Venezuelan bonds surge as Chavez heads into surgery
Mr. Chavez, who has been running Venezuela into the ground for the past 13 years, still insists he will contest the next presidential election in October, which will feature a credible opposition candidate running on a platform borrowed from Brazil’s successful, market-boosting socialists.
The bond market’s early bet is that Mr. Chavez’s political prognosis is poor. Even if he prevails in the election, chances of serving out another term are considered remote. And it would be hard to find anyone outside his inner circle who thinks Venezuela wouldn’t be far healthier and considerably more market friendly without him at the helm. But give the former army officer and Castro acolyte his due. It’s quite a political feat to transform an oil-rich nation into an abject basket case, with high unemployment, rampant corruption, an overvalued currency, stunning inflation of about 30 per cent and a continuing flight of capital, despite exchange controls. Average economic growth during his time in his office: 2 per cent. The average for all OPEC producers during the latest period of stronger oil prices: nearly 7 per cent.
So the Globe and Mail is basically oozing vitriol against Chavez. But really it is kind of impressive what a terrible job he’s done despite having started out with such reasonable goals and huge natural-resource endowments.
Best-case scenario is that Venezuela gets a legitimate socialist government who realizes that poor people are better served by subsidies to basic essentials and access to safe and steady employment rather than by six-hour long television diatribes and threats to invade every country within marching distance? But not really all that optimistic that the military won’t just take over or something if Chavez dies or the election goes poorly for them.
