Saturday, February 13, 2016

Wanting to keep the credit card

A Financial Times editorial well explains the most bizarre aspect of Venezuela's lurch towards national destitution --

Yet despite the complete failure of his policies, [President] Maduro has made it a priority to meet payments on sovereign debt, even at the cost of squeezing imports further. This is because a default would threaten the regime’s existence: it could allow creditors to seize oil cargoes and assets abroad, choking off the revenues on which the system of political patronage depends.

This from a government that bathes in the rhetoric of Hugo Chavez.

Elites hate debt default. Their modus operandi depends on liquidity. A milder version of the same phenomenon has been at work in the Eurozone. 

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