Maybe.
ry It looks the inflation ratei in Venezuela maxed out in January at an annuualized rate of 192,000 % , whiich fell by September to 4,600% rate, still in hyperinflationary teritoryy, but clearly coming down substantially. I am not a fan of this regime and never was, unlike some prominent economists saying nice t8ings about tueir economic performance, especially back in 2007, just berofe the world crash, when indeed their numbers looked prtty good. But, not more recently unfortunately. But maybe they are slowly returning to a more functional economy now, with still a long way to go.
There are also reports that oil production in Venezuela has recently risen. Reportedly some of the recent possible stabilization in Venezuela may reflect influence of Russian advisers.
Barkley Rosser
Even in 2013 we have:
ReplyDeletehttp://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/long-awaited-apocalypse-not-likely-in-venezuela
November 7, 2013
Sorry, Venezuela haters: this economy is not the Greece of Latin America
Predicting a Venezuelan apocalypse won't make it happen: in this oil-rich country the only thing imploding is poverty
By Mark Weisbrot - Guardian
[ What happened then that brought an apocalypse to Venezuela? Please explain further. ]
A.,
ReplyDeleteMark W. is a friend of mine, but I do not completely agree with him on all this.
Anyway, I have done a bunch of checking on all this, and, frankly, there are parts of what has happened that are unclear. Part of the problem is that between somewhere in 2014 and May, 2019, the Venezueala central bank simply shut dowwn. No data.
Now data is out, but it is highly questionable. Anyway here is what seems to have gone down, plus my annalysis.
Let me shut down something you are sort of suggesting: no, this disaster is not due to US policies. US has mildly sanctionned Venezueal, but it has done so far more vigorously on other nations, such as feellow-oil expoerting Iran. But while Iran's economy is declining at about 2% per year, and has about a 40% inflation rate, well, sorry, US sanctions are not while Venezuela is in such bad shape as it is.
Frankly i do not fully understad fully why the Venezeualn GDP declined 50% over the last five years, not to mention the massive outbreak of hyperinflation, but I know more than I did.
So, three areas. Probably the biggest issue/problem has involved the long-state-owned oil company. Technically speakinbg they were already "socialisr" in that sector, but when Chavez came in 2002, he fired half the previous employees, replacing them with corrupt cronies. While the economy was doing well in 2007, with Chavez's effective redistribution progeam. This program was successful, and in 2007, supported by high oil prices, the Venezuean economy waas perfoorming very well on many fronts, despite the fact that mosst of the crucial decisions that would lead to later problems had already been made, with the firing of the competent technocrats who had run the state-owned oil companny had already happened. But Maduoro mad these matters much worse after ha came in.
In any case, in 1996, oil production in Venezuela was about 3.6 mbpd, but it is now about 2.3 mbpd.
Another area where there was bad policy was agriculture, which has also seen a serious decline in production, with outright food shortages a major reason for the exit of 3 million Venezuelans. The major changes came under Chavez, but the full impact came later. So, about 20% of farmland was collectivized, leaving 80% privately heldl. The collectivized land ended up not producing any food, for complicated reasons. Probably the biggest problem was not this outbreak of semi-socialism, but very incompetent price controls, with the combination of the two leading to a massive decline in ag output, which, given the inability to buy food from abroad becauuse of the decline in oil production, led to famine and mass exodus of the population.
The other area that I had not been aware f before involves manufacturing, which Venezueal waas quite strong in, but has also declined. Some of this is due to capital controls and badly managed that led to massive devaluations that made it hard for manufacturers to impport needed input supplies. Thus in 2014, well before things got really got bad, GM shut down their larg auto production facility there, with auto production down 84% since its peak. As it is, GDP has been down 50% in the last five years.
A final issue is why this massive hyperinflation in a world where we have seen nothing like this in over a decade, with most nations trying to raise their low inflation rates. I do not fully understand this, but the recently released data ahows a massive increase in government debt between 2017 and 2018, with the rate of inflation also massively accelerating during this period. According to the central bank numbers the debt/GDP ratio went from 34% to 162%. I think we have more to learn about all this.
Hyper-inflation is pretty much always due to a break down in confidence in the currency issuer - usually the government. It's not the money supply per se, it's loss of belief in the anchor politically underpinning all credit. Weimar (French seizure of the Ruhr), aftermath of war and so on. Or Zimbabwe or Yugoslavia or Venezuela. The solution is therefore some more stable settlement of social relations, but this can take several forms.
ReplyDeleteI largely agree, Peter T. I have not seen money supply numbers for Venezuela, although I imagine they have soared. Devaluations have played an important role in all this.
ReplyDeleteBTW, i was in error in saying the central bank "shut down" between 2014 and 20q9. What was closed was its data eeporting operation. The resst of the bank continued to function throughout this period.
Let me shut down something you are sort of suggesting: no, this disaster is not due to US policies. US has mildly sanctioned Venezuela...
ReplyDelete-- Barkley Rosser
[ No, there was no such suggestion or sort of suggestion from me. I was merely asking what might have happened after November 2013, given the column by Mark Weisbrot.
However, the United States at least since 2017 has been brutal towards Venezuela and using the word "mildly" for the period since 2017 would be entirely wrong and offensive. American foreign policy in general since 2017 has been chacterized by brutality. ]
As for the explanation to my question, I found that helpful and am grateful for the explanation. Thank you so much.
ReplyDeleteA.,
ReplyDeleteTrump has been hostile to the current leadership and supported Guaido, although the effort to have him replace Maduro seems to have failed.
While there are restrictions on capital flows, there continues to be a lot of trade between US and Venezuela. I thought US had stopped buying Venezuelan oil, but according to sources I checked, Venezuela is the fourth largest source of oil imported into the US.
Thank you anyway
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ReplyDeleteIf you want to let me know privately, my emails is rosserjb@jmu.edu
I apologize that I do not know how to do this. I think I was told onc, but do not remember.
ReplyDeleteWhile there are restrictions on capital flows, there continues to be a lot of trade between US and Venezuela. I thought US had stopped buying Venezuelan oil, but according to sources I checked, Venezuela is the fourth largest source of oil imported into the US.
-- Barkley Rosser
[ Astonishing. So, we sanction Venezuela, threaten other countries who want to buy oil from Venezuela but buy oil there ourselves... I am startled. How is this explained and why has this not been reported, to my knowledge, in the Post or the Times? I am naive.
Wow. ]
Again, this is really important:
ReplyDeleteWhile there are restrictions on capital flows, there continues to be a lot of trade between US and Venezuela. I thought US had stopped buying Venezuelan oil, but according to sources I checked, Venezuela is the fourth largest source of oil imported into the US.
-- Barkley Rosser
Thank you so much for the explanation.
[ The spam is heartbreaking. ]
While there are restrictions on capital flows, there continues to be a lot of trade between US and Venezuela. I thought US had stopped buying Venezuelan oil, but according to sources I checked, Venezuela is the fourth largest source of oil imported into the US.
ReplyDelete-- Barkley Rosser
[ Please this is very important but I can find no confirmation. Please set down a source, so that I can use the information. I will of course credit you. Please set down a source. ]
A.,
ReplyDeleteSimply google "nations sources of US oil imports" and at the topp is a list of the top five national sources in 2018, this data appareently from https://www.eia.gov . The top five nations listed in order are Canada, Saudi Arabia, Mexico, Venezuela, and Iraq. Obviously sources near the US are strongly favored, which makes sense.
Excellent:
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