GLOBAL MARKETS


Live World Indices are powered by Investing.com

Thursday, June 16, 2016

DE- INDUSTRIALIZATION :Implosion of Venezuela

 

The Disaster of De-industrialization 

Once a nation no longer produce essential goods and services, it becomes vulnerable to collapse.
By now, we all know what's happening in Venezuela: hyperinflation, empty stores, a regime in denial. The Trajectory of Venezuelan Hyperinflation Looks Frighteningly Familiar... (Zero Hedge)

My contacts in Venezuela tell me that merely posting the black market exchange rate of bolivars to USD can get you arrested. So yes, Venezuela's regime has gone full Orwell-1984: whatever is true is outlawed.
Venezuela is imploding not because of hyper-inflation, but as a result of policies that led to hyper-inflation: policies that generate perverse incentives, disincentives to produce goods and services and incentives to depend on government subsidies.
But one of my correspondents nailed a key cause that is rarely discussed: Venezuela has been effectively de-industrialized. Capital that should have been invested in the electrical grid and the oil industry has been diverted to other pet projects (and the pockets of regime insiders).

LEARNING LIBRARY