The Venezuela Catastrophe

It’s a disaster that will get worse before it gets better:

“The only question now is whether Venezuela’s government or economy will completely collapse first,” writes Matt O’Brien in a jaunty overview of this fucked up global fucked-spot. What happened? An incompetent government combined with a huge drop in global oil prices have produced an economy that is shrinking at a breathtaking clip, crumbling infrastructure, a lack of goods for people to buy even if they could afford it, and runaway inflation. (It is worth noting that the government’s top economic official “rejects some basic tenets of conventional economics, for example that printing too much money causes inflation.”) Venezuela’s oil production is falling, and oil prices are falling even faster, leaving the government woefully short on funds. They’re set to default on their national debt. Corrupt officials may have embezzled hundreds of billions of dollars. Venezuela is rated one of the most corrupt countries on earth. The nation’s biggest company is begging the government to seek international aid “to avoid the collapse of the food supply.” Unfortunately, most of their neighbors are too pissed off at them to care.

From large-scale cronyism to trying to deny basic economic realities with price and currency controls that have no chance of working, it’s an all-too-common and all-too-awful story.