Financial vultures and destabilzation teams are watching Venezuela’s mostly self-inflicted death spiral. The plunging price of oil has hugely worsened that country’s already precarious situation. Simply put, it has obligations it cannot meet, is selling anything it can, and making up shit to pretend things are ok.
The country – desperate to give the impression that it is not terminally insolvent and still has some foreign reserves left – ordered its Central Bank to dramatically change the rules, in a step “that enables them to count a whole new set of ‘assets’ as potential international reserves including “stones” and “precious metals held in their vaults on behalf of foreign financial institutions.”
No, you can’t pretend something you don’t own is an asset. No one will believe you anyway. The chart shows the soaring BPS spread between bid and ask on Venezuela credit default swaps. By contrast, the US spread is 19. In a CDS, the seller guarantees to pay debt of the buyer if they default and receives a payment for doing so. A spread of 3100 is insanely high and indicates vanishing trust that the country can meet its obligations.
From the comments:
Ukraine has no more gold, so strategically, Venezuela still has something to be looted, I think a destabilization will begin occuring to the south of us.
TPTB will then loot the repatriated gold and move it back into more friendly vaults with their greedy little mitts.
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Well, the CDS oddsmakers have Venezuela #1, Ukraine #2, and the Grand Duchy of Evil (Muskovy) #3. Sounds about right to me. Ukrainians are in the middle of a war and thus have a rally round the flag moment going to stretch out their agony. Venezuela is spending its last remaining cookie jar money on swimming lessons for rodents.
Anyone who can is getting their money out of Venezuela into a different currency.