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Can you be more specific? What bad policies? Was it the nationalization of the oil industry that has done them in?
Sure I can be more specific. The worst policies was not nationalization. I believe the worst policies was refusing to devaluate, ignoring crime and massive price controls.
Devaluation: Currently the black market exchange rate is 1000, while the official rate is 9.5. This didn't happen overnight, but was due to Maduro refusing to devaluate. Why didn't he devalue, because he wanted to resist the price increases of the capitalists. An exchange rate difference like this can only happen when you limit how many bolivars you can exchange into dollars. This has opened up for massive corruption, where companies have to befriend and bribe public officials to get dollars, which they need for imports. Great for inefficient monopolies, horrible for everyone else.
Crime: During Chavez and Maduro the homicide rate has five doubled, kidnappings has increased even more and Venezuela has become a drug capital. The homicide rate increased the most under Chavez, but kept increasing under Maduro. Venezuela extremely high crime rate, is very bad for businesses who has to either invest lots of money into armed guards, or just let their things get stolen.
Price Controls: Due to the factors above, combined with massive wage increases, inflation has gone into triple digits. Instead of trying to subsidize essential goods, or reduce costs for companies, Maduro decided to limit their price, and force them to keep producing goods. If you try to stop production then your company is likely to be confiscated, and you might go to jail. However, companies can't run into debt forever, and many companies stopped or slowed down production. The result of this has been massive shortages of nearly everything.
All of this was avoidable. Of course low oil prices made it worse, but it wasn't the main cause.
Venezuela’s economy relies heavily on oil exports. Oil accounts for 95% of exports and about 25% of gross domestic product.
“Indeed, each $10 decline in oil prices worsens Venezuela’s trade balance by 3.5% of GDP, a bigger effect by far than for any other country in the region," wrote an IMF official in the organization's blog, iMGdirect. "The loss in export revenue causes mounting fiscal problems and a sharper economic downturn.”
No one disagrees that Venezuela got impacted by low oil prices, but it is not the main reason. Saudia Arabia, Dubai, Kuwait, Iran, Russia are all dependent on oil production, but none of them lack toilet paper or food.
Also, the oil price is not that low anymore, its $50 with a very strong dollar. Most oil countries are now recovering from the crisis. But Venezuela has not improved, they have just gotten worse and worse, which shows that Venezuela has bigger problems than just low oil prices.
What country can survive or mitigate the effects of a situation similar to Venezuela?
Would you say that Greece, Italy, Spain and Portugal are kind of like Venezuela, and the only thing keeping them afloat is being a part of the EU?
No, absolutely not. Italy, Spain and Portugal have a high living standard. And all of the three countries live now within their means. They all produce more goods and services than they need. They are able to achieve current account surplusses. Their economies are very diverse, even the Portuguese one. The three countries will never face an uncertain supply situation. In no way comparable with Venezuela. And it has nothing to do with that they are part of the EU.
The situation was different in Greece. A bankruptcy of Greece could had result into an uncertain supply situation. But of course never as severe than in Venezuela. Now even Greece live within their means. Their living standard is today much lower than before the crisis. But their living standard is now in accordance with their economic capabilities. Greece still belongs to the wealthiest quarter of all countries around the world.
No one disagrees that Venezuela got impacted by low oil prices, but it is not the main reason. Saudia Arabia, Dubai, Kuwait, Iran, Russia are all dependent on oil production, but none of them lack toilet paper or food.
Also, the oil price is not that low anymore, its $50 with a very strong dollar. Most oil countries are now recovering from the crisis. But Venezuela has not improved, they have just gotten worse and worse, which shows that Venezuela has bigger problems than just low oil prices.
They are not all the same. Venezuela is probably the weakest in being able to defend itself in the event of a fiscal crisis. Their reserves only amount to 11-12 percent of GDP.
Yugoslavia has probably had the most dire situation even compared to Greece or Venezuela. Their unemployment rate rose to 50 percent and the inflation rate to 200 percent under the IMF-imposed shock therapy, the precursor of the austerity programs imposed on debtor countries today. Even today, the unemployment rate in Bosnia-Herzegovena is 40 to 50 percent.
Venezuela has a different problem than the PIIGS, but both sovereign currency related. The PIIGS are not monetarily sovereign, IMO their undoing.
Venezuela is monetarily sovereign, their undoing is IMO by going too far off the socialism scale. Oil is what let them do this, and now oil is in the tank. They had let their oil fund too much of their country and lives, and let their Gov't take over too much industry, letting it rot. Subsequently they have no productivity left as an end result. Without national productivity their currency crumps. So in effect they are no longer monetarily sovereign.
They are not all the same. Venezuela is probably the weakest in being able to defend itself in the event of a fiscal crisis. Their reserves only amount to 11-12 percent of GDP.
And if you go 3 years back, their reserves was twice as big, they had plenty of gold and debts levels were low. They were not weak, they made themselves weak.
In 2014 oil prices was $100, Venezuela was increasing their deficit massively, and borrowing money from abroad. They should have gotten a boom, which is the normal effect of overspending, but instead got a recession and shortages of toilet paper and more. If low oil prices was the reason, then why was Venezuela doing so terrible in 2014?
Don't try to excuse this socialist failure on external factors, their misery is mainly caused by bad policies.
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Yugoslavia has probably had the most dire situation even compared to Greece or Venezuela. Their unemployment rate rose to 50 percent and the inflation rate to 200 percent under the IMF-imposed shock therapy, the precursor of the austerity programs imposed on debtor countries today. Even today, the unemployment rate in Bosnia-Herzegovena is 40 to 50 percent.
Yugoslavia was another socialist failure.
You are getting confused by cause and effect. IMF shock treatment is something you need to deal with when you have run out of options, its an effect not a cause. The cause of their problems is nearly always terrible policies.
What country can survive or mitigate the effects of a situation similar to Venezuela?
Would you say that Greece, Italy, Spain and Portugal are kind of like Venezuela, and the only thing keeping them afloat is being a part of the EU?
From what I understand, Chavez comes in, nationalizes a few industries. The foreign investors get pissed off, and now they cannot do business internationally. Maduro just continued his policies.
Greece, Italy, Spain and Portugal are nothing like Venezuela. Those four are just incompetent and fiscally undisciplined. Chavez implemented actual socialism and ran the country according to socialist principles. He also packed the entirety of civil society with his lackeys to the point where there was no longer a way to balance the power of his party.
Again, Venezuela didn't fail because of low oil prices. Venezuela started to crash when the oil price was high, and there are many other countries who is also dependent oil.
They failed because of bad policies not external factors.
They also took out loans factoring in 200 dollar oil. It most definitely was their belief in their own commodity
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