Venezuela defaults on its debt, blames Trump
Venezuela has been declared a deadbeat on its debt by both Fitch Ratings and Standard & Poor's after it couldn't cough up $200 million for a couple of sovereign bond payments. Now any bond with Venezuela's name on it – and all the bonds issued in the country – will be affected as if in default, too. This will add up to billions. All that's left now is for the repo men of the bond world, the Investment Swaps and Derivatives Association (ISDA), to declare default to trigger cross-default clauses on a type of bond insurance known as credit default swaps, for the deed to be complete. All the help Russia has given to Venezuela, some of which was signed even this morning, was not enough.
So this should be a time of socialist reckoning, right? The comeuppance of socialism? Another example of socialism failing every time you try it? Not in the least. Yet one of the historically richest countries in Latin America, and the country with the world's largest oil reserves, has been left a smoking ruin. It's defaulted on its sovereign debt, run out of money (the WSJ says it has just $1 billion in foreign reserves left), has widespread hunger, mass poverty, and the wreck of its medical system. The electrical company is bankrupt, the water isn't running, the bridges are falling apart, and now even the Caracas subway seems to be shutting down. The wages of socialism are there for all to see, and presumably reject, right?
Not for Chavista socialist Venezuela's rulers. They've got an answer for us: the problem is Trump. Kid you not.
At yesterday's creditors' meeting in Caracas, according to the Toronto Star:
Very little was announced and nothing was resolved, according to attendees who said they left just as confused about the government's intentions as they were going in. Vice President Tareck El Aissami was the only official to speak, and devoted most of his prepared remarks to railing against U.S. President Donald Trump and global financiers who he said have conspired to keep the country from making debt payments on time. He pledged the nation would continue to honour its obligations and work with bondholders to find new ways to get them their money, but offered no concrete proposals for restructuring.
See? If it weren't for Trump, all would be hunky-dory. Pay no attention to their failed socialist model out there, decades in the making. Th price controls. The expropriations of property. The ruin of the currency. The currency controls. The misallocation of critical investment capital into socialist welfare handouts. The corruption of the party elite. The crash is the work of Trump.
Like a delinquent who blames everyone but himself for his misdeeds, they are, like most socialists, unable to point the finger at themselves. It's that very inability to examine themselves and take responsibility for the horrific errors they engineered that ensures they won't be reforming any time soon, or enough to pay their debts.
For the creditors, that message says they are incapable of reform is the surest sign of a congenital deadbeat. So long as they keep blaming Trump for the sanctions on their ruling drug dealers, one of whom is El Aissami himself, they aren't ever going to crawl out of their hole.