February 17th, 2014

The day Venezuela died

Hugo Chavez is dead, but his legacy lives on.

And that means that Venezuela is in a heap of trouble:

The suddenness of Venezuela’s collapse should have come as no surprise because downfalls are inherently abrupt…Imagine there’s no money to keep up the sovereign bond payments, the only source of money to keep power plants going.

Welcome to Hugo Chavez’s Venezuela, a country with the fifth largest oil reserves in the world and absolutely broke. It’s a remarkable achievement for Chavismo. A just-wow moment. Socialism is useless at everything except for smashing things in record time.

As Margaret Thatcher famously said: The problem with socialism is that you eventually run out of other people’s money. “Eventually” seems far away—until it arrives.

So, what happened? This:

High oil prices funded Mr. Chavez’s “Bolivarian revolution” over the past 14 years. He made massive investments in health and education; because the government releases almost no reliable data, it is debatable how much impact these had on human development, but they did inspire a belief in redistribution and justice, and ensured his huge popularity.

But since Mr. Chavez’s death nearly a year ago, it has become apparent that his hand-picked successor, Nicolas Maduro, lacks his charisma. Meanwhile, the safety net is starting to tatter. Production by the national oil company, Petroleos de Venezuela, S.A, or PDVSA, is declining, although the government won’t say by how much. The company is crippled by debt, has no cash to invest in operations, must operate on the posted exchange rate, and has been turned into a bizarre do-everything organization that makes jam and processed chicken, builds houses and runs neighbourhood health clinics.

As uncertainty grows, Venezuelans must adapt to an ever-shifting reality. In the middle and upper class, this means cultivating friendships with grocery store clerks who text you when a shipment of butter comes in; shopping on credit cards, because the bolivare, the national currency, will be worth even less when the bill comes due; and sinking cash into hard assets such as a used car, if you can find one (the official waiting list at dealerships is years long.)

Even before President Obama was elected in 2008 I wrote that he was showing Chavez-like tendencies. I have never seen any reason to revise that notion; it has only strengthened. Reading the Globe and Mail article I quoted above, I am struck in particular by this seemingly unimportant quote, “the government releases almost no reliable data.” That’s been especially true of Obamacare and the present administration, as I pointed out last Thursday. Far more than ever before in my memory, domestic statistics released by the government have become almost pure propaganda, and few on right or left trust them.

But bluffing can only get you so far. Sooner or later economic reality comes to call.

Can Venezuela right itself? Richard Fernandez thinks it may have reached a point of no return:

The problem with Venezuela is that Chavismo has left people with nowhere else to go. It’s burned the bridges. There’s no reopening the car plants or restarting the factories, or even repairing the power plants. The engineers have all emigrated to Alberta, Canada.

Fernandez then notes that something similar has happened in Syria, for different reasons. And in Detroit:

Detroit had posted the lowest math scores in the history of the National Assessment of Educational Progress.

“These numbers are only slightly better than what one would expect by chance as if the kids had never gone to school and simply guessed at the answers,” said Michael Casserly, executive director of the Washington-based Council of the Great City Schools, which represents large urban school districts. “These numbers … are shocking and appalling and should not be allowed to stand.”

“Should not.” But what’s to be done? Has Detroit passed some point of no return?

It is easier to destroy than to build. Much easier. That’s true whether destruction is your goal or not. And if you’re blinded by the need to stick to your ideology and declare it a success no matter what the truth is, you may not even know what’s going on until Humpty Dumpty finally takes that tumble.

[ADDENDUM: See also this.]

43 Responses to “The day Venezuela died”

  1. waltj Says:

    It saddens me to see what has happened to the city of my birth–Detroit–but the vast majority of the wounds were self-inflicted, starting in the mid-1960s. Venezuela has followed the same path, but a lot quicker. I don’t think the story will end well in either place.

  2. Gringo Says:

    The Chavernment, a.k.a. the Maduro/Chavista regime, announced that last week it had issued a warrant for the arrest of oppo leader Leopoldo Lopez. Leopoldo Lopez has been in hiding since then. From Venezuela News and Views: Leopoldo Lopez date with destiny.

    Leopoldo Lopez has released a video filmed from his hiding place where even a painting in the wall was blurred.
    What Lopez is saying is that next Tuesday (the 18) he will be leading a march to the interior ministry to submit a claim. Then, a few dozen yards before the door he will stop the march and walk alone, letting the regime assume its responsibility in arresting him, in front of gazillions cameras posted in front. To make the moment more dramatic he has asked to all that are willing to accompany him to dress in white, and takes as peaceful an attitude as they can come up with.

    Of course the symbolism is rich, and richer than what you may think. For example white is also the color of choice to dress for many “santeros” and other assorted voodoo like sects, which have strangely flourished with the influence of Cuba over chavismo. That he goes to the interior ministry is also something because not only this is the ministry in charge of public order, but also the one whose head has been pretending to hold a dialogue to ensure the safety of Venezuelans. Amen that the current head, Rodriguez Torres, was also a coupmonger of 1992 in charge of killing the presidential family if needed.

    By Tuesday all major networks in the world will be filming this human sacrifice. And Lopez will write his ticket to immortality, one way or another. Unless the regime finds a cope out. But even ransacking half of Caracas to find Lopez hiding place will not compensate.


    Note: none of this is on Venezuelan TV or radio. The regime forbids it. And to make sure that the order is fulfilled the regime is holding as I type a cadena where Maduro is trying to put destruction perpetrated by his followers on the back of the opposition. In particular an alleged attack to dozens of metro bus units when the mayor of Baruta stated that he knows of none. In short, Twitter and international press have inflicted such damage on the regime that this one has gone into propaganda overdrive.

    To repeat what Daniel the blogger has already stated: none of his will be covered on Venezuelan TV, as all oppo TV stations have been forced out , either by decree or by financial asphyxiation by heavy fines followed by forced buyouts. Also note that a Colombian [not Columbian :) ] network covered the demonstrations last week, only to be cut off.

  3. Gringo Says:

    For those who are interested in learning more about Venezuela, there are a number of English language blogs about Venezuela.

    http://daniel-venezuela.blogspot.com/ Venezuela News and Views. Run by Daniel Duquenal, a Ph.D. biologist who is also a good storyteller. As he works in a small agribusiness in the boondocks, he writes with direct experience of the insanity of Chavenomics.

    http://devilsexcrement.com/ Devil’s Excrement. Miguel Octavio, a physics professor turned bond trader, left Venezuela about a year ago. His strength is economic analysis.

    http://caracaschronicles.com/ Caracas Chronicles. Ironically, the head blogger, Juan Cristobal Nagel, is from Maracaibo, a city that has no love for Caracas. JC is currently an economics professor in Chile. There is a host of contributing bloggers who live in Venezuela. Multiple posts per day. Policy wonks- and more. Also good stories from ground level.

    http://infodio.com/ Alex Boyd, exiled in London, has written extensively about corrupt Chavistas and their attempts to suppress reporting about their corruption. Formerly had vcrisis blog.

  4. Matt_SE Says:

    To quote King Denethor from the Lord of the Rings movie,” What can one man do against such reckless hate?”

    Killing. That’s how this is going to end, if at all…with lots of killing.

    That doesn’t please me (and you can pray for the opposite, if that’s your wont), but is a simple statement of fact.

    The Commies need to be taken out into a field and publicly shot in the head. If they aren’t, you can count on them doing that to the opposition.

  5. vanderleun Says:

    I’m trying mighty hard to care about Venezuela but I just can’t get going. They’ll either shoot their way out or they’ll just sit in their corner and fester.

  6. J.J. Says:

    Amazing how much breathless coverage of this collapse there is in the MSM. Oh, wait……it’s nothing but crickets. Sigh!!

  7. jc Says:

    Argentina is following along in the next handbasket” check http://www.zerohedge.com/news/2014-02-05/argentine-banking-system-archives-destroyed-deadly-fire

  8. neo-neocon Says:


    I didn’t put this post up here because of concern about Venezuela. I’m concerned about Venezuela, but if that’s all it was I probably wouldn’t be writing about it.

    It’s because of concern about our own future, here.

  9. southpaw Says:

    Where’s Sean Penn when you need him? I would have expected a leader with his unparalleled skills as a statesman, scholar, and geopolitical intellectual to have ridden to the rescue by now. Perhaps he and Jimmy Carter are preparing to travel there and help organize the new regime? Habitat for comrades?
    They seemed to have such a great admiration for the previous well oiled government operation, it’s only natural for one to expect they might lend some cash and support.

    On a serious note, PDVSA used to be a big customer of ours 20 years ago, but their business has been declining for years to nothing in recent years. No investment whatsoever in their oil infrastructure.
    They have Chavez to thank – it’s an oil rich nation, and they’re mostly dirt poor. Like a lot of other resource – rich, corrupt countries. Their people suffer, while the useful idiots in Hollywood and failed ex-presidents extoll the virtues of a socialist idealism that anybody with a brain cell knows ends in poverty and suffering whenever it’s forced on the citizens.

  10. Lizzy Says:

    I have not been following this, but based on the news you’d think the only problems in the world today are “extreme weather”/climate change and gay rights in Russia. The MSM probably doesn’t want anyone to look too closely to see the similarities you’ve pointed out, NEO.

    *Thanks for the links, Gringo!

  11. Ymarsakar Says:

    To the Left, Obama taking an example of good governing policy from Chavez is like MSNBC talking to CNN. It happens naturally. They are part of the same alliance. They are not enemies or competitors.

  12. rickl Says:

    Here is another blog post by a Venezuelan blogger:

    Civil Protests, Government Violent Repression and Killings in Venezuela. February 2014

    A commenter at Ace of Spades linked that the other day. Note the description of the chronic shortages and people standing in long lines for basic necessities, exactly like in the Soviet Union. What a waste of human potential. It is beyond infuriating that so many people want to bring that hell to America.

    Matt_SE Says:
    February 17th, 2014 at 2:38 pm

    The Commies need to be taken out into a field and publicly shot in the head. If they aren’t, you can count on them doing that to the opposition.

    Amen. I couldn’t agree more. I wish we had executed more Communists here in America in the 50s and 60s.

    It’s been remarked on before, but if a person identifies as a Nazi, or praises Nazi ideology, he becomes a social pariah. No decent person would have anything to do with him. Yet if he praises Communism, wears a Che Guevera T-shirt, or whatnot, he is excused as an “idealist” despite the fact that Communism is responsible for more death and misery than Nazism ever was.

  13. parker Says:

    Che Guevera T-shirts are worn by those too young and ignorant to know that CG was a bloodthirsty monster or aging hippies who were too young and ignorant many moons ago. This is why we are doomed to deja vu all over again.

    “It’s because of concern about our own future, here.”

    Yes, that is why it is important to pay attention to places like Venezuela and Argentina. Both will collapse into bankruptcy….. a fate that awaits us if the ship is not turned around within 3-4 years (not that it will happen that quickly, our train wreck is more slow motion). I am ready to die fighting, but I don’t wish that upon my children and grandchildren.

  14. Tonawanda Says:

    Obama and Chavez are twin souls.

    What has happened in Venezuela is what Chavez could get away with.

    Obama sees this, and as a twin soul to Chavez he too wants to get away with what he can. This is merely the Leftist religion.

    What is happening in Venezuela is interesting in a life and death sort of way.

  15. Curt LaRose Says:

    What’s amazing is that the people of Venezuela voted for this. Their envy and greed for other people’s wealth brought this on their own heads.
    And we see the same thing happening here in America w/ liberals who are so consumed w/ envy of the “1%ers.”

  16. Sam L. Says:

    PDVSA is sponsoring Pastor Maldonado to race in Formula 1. Supposedly this is some $30 million a year. He just signed on with Lotus (previously Renault)–it seems Lotus did not pay its #1 driver’s salary last year, and possibly others–and Lotus needs the money to keep going. I suspect this is not going to work out for them.

  17. Bob From Virginia Says:

    Curt Larose you hit the nail on the head, this is self-immolation by choice, although I suspect Venezuela’s have-nots did not have that many other alternative parties when they chose Chavez. Even if the last election was fixed the Chaveznistas still got a near majority. The real questions are how bad will things have to get before the lesson is learned and will there be anyone left to turn things around? Argentina has been playing this game for generations with no lessons learned and no end in site.

    As for the US; probably the same thing. The people who voted for Obama could care less about the threat Obama poses to democracy, the economy or security. Gay rights and being cool they can understand, the likelihood of of an Iranian nuke in NYC is beyond them.

    There reaches a point where tragedy becomes comedy. Venezuela reached that point long ago. I am 100% sure that there be no effort to reverse Obama’s means and ends in our lifetimes. The national recognition and will is not there. With that in mind I predict the Democrats will take the House in 2014 and we will see a repeat of the Venezuelan comedy here.

  18. Don Carlos Says:

    Maduro must kill Lopez, even if a “nut” kills him in front of the Ministry, said nut immediately blown away by the Ministry forces that were “trying to protect” Lopez.
    Venezuela has gradually turned itself into a Nigeria equivalent.

    We are getting a wee glimpse into our future. It is the United States of America that, before the advent of Progressivism one hundred years ago, has been a one-off anomaly in the history of the human species. It is and has been slowly sinking, like the Titanic, and when it dips beneath the waves, there will be no resurrection, no rebirth. Ever.

  19. rickl Says:

    Bob From Virginia Says:
    February 17th, 2014 at 9:00 pm

    The real questions are how bad will things have to get before the lesson is learned and will there be anyone left to turn things around?

    The answer can be found in America’s cities and it is not reassuring. The lower they sink into poverty, squalor, and violence, the more the citizens vote in lockstep for Democrats.

    There is no doubt in my mind that Obama’s economic policies were designed to force as many people as possible to become totally dependent on the government. When they lose hope of ever finding a decent job again, they will always vote to keep their benefits coming.

  20. DaveindeSwamp Says:

    The Colombians swore that the lightgiver was Chavez’s girlfriend .

    The Venezuelans committed the same irrational acts as we did . Frightening, ah?

  21. blert Says:

    The Venezuelan voters never voted for this chump.

    Can you say Chicago politics?

    The question is, is the despot paying his Praetorian guard on a timely basis?

    BTW, the North Dakota fracking boom is a part of the Venezuelan story. It’s sucked away all of the talent that would’ve been drilling virgin prospects.

    Because of its world leading reserve position, Venezuela has not engaged in truly exploratory wild cat wells in generations.

    Instead, the players have spent their dimes on building out the technology required to pre-process the ultra-heavy crudes that Venezuela has in world record abundance.

    (Orinoco crude)

    For those not aware, Venezuela has far more crude oil potential than KSA. It’s only headache has been the cost of extraction. KSA and Kuwait can’t be beat.

    But, at these prices, even heavy, sour, crudes are viable — once they are pre-processed.

    I think it’s highly notable that Red China is NOT bailing ‘our boy’ out. The word on the street is that he’s a cretin. That’s why the old despot trusted him.

  22. Gringo Says:


    BTW, the North Dakota fracking boom is a part of the Venezuelan story. It’s sucked away all of the talent that would’ve been drilling virgin prospects.

    There was a vast exodus of PDVSA personnel in 2003 when Chavez fired all who participated in the strike. Why the strike? Chavez decided to take over PDVSA, and PDVSA personnel struck in an unsuccessful attempt to stop him. Many of who were working in the Orinoco heavy oil belt took their expertise to the tar sands in Alberta, well before North Dakota got going. I am not going to say that there are no former PDVSA personnel in North Dakota, but from what I have read, Alberta was their primary destination.

    I think it’s highly notable that Red China is NOT bailing ‘our boy’ out. The word on the street is that he’s a cretin. That’s why the old despot trusted him.

    From what I have read, the Castros wanted Maduro because he was Our Man In Caracas. He had been trained in Cuba years ago, before he did the bus driver’s union gig. But agreed that Maduro isn’t the brightest bulb on the Christmas tree.

    On a serious note, PDVSA used to be a big customer of ours 20 years ago, but their business has been declining for years to nothing in recent years. No investment whatsoever in their oil infrastructure.

    Before Chavez took over PDVSA, it was one of the best-run government-owned oil companies in the world. It was certainly head and shoulders above PEMEX , YPF [Argentina], or YPFB [Bolivia].

    In 2007, a Chinese rig burned down in the Anaco area. In looking at pictures about the incident, it appeared to me that there were maintenance issues about the rig. I know someone who makes periodic inspection tours of oil installations in Latin America. I wrote to get his opinion.

    He wrote me back that yes, there appeared to be maintenance issues at the rig. In addition, he noted that since Chavez had taken over PDVSA he had observed a deterioration of PDVSA-maintained equipment- and this was in 2007. Maintenance has gotten much worse since then.

  23. MEC2 Says:

    LOTR correction – that was King Theoden, not Denethor, who was the Steward of Gondor, and not a King.

  24. Buck O'Fama Says:

    What’s even more ridiculous – there are still ads running in the NY/NJ area, voiced by Joe Kennedy, announcing that “the people of Venezuela” are sending low-priced oil to Americans who can’t afford to pay their fuel bills. So even though the country is circling the drain, Maduro and Co. still can find the resources (at their citizens’ expense) to play political games for their own amusement. Amazing.

  25. Gringo Says:

    Buck O’Fama
    So even though the country is circling the drain, Maduro and Co. still can find the resources (at their citizens’ expense) to play political games for their own amusement. Amazing.

    Venezuela gives away a lot more money to Cuba than it does to Joe Kennedy’s heating oil company- a company which pays Joe the Friend of the Poor a hefty salary.

  26. Matt_SE Says:


    Yes, my nerd certificates are hereby revoked.
    Looks like it’s back to D&D prep school.

  27. Matt_SE Says:

    If anyone cared about Venezuela, they would start gun-running over the border.

  28. MassJim Says:

    Does former Representative Joe “Call Joe for oil” Kennedy know about this?

  29. texexec Says:

    I worked with Venezuelan refineries in the early 60″s. Then, the government even allowed private companies like Shell, Exxon, and Gulf Oil to operate there. The oil business was thriving and that radiated to the entire economy. Venezuela was a beautiful and thriving country.

    It saddens me to think of what has happened since.

    In a democracy, the quality of a government depends on the quality of its electorate. In Venezuela’s case, those allowed to vote grew steadily less informed and steadily more inclined to need a government handout.

    We are doomed to the same fate, unless something changes soon. And I’m not optimistic about that.

  30. ErisGuy Says:

    Once the electorate is no long enlightened by self-education or limited to the enlightened by limiting the franchise, Venezuela and Detroit are inevitable.

  31. Mike Says:

    The point about Obama and Chavez is exactly right. The larger point is the supporters of Obama and the Chavistas.

    They are the problem. They are the issue. Let’s keep our eyes on the ball.

    Obama is not the problem. As Ymsarker says, it’s his human and political infrastructure.

    That means, simply, never letting a liberal get a pass on anything – on the local level. It means calling out your neighbors.

    No one wants to do that. But they are where the evil lies and has its power.

    Perhaps we should consent to being done in by them. That’s about the only choice. Let’s not kid ourselves though – if they are not stopped, we will be done in by them. It’s what people like that do. Venezuela is the perfect case in point. Detroit is the perfect case in point. We are already well down that road.

  32. bandit Says:

    Just last night I saw Joe Kennedy thanking President Maduro, Citgo and the peeps of Venezuala for allowing him to skim the profits and pay his wife 360K a year on top of his $600K

  33. It’s Happening In Real Time. Pay Attention. | Is This Blog On? Says:

    [...] brings me to this [...]

  34. Hangtown Bob Says:

    Chavez was a populist buffoon who demanded absurd redistributionist policies for his country and whose greatest asset was his mouth. He would talk for hours on the state-run TV networks.

    Remind you of anyone in this country??????

  35. Don Carlos Says:

    What I said back then:

    October 13th, 2008 at 7:05 pm
    I share Neo’s thoughts, and as to Bookworm’s thesis, have for some months remarked on several blogs, including perhaps this one: Obama=Chavez

  36. Venezuela | Transterrestrial Musings Says:

    [...] The day it died: [...]

  37. willis Says:

    ““the government releases almost no reliable data.” That’s been especially true of Obamacare and the present administration, as I pointed out last Thursday…”

    My favorite are the unemployment data. Some on the best free fiction on the market.

  38. Ray Says:

    Think of Zimbabwe, run by Robert Mugabe. I was in Rhodesia in the early 1970s and it was a prosperous country. After thirty years of Mugabe redistribution it’s a basket case. The joke goes that you used to visit Rhodesia to see the ruins of Zimbabwe, now you visit Zimbabwe to see the ruins of Rhodesia. Mugabe doesn’t care as long as he is in charge.

  39. blert Says:


    Chavez had hired non-Venezuelans to drill some WILD CAT wells in an attempt to find additional light, sweet, crude.

    Then he got behind on his payments — like six to nine months behind — and they — the firms — upped stakes and fled to North Dakota, etc.

    This event happened in the last three years.

    The firms involved were deemed state-of-the-art. They even hit oil. Chavez just slow-rolled payments to the degree that all of them fled — going public after the break-up.

    It made the international news-wire — especially in the oil patch.

    I ditto your post INRE Chavez driving out the middle class.

  40. Don Says:

    Venezuela and Rhodesia: Jimmy Carter played a part in both.

    Yes, Venezuela matters because it is a model we are following. Also, Ecuador is on the same path.

  41. dicentra Says:

    I’m following several Venezuelans on Twitter (I can read Spanish) including Leopoldo López’s feed, on which he bade farewell about three hours ago: https://twitter.com/leopoldolopez

    The Venezuelans have taken to the streets by the thousands.





    There’s also this soon-to-be-iconic photo of López bidding farewell to his wife: https://twitter.com/carlosgarcia98/status/435853879419604993/photo/1

    I’m seeing tons of Venezuelan Tweets in support of López and against Maduro. The people are heartily sick of the disappearances, torture, and murders and they want their freedom back.

    Go ahead and not care if you must, but if Venezuelans manage to unseat a tyrant, that’s the best thing to happen in the Americas since the moon landing.

  42. Fausta Says:

    Neo, many feel like vanderleun, in spite of the fact that Venezuela’s growing ties to Iran include direct flights from Tehran, and ceding Iran a shipyard facility within direct range of the Panama canal.

  43. News of the Week (February 23rd, 2014) | The Political Hat Says:

    [...] The day Venezuela died Hugo Chavez is dead, but his legacy lives on. [...]

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