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| Caribbean-Latin America |
| Venezuela No. 1 ... In Default Risk |
| 2009-12-24 |
| For all the press coverage about fiscal woes in Dubai and Greece, the country most likely to default on its debt is Hugo Chavez's Venezuela. The country leapfrogged to the top spot in Q4 2009, with a greater than 50% chance of going deadbeat on its $90 billion in sovereign bonds, according to CMA Datavision, a U.K.-based company that compiles comparative data about credit default swaps. Dubai ranks sixth, and Greece a lowly eighth. Ukraine, which still can't get a grip on its finances, is No. 2 on CMA's likely-to-default list. Argentina, with a $100 billion sovereign default in 2001 under its belt, is No. 3. Newcomers also rounded out the dubious top-10 distinction, like Romania, which ranks nine. But after amassing $600 billion to $800 billion in oil earnings in history's biggest oil boom, Venezuela's current woes stand out. It shows that socialism can spend money faster than even an oil boom can draw it in. Instead of using that oil money to diversify its economy, Venezuela devoted itself to rent seeking and expanding state power, according to El Universal. That's driven the country's industrial output down nearly 12% in 2009, with the highest inflation in Latin America. Oil cash proved to be anything but a blessing with Chavez at the helm -- and bloggers in Caracas say the problem is political. Now, with oil prices well off their 2008 peaks and Venezuela's output continuing to plunge due to incompetence at the state-owned oil company, the country's finances are a mess. Investors know Chavez expropriates private property and claims whenever it suits him. The idea that he would choose to rein in uncontrollable spending so he can make debt payments to foreign investors is a fantasy. |
| Posted by:Fred |
| #3 JohnQC, you don't understand. Obama will make socialism work! It's his Destiny! |
| Posted by: Deacon Blues 2009-12-24 18:39 |
| #2 How's that socialism working for you Hugo? Obama, let's hope you are paying attention too. |
| Posted by: JohnQC 2009-12-24 14:54 |
| #1 Given our spendthrift president and congress, I wonder where the US ranks as a default risk? |
| Posted by: DMFD 2009-12-24 10:19 |