jueves, marzo 12, 2009

Venezuela: an economic tsunami disaster

The economic situation is critical. Oil prices for the Venezuelan basket is about $ 35 dollars and with a tendency for the U.S. barrel to fall to $ 30.

The country’s budget has been prepared based on U.S. $ 60 U.S. dollars per barrel, a fall of almost 40%. On the other hand, inflation is the highest in Latin America, ie 30% per year and the politics of Chavez is to end private ownership and private enterprise and the country has no capacity to replace the high imports of goods and services.

Also, the oil company of Venezuela is deteriorating by poor administration, corruption and for his populist political decisions. The state enterprise has insufficient resources to pay their workers as specified via agreement, then protests and conflicts will emerge. And this also applies to other state enterprises such as producing steel and aluminum.

The country’s economic future is very bad compared to some very low oil prices because world demand has decreased due to a hemispheric crisis. All this has arisen as a result of Mr. Chavez’s populist decisions when prices for Venezuelan oil was U.S. $ 140 a barrel.

A reflection: governments that want to establish a Marxist-Leninist model always fail because those decisions are always wrong in this globalized world.

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