This article is disputing an earlier piece in the Financial Times that argues that Venezuela's economy is going to collapse and there will be an imminent sovereign default. It is argued that the catastrophe has already happened, a sovereign default is expected, and criticizes the decisions that have lead up to this point, such as fixing market prices below where they would normally fall creating shortages instead of using taxes to distribute wealth more evenly. The economic crisis is not just because of the fall in oil prices and Venezuela's plan to double the amount of money in circulation would create massive inflation that will even further disadvantage the economy.
The article instead supports a potential movement of Venezuela to a move to a free market by abolishing price controls, all subsidies, removing constraints on ownership and production all in order to gain a stable currency. It suggests that after the economy is stable again by introducing a free market, then it will be possible to rebuild the economy. The article remains hopefully regarding a successful bounce back of the economy provided that Venezuela goes on a free market as soon as possible.
http://www.forbes.com/sites/timworstall/2016/02/07/venezuelas-economic-catastrophe-isnt-about-to-happen-it-has-happened/#198ac1385a1e
I read that their predicted inflation rate for 2016 is over 150%. I also heard that Venezuela is importing a lot of American refined oil.
ReplyDelete