This is the end game of Chavismo. For about a decade, some sectors of the left hoped that Hugo Chavez represented an alternative to the neoliberal consensus on economic policy. (snip) Chavez was in fact direly mismanaging the economy, diverting investment funds that were needed to maintain oil output into social spending.As Margaret Thatcher famously said, "The problem with socialism is that you eventually run out of other peoples' money." In the case of Chavez, the "other people" whose money he misappropriated was the government oil company.
The problem was that the money he was using was, essentially, the nation's seed corn. Venezuelan crude oil is relatively expensive to extract and refine and required a high level of investment just to keep production level.
In the beginning, printing money may have looked like the best of a lot of bad options. By the time it became clear that the country was not fudging its way out of a temporary hole, but making a bad situation worse, it was committed to a course that is extremely painful to reverse.
Today's low price for crude doesn't help. Venezuela faces a double threat: the lower price per barrel and fewer barrels produced. Weimar on the Orinoco, anybody?
