I have been trying to write other posts, but the news are such that I have to set them aside and write more about very current events. One of my biggest complaints about the Maduro Government (and Chávez before him) is that while they carefully plan what they say to the Venezuelan “people”, they don’t apply the same analysis to what they tell (or not!) to foreign investors. Very simple messages, or simply informative messages would go a long way towards improving the outlook of Venezuela’s debt, mor so in the face of the recent drop in oil prices.
When I heard that José Vicente Rangel was going to have Maduro today in his program in Televen, I thought this would be an effort to do just that. Instead, the opposite was done. The interview did exactly the opposite. Clearly, the interview was going to be friendly, on tape (Maduro was not even in Venezuela today, so that this was not live) and a perfect chance to assure invetsors that he was in control. Instead, Maduro sent the wrong message (s). Start with gas prices:
He suggests that most people agree gas should be increased, but he says the time is not right, it would be like adding fuel to the fire and he has to wait until “speculative forces” in the economy subside. He also states that there is no rush, even with the fall in oil prices, there is no rush to to do it and he has the funds to do things and the price of gas could be increased in 2015 or 2016. He has to wait until inflation is controlled. #FAIL
Maduro also said that he would “modify” the Sicad 2 market, something that would help, but is only a small problem in the scheme of things. He did not say the Bs. 6.3 rate would be modified (he ratified it would remain), nor Sicad 1, only that Sicad 2 would be modified.
Maduro repeated in the interview his phrase from four months ago: “The money form China is not debt, it is financing” (El dinero de China no es endeudamiento, es financiamiento). Oh yeah, how I would love to get financing that is not debt for myself!
He also said that sometimes he feels he should just break relations with the US, as if relations were normal. The two countries do not have Ambassadors, but worse, does Maduro understand what this could imply? Maybe he should look to Nigeria, a country that used to export one million barrels a day to the US in 2010, but now sends not a single barrel to a country with which it has friendly and normal diplomatic relations.
Nor did this sentence, said earlier helped much:
“There is no possibility that Venezuela will declare a default, unless we decided not to keep paying the debt”
Oh, I see. It’s like me saying I promise to keep writing this blog, unless I decide to stop. I guess the only positive was that he did say that is what Chávez wanted, to keep paying debt. But the first part certainly was not very reassuring.
Just another day of Maduro sending the wrong messages to markets and investors, let’s hope that oil does not continue hurting bond prices, as it is, they have been slaughtered in the last week and Maduro seems intent on not helping.
The Devil's Excrement 
December 16, 2014 at 8:19 pm
Interesting piece:
http://www.forbes.com/sites/afontevecchia/2014/12/16/fire-in-the-hole-the-imminent-implosion-of-venezuelan-chavismo/
December 15, 2014 at 6:39 pm
Could it be that they are unleashing the beast (Maduro) and buying bonds at lower and lower prices, basically prepaying at a big discount?
Are they this clever? Or am I giving them too much credit?
December 15, 2014 at 7:50 pm
To buy bonds, you need money, I dont think they have the person to suggest it and even if they did since Maduro is in charge and making decisions it would take him months to decide. If somebody clever is named Minister of Finance, markets will be buyoed, but beware of someone that is clever, he or she could play the system so much better.
December 16, 2014 at 8:48 am
Of course is not the best strategy, its probably the worst!
But coming from the team that decided to destroy a country in order to stay in power forever, instead of building a great country in order to stay in power forever… what could you expect?
December 16, 2014 at 8:49 am
Besides, they just got around $2BN from discounting the Petrocaribe invoices…
December 15, 2014 at 6:34 pm
Cargill dumped $200M of Venezuelan bonds recently
December 15, 2014 at 7:46 pm
That’s a days worth of bonds aand the guy quit a while back.
December 15, 2014 at 6:32 pm
OT: heard of “Wilfrido Cardenas Hoffman” 30yrs old? He’s Venezuela and lives in El Hatillo, Caracas.
When the Newton massacre happened, Wilfredo was in his house in El Hatillo watching CNN. He got online using his iPad and googled the Newton area code. He then made about 100 phone calls using a phone app to random Newton telephone numbers claiming he was Adam Lanza and was going to kill them.
On June 21st, Wilfredo was travelling to Mexico via Miami. When he passed through MIA customs, he was promptly arrested. He must have had the surprise of his life.
In his first Miami court hearing, Wilfredo volunteered to go to Connecticut to face a charge of transmitting threats to injure a person.
After being examined at the Yale School of Medicine. Doctors have prescribed twice daily doses of anti-psychotics.
When Wilfredo is sentenced in February, he will be deported to Venezuela after an eight-month lockup.
How was Wilfredo Cardenas Hoffman identified? THE NSA.
There you have it, proof that the NSA is penetrating Venezuela data networks. In this case it was law enforcement work w/FBI. There was NO collaboration or informing Venezuelan authorities.
You will not read about this anywhere.
December 16, 2014 at 12:19 am
Sad story all around. But what is your evidence to say that it had anything to do with the NSA? Baseless accusations are not helpful.
December 16, 2014 at 11:04 pm
I think we’ll be waiting for a while to see evidence of the NSA, but that apart, isn’t Midge just stating the obvious? That’s what the NSA does, spies on foreigners and foreigners talking to Americans (from the EFF website, “Moreover, the media reports confirm that the government is collecting and analyzing the content of communications of foreigners talking to persons inside the United States, as well as collecting collecting much more, without a probable cause warrant”).
Seems they knew who he was for some time but kept the indictment sealed until they had him in transit at Miami. Clever. And if the Venezuelan authorities had collaborated, he would have been nabbed in El Hatillo.
December 18, 2014 at 11:59 pm
In my opinion, this is how it happened: the victims of the prank noted the phone number that was listed at the caller(these are routed through US switches to save costs). The police then looked up the owner of that phone number and saw that it was an app company that was based in the US. The police asked the app company to look up which of its users made that call(it was probably quite easy to find which user had made 50 calls to different numbers in Connecticut). Yes, it would have been quite easy for Mr. Cardenas Hoffman to cover his tracks. But he most likely did not make any effort to cover his tracks, since we already know he is an absolute idiot.
December 15, 2014 at 8:06 am
Muchas gracias por el artículo.
Yo pienso que todo esto es ruido. Este régimen no sale democráticamente. Tampoco cae por el desastre económico a donde ha llevado a Venezuela. Desde hace años tienen todos los poderes tomados.
Lamentablemente Venezuela se viene acabando desde antes de Chavez y Maduro.
Saludos,
Ana
December 14, 2014 at 11:19 pm
I wrote a article about the bond systems in VZ and shared it online, people live it. thanks, amigo!
December 15, 2014 at 2:49 pm
你的欢迎
December 15, 2014 at 4:09 pm
How is the bail-out meeting between VZ and China?
December 15, 2014 at 4:13 pm
They said something very polite like: “We are happy with your payments in the Chinese Fund, once you pay us, we could lend you more”
The Russians said: “We have no money”
December 14, 2014 at 9:08 pm
Perhaps Maduro’ s inability to offer different, credible economic policies, is due to the fact that he is not really in control. Nor does he have the legitimacy with the people, having inherited power rather than having won it.
Given that the track record of Chavismo regarding private investment has been horrendous, Maduro & Co may be tempted to do a rescheduling à la Argentina, in which case the “negotiated” debt write-off maybe substantially bigger than that which reflects the country’s ability to pay.
Let’s face it, would any foreign creditor trust any agreement signed with the same guys who tore every agreement they had with foreign companies and expropriated local ones?
December 14, 2014 at 9:35 pm
Q: Has any business in Venezuela been expropriated, or any contract with a foreign investor been violated intentionally, post Chavez?
December 15, 2014 at 2:37 pm
Does the continuous violation of contracts count? The Maduro regime inherited contract breaches and violations from Chavez, and as far as I know nothing changed. There are also ethical breaches, such as their tricks to have joint companies pay dividends. Many companies hide this fact to keep the image. But the real deal is really ugly. Most companies have trapped bolivars, get no dividends, aren’t paid what they’re owed, and/ or are just ripped off if they make noise. It’s the worst I’ve seen. And the funny thing is the bulk of the Orinoco heavy oil are fake. They don’t meet the legal requirements to be considered proved.
December 14, 2014 at 9:36 pm
Let me add “or property” to business above.
December 14, 2014 at 9:57 pm
Yes
December 14, 2014 at 8:31 pm
The biggest economic decision this moron ever had to make was making change for a 20-Bolivar note for someone’s bus fare.
December 14, 2014 at 8:33 pm
I dont even belive that he ever drove a bus either.
December 14, 2014 at 8:24 pm
Do you think this is a good buying opportunity for PDVSA bonds given the recent selloff?
December 14, 2014 at 8:32 pm
Those that are near 33% seem cheap compared to a reestructuring value for PDVSA.
December 14, 2014 at 8:21 pm
Itr seems that you are long in junks from Venezuela. It is going to be worst…
December 14, 2014 at 8:31 pm
Yes I am long, but below what I think is recovery value. I just think that it is stupid to go through the pain of default if you dont need to. A smart Minister of Finance could turn this around in a dime.
December 15, 2014 at 8:07 am
Speaking of how a competent Minister of Finance could, if allowed to, turn things around (I agree): Do you believe the rumor that some cabinet ministers have pushed for Maduro to appoint Francisco Rodriguez?
December 15, 2014 at 10:17 am
Might I suggest that it would be MORE likely that F-Rod quits his day job at the Bank of America and joins the ISIS fighters in Syria rather than agreeing to become the new Minister of Finance. One may occasionally disagree with him, but he’s NOT that nutty…..