The Venezuelan economy is rapidly sinking as panic and desperation are now widespread in the oil rich nation. The bills for 14 years of excessive government spending and socialist mismanagement are now coming due.
Last week President Nicolas Maduro forced shop owners to cut prices on appliances and electronics by half, and when they did not comply, he sent in troops. He is about to take the same step with auto dealers and apparel manufacturers.
Maduro says “This robbery of the people has to stop,” and numerous store managers and owners have been arrested for “illegal price gouging.”
Maduro, the handpicked heir to the late leftist leader Hugo Chavez, has become increasingly aggressive, but he is only making the situation worse.
Maduro has been forced to confront the fact that his predecessor’s nationalizations of large sections of the economy have left the nation in shambles. The ruling party faces crucial municipal elections on December 8th.
How can an oil rich nation be impoverished? Since Chavez took over in 1999, the nation has received over $800 billion in oil revenues, and China recently paid $39 billion in advance. All of the money is gone and the IMF believes over $100 billion was stolen through government corruption.
• The inflation rate is 54%.
• Since January, the currency has lost 90% of its value on the unofficial but widespread black market.
• The International Monetary Fund says Venezuela’s current path is unsustainable.
• The President’s approval rating has fallen from 43% last summer to 7%.
• 1 in 4 food items on the government’s list of basic goods are already scarce, and the shortages are expected to be far worse. The government has set these food prices since 1999, and they drove many food companies out of business.
• The nation use to be self sufficient in food, but now it must import 70% of all basic foods.
• Last week a Miami Herald reporter who asked people about food shortages was imprisoned for three days.
• The government nationalized the oil industry but they would not make any investments in maintenance so production declined rapidly. The result is oil imports from the United States have doubled in the past five years.
• The Los Angeles Times says “A recurring scene played out at the Unicasa supermarket in Caracas, where shoppers had waited two hours for chicken to appear on the shelves. People turned into savages, grabbing what they could.”