The Irony of Stable Inflation

In February 2000, the FOMC quietly switched from the CPI to the PCE Deflator as its standard for inflation measurement. There were various technical reasons for doing so, including the CPI’s employment of a geometric mean basis (which was in 2015 finally altered to a Constant Elasticity of Substitution formula). But it was one phrase that in hindsight did the Fed no favors, as it explicitly cited the expected fruits of the PCE Deflator’s methodology which would ‘avoid some of the upward bias associated with the fixed-weight nature of the CPI.’
I am not a conspiracist by any means, but there are times when you have to shake your head as these economists lack even a modicum of self-awareness. The central bank has been given a legal mandate for price stability, so the average American might wonder why that central bank is allowed to choose the measure most inherently stable (and low). At the very least, it seems like a conflict of interest, one among so many.
In that regard, the last five years have been almost fitting. The PCE Deflator has, as expected, avoided the higher beta tendencies of the CPI and in both directions. For that, it has remained stable, alright, but stable below target no matter what the Fed does with its own balance sheet. I hope the irony is not lost on them, especially as it was oil prices that ‘achieved’ what they could not despite considerable expenditure on their part.

This post was published at Wall Street Examiner on May 1, 2017.

Germany Building Free Housing for Refugees worth 3 million

In Germany, Martin Schultz wants to give refugees the right to vote. So if he cannot win with Germans, he wants to give the right to vote to refugees to win by bribing them. The German politicians are now giving them apartments they are constructing that cost about 3 million each. The construction costs actually come out to about 1600 per square meter and since each apartment is about 470 square meters, the cost to build one apartment is more than 3 million. It is stunning that Merkel was so fearful of inflation that she would not yield to Greece and saw fit to impoverish the people to pay for the political corruption of their politicians. Yet building dwellings for refugees without language and job skills that cost 3 million each is some how not inflationary.

This post was published at Armstrong Economics on Apr 15, 2017.

How The Black Market Is Saving Two Countries From Their Governments

Ever since governments began banning and licensing different parts of the economy, the black market has made sure people still have access to the things they need. Unstable governments always turn on their own citizens by using price controls, heavy taxes, and even the threat of imprisonment to prop up their failing systems. As conditions inevitably deteriorate, as they have in Venezuela and Greece, the underground economy becomes invaluable to those living through the crisis.
The shadow economy refers to more than just the trade of illegal goods. A grey market, for example, provides legal products that have become difficult to find. Since basic things like toilet paper, medicine, and even food have disappeared from store shelves in Venezuela, the peer-to-peer network has become the only reliable way to secure life’s necessities. In desperate situations like this, the existence of independent merchants can mean the difference between life and death.
Even the value of Venezuela’s currency has started to move away from the government’s control. At one point, the official exchange rate was fraudulently set at 10 bolivars per U. S. dollar, while on the black market it was trading at 1,000 to one. This action hurt millions by suppressing wages across the country and eroding any remaining trust. Inflation has quickly become the most imminent threat to the Venezuelan people, stealing the value of their labor and savings. For years, the bolivar has experienced hyperinflation, increasing the cost of living almost exponentially.
The State’s desperate response was to institute price controls, but that has only led to shortages across the board. Luckily, the unregulated markets have been able to determine the true value of goods and provide vital support for the struggling communities. Many people think that so-called price gouging is unethical, but isn’t it better to buy what you need at twice the price than to not be able to get it at all?

This post was published at Zero Hedge on Mar 10, 2017.

Are Big Banks’ Dark Pools Behind the Run-Up in Bank Stock Prices?

The biggest banks on Wall Street, both foreign and domestic, have been repeatedly charged with rigging and colluding in markets from New York to London to Japan. Thus, it is natural to ask, have the big banks formed a cartel to rig the prices of their own stocks?
This time last year, Wall Street banks were in a slow, endless bleed. The Federal Reserve had raised interest rates for the first time since the 2008 financial crisis on December 16, 2015 with strong hints that more rate hikes would be coming in 2016. Bank stocks never do well in a rising interest rate environment because their dividend yield has to compete with rising yields on bonds. Money gravitates out of dividend paying stocks into bonds and/or into hard assets like real estate based on the view that it will appreciate from inflationary forces. This is classic market thinking 101.
Bizarrely, to explain the current run up in bank stock prices, market pundits are shoving their way onto business news shows to explain to the gullible public that bank stocks like rising interest rates because the banks will be able to charge more on loans. That rationale pales in comparison to the negative impact of outflows from stocks into bonds (if and when interest rates actually do materially rise) and the negative impact of banks taking higher reserves for loan losses because their already shaky loan clients can’t pay loans on time because of rising rates. That is also classic market thinking 101.
Big bank stocks also like calm and certainty – as does the stock market in general. At the risk of understatement, since Donald Trump took the Oath of Office on January 20, those qualities don’t readily come to mind in describing the state of the union.
Prior to the cravenly corrupt market rigging that led to the epic financial crash in 2008 (we’re talking about the rating agencies being paid by Wall Street to deliver triple-A ratings to junk mortgage securitizations and banks knowingly issuing mortgage pools in which they had inside knowledge that they would fail) the previous episode of that level of corruption occurred in the late 1920s and also led to an epic financial crash in 1929. The U. S. only avoided a Great Depression following 2008 because the Federal Reserve, on its own, secretly funneled $16 trillion in almost zero interest rate loans to Wall Street banks and their foreign cousins. (Because the Fed did this without the knowledge of Congress or the public, this was effectively another form of market rigging. Had the rest of us known this was happening, we also could have made easy bets on the direction of the stock market.)

This post was published at Wall Street On Parade By Pam Martens and Russ Marte.

Billions Wasted: Structures Built For 2016 Olympics In Brazil Are Now In Ruins

The 2016 Summer Olympics in Brazil cost Brazilian taxpayers $4.6 billion, conservative estimates show. But once related expenses covered by the Brazilian government are factored in, the overall costs hit the $12 billion mark, which equates to about 0.72 percent of Brazil’s national budget.
Prior to the Olympics, however, the Brazilian government had already spent BR$39.5 billion on infrastructure, or about $12 billion. Stadiums and urban projects designed to ensure the country was ready for the sports event were built, but aside from the events scheduled for 2014 and 2016, there seemed to be little to no demand for such public investments, which prompted the country to wonder whether the expenses were worth the trouble.
Now, as these same structures are left to rot, the documented decay becomes a symbol of government waste, not only because the investments weren’t meant to stand the test of time, but also because the Brazilian government’s lack of concern for the taxpayer is not the main story. It is, in fact, just a footnote.
Like many others, the government ignored the economic realities of the country, betting on inflation and cronyism in order to throw an unforgettable party.

This post was published at Zero Hedge on Feb 22, 2017.

Brazil Retail Sales Collapse as Inflation and Unemployment Whack Consumers

A very inconvenient connection.
Brazil is in the middle of a political and corruption crisis blooming on the verdant pastures of an economic and fiscal crisis that has now produced a second year of recession in a row, with the financial curse of the Olympics still hanging over the country for years to come.
Nearly 12 million people were counted as unemployed in December. The number of employed fell to 90.4 million, from 92.1 million a year earlier. The unemployment rate has steadily climbed to reach 12% in December, up from 6.5% in December two years earlier (via Trading Economics):

This post was published at Wolf Street by Wolf Richter ‘ Feb 14, 2017.

Expropriation and Impoverishment: “Capitalist” Greece and “Socialist” Venezuela

Neocolonial “capitalist paradise” or crony “socialist paradise”: the net result is the same: expropriation and impoverishment. Yesterday I noted that not all assets will make it through the inevitable financial re-set. ( Which Assets Are Most Likely to Survive the Inevitable “System Re-Set”?) Those that are easy to expropriate will be expropriated, and those assets vulnerable to soaring taxes, inflation and currency devaluation will also be hollowed out. There are two real-time examples of these dynamics we can profitably study: “capitalist” Greece and “socialist” Venezuela. Both nations have impoverished their citizenry to preserve an oligarchy and its cronies. I hope it won’t be too great a shock that crony-capitalism and crony-socialism function in much the same fashion and generate the same result: the wealth of the nation is funneled (or expropriated) into the ruling Elites, impoverishing the non-elites.

This post was published at Charles Hugh Smith on MONDAY, FEBRUARY 06, 2017.

Where’s the Outrage?

Blind to Crony Socialism
Whenever a failed CEO is fired with a cushy payoff, the outrage is swift and voluminous. The liberal press usually misrepresents this as a hypocritical ‘jobs for the boys’ program within the capitalist class. In reality, the payoffs are almost always contractual obligations, often for deferred compensation, that the companies vigorously try to avoid. Believe me. I’ve been on both sides of this kind of dispute (except, of course, for the ‘failed’ bit).
People are usually struck by the seeming injustice of CEOs running companies into the ground and then getting paid obscene amounts in the form of ‘golden parachute’ type good-bye presents. Often there is no other way to get rid of a bad CEO though – if his or her employment contract guarantees a large termination benefit, the company may have little choice in the matter. As a rule, private shareholders are bearing the cost of such transactions, and they are in this position voluntarily (after all, they could sell their shares or vote against generous CEO payment packages at shareholder meetings). We realize of course that in the age of crony socialism, one usually has to judge such things carefully on a case by case basis. Still, it is a far cry from the misuse of taxpayer funds, which are appropriated by coercion and offer those bearing the costs no opportunity to ‘opt out’.
So where’s the liberal outrage with a story like the pension swindle in El Monte, California? This is about a dying town, with a per capita income of $10,316 and a quarter of its population below the poverty line, that is paying a pension to one of its retired (at the age of 58) city managers of more than $250,000 per year. Adjusted for inflation. With medical for him and his wife. And survivorship benefits. And to which he contributed nothing.
Or another retired city manager who collects $216,000 per year, allowing him to ‘take some things off his bucket list’ such as golfing at the Old Course at St Andrews. And it looks like the public is paying for more than just green fees. His retirement came shortly after he was swept up in an anti-prostitution sting operation.

This post was published at Acting-Man on January 12, 2017.

PROTESTS IN MEXICO PUSH COUNTRY TO BRINK OF REVOLUTION AND NOBODY’S TALKING ABOUT IT

San Diego, CA – Long-simmering social tensions in Mexico are threatening to boil over as failing neoliberal reforms to the country’s formerly nationalized gas sector are compounded by open corruption, stagnant standards of living, and rampant inflation.
The U. S. media has remained mostly mute on the situation in Mexico, even as the unfolding civil unrest has closed the U. S.-Mexico border in San Diego, California, several times in the past week. Ongoing ‘gasolinazo’ protests in Mexico over a 20 percent rise is gas prices have led to over 400 arrests, 250 looted stores, and six deaths. Roads are being blockaded, borders closed, and government buildings are being sacked. Protests have remained relatively peaceful overall, except for several isolated violent acts, which activists have blamed on government infiltrators.
The few mainstream news reports that have covered the situation blame rising gas prices but fail to examine several other factors that are pushing Mexico to the brink of revolution.


This post was published at The Daily Sheeple on JANUARY 11, 2017.

Buy C-R-A-P

We live in a modern world of acronyms and buzzwords, and the financial industry is certainly no exception. In fact, it may be one of the worst culprits, what with FANG, ZIRP, TINA, BREXIT, QUITALY, BRIC, etc. all entering the lexicon over the last few years. Yet, creating some catchy collection of consonants remains one of the most surefire ways to attract attention in this business since it, admittedly, makes for a great headline and gives strategists like us something fun to write about (‘fun’ being a relative measure). Well, now the new eye-catching acronym to watch, according to Tom Lee of Fundstrat is C-R-A-P – Computers, Resources, American Banks, and Phone Carriers – which are all levered to the investment recovery, inflation, and deregulation expected over the next year. Before I comment further on those recommendations, though, I want to point out that I like to follow Tom Lee’s thoughts because, like us, he lets the data do most of his thinking, and, like us, he was one of the few pundits last year who actually saw potential for the US stock market. He backed that up, too, with one of the highest S&P 500 targets among strategists for 2016 (2325), but now, according to Bloomberg, he has the lowest price target for 2017 among the fifteen strategists they track (2275), further proof that he doesn’t just parrot consensus numbers.
Reading between the lines of his comments, Lee does not see a substantial upside for the stock market as a whole in 2017, at least not without a pullback first, but he does believe a potential exists among individual areas of the market. This line of thinking is consistent with our view that passive indexing may be more frustrating for this type of investing environment because you will be dragged down by the underperforming sectors and the increased volatility may make it more difficult to hold onto positions long enough to achieve the eventual performance. We generally agree, too, that the C-R-A-P stocks should do well in the political and economic landscape that many expect on the horizon. If inflation does pick up, driven by fiscal stimulus and more robust economic growth, Fundstrat argues that the contemporaneous increase in wages will not hit technology company margins as hard given their reliance on more high-skilled workers, and we, too, continue to advise an overweight of Tech to benefit from the Computers sub-sector. The big acronym of 2015 and 2016, the so-called FANG stocks, may already be coming back into favor, as well, with Facebook Inc. (FB/$123.41/Outperform), Amazon.com Inc. (AMZN/$795.99/Outperform), Netflix Inc. (NFLX/$131.07/Outperform), and Alphabet Inc. (GOOG/$806.15/Outperform) all breaking out to new reaction highs last week.

This post was published at FinancialSense on 01/10/2017.

We Can Only Afford One, So Choose Wisely: Social Security/Medicare, Cartel Cronyism or Inflation (a.k.a. Central Banking)

Here’s the problem with central banks seeking higher inflation: costs go up but wages don’t.
It’s easy to quantify the annual cost of Social Security/Medicare, and not so easy to calculate the cost of Cartel Cronyism and Central Bank-created inflation. Cartel cronyism is a hidden tax on the entire economy, as is Central Bank-created inflation.
That makes it easy for the financial-political Oligarchy to continue their skimming operations, because nobody says Cartel Cronyism cost us $1 trillion last year, and central bank skimming (inflation) cost us another $1 trillion. The stark reality is there are limits on what we as a nation can afford in the long term. Borrowing trillions of dollars annually at low rates of interest creates a magical-thinking illusion that we can just tack on another $10 trillion, or what the hay, make it $100 trillion, and get away with it, because we’ve gotten away with it so far.
This leaves us an equally stark choice: we can only afford one of these three crushing costs:
1. Limited Social Security/Medicare (no nation can afford unlimited anything, including healthcare)

This post was published at Charles Hugh Smith on THURSDAY, JANUARY 05, 2017.

The Obama Legacy: ‘Crippling Debt, Massive Unemployment, Welfare-based Society, Deteriorated Infrastructure, Massive Inflation, And A Worthless Fiat Currency’

Rapacity performed by an outgoing Democratic president is intentionally downplayed or simply ignored by the mainstream media. We saw such unbridled rapacity in the atavistic way the Clintons left the White House when they departed in 2000. They stole and/or vandalized furniture and furnishings of the White House and left it in a deplorable state. From a perspective of his official actions, Bill Clinton did things such as pardon Tommy Rich and closed a few loopholes to ensure his Clinton Foundation deals did not fall apart after he surrendered the Oval Office.
The Obamas are not following suit in the manner of the Clintons with pillaging the White House for three reasons. Firstly, although he committed dozens of offenses that would have merited it, Obama was not impeached, whereas Clinton was. For those who may hold askance with the conditions of impeachment for Obama, let us remember that under the parameters of the National Defense Authorization Act and the tenets of more than half a dozen overlapping executive orders, the United States (and the world) were ‘redefined’ as a ‘battlefield’ in the war on terror. The emergency status has never been lifted: that status was affirmed and inculcated under the Bush administration shortly after 9/11 that categorized us as being in a state of war (against terrorism) and a continuous state of emergency.
Under such ‘wartime’ conditions, the words of Obama in 2012 were clearly treasonous and constituted an impeachable offense.

This post was published at shtfplan on December 30th, 2016.

TO REALLY ‘MAKE AMERICA GREAT AGAIN,’ END THE FED!

Former Dallas Federal Reserve Bank President Richard Fisher recently gave a speech identifying the Federal Reserve’s easy money/low interest rate policies as a source of the public anger that propelled Donald Trump into the White House. Mr. Fisher is certainly correct that the Fed’s policies have ‘skewered’ the middle class. However, the problem is not specific Fed policies, but the very system of fiat currency managed by a secretive central bank.
Federal Reserve-generated increases in money supply cause economic inequality. This is because, when the Fed acts to increase the money supply, well-to-do investors and other crony capitalists are the first recipients of the new money. These economic elites enjoy an increase in purchasing power before the Fed’s inflationary policies lead to mass price increases. This gives them a boost in their standard of living.
By the time the increased money supply trickles down to middle- and working-class Americans, the economy is already beset by inflation. So most average Americans see their standard of living decline as a result of Fed-engendered money supply increases.

This post was published at The Daily Sheeple on DECEMBER 2, 2016.

Here’s what happened when ancient Romans tried to drain the swamp

In late January of the year 98 AD, after decades of turmoil, instability, inflation, and war, Romans welcomed a prominent solider named Trajan as their new Emperor.
Prior to Trajan, Romans had suffered immeasurably, from the madness of Nero to the ruthless autocracy of Domitian, to the chaos of 68-69 AD when, in the span of twelve months, Rome saw four separate emperors.
Trajan was welcome relief and was generally considered by his contemporaries to be among the finest emperors in Roman history.
Trajan’s successors included Hadrian and Marcus Aurelius, both of whom were also were also reputed as highly effective rulers.
But that was pretty much the end of Rome’s good luck.
The Roman Empire’s enlightened rulers may have been able to make some positive changes and delay the inevitable, but they could not prevent it.
Rome still had far too many systemic problems.
The cost of administering such a vast empire was simply too great. There were so many different layers of governments – imperial, provincial, local – and the upkeep was debilitating.
Rome had also installed costly infrastructure and created expensive social welfare programs like the alimenta, which provided free grain to the poor.
Not to mention, endless wars had taken their toll on public finances.
Romans were no longer fighting conventional enemies like Carthage, and its famed General Hannibal bringing elephants across the Alps.
Instead, Rome’s greatest threat had become the Germanic barbarian tribes, peoples viewed as violent and uncivilized who would stop at nothing to destroy Roman way of life.
Corruption and destructive bureaucracy were increasingly rampant.
And the worse imperial finances became, the more the government tried to ‘fix’ everything by passing debilitating regulation and debasing the currency.

This post was published at Sovereign Man on November 25, 2016.

Perilous government finances

President-elect Trump stated in his victory speech that he intends to make America great again by infrastructure spending.
Unfortunately, he is unlikely to have the room for manoeuvre to achieve this ambition as well as his intended tax cuts, because the Government’s finances are already in a perilous state.
It is also becoming increasingly likely that the next fiscal year will be characterised by growing price inflation and belated increases in interest rates, against a background of rising raw material prices. That being the case, public finances are not only already fragile, but they are likely to become more so from now on, without any extra spending on infrastructure or fiscal stimulus. So far, most informed commentaries on the prospects for inflation have concentrated on the negative effects of an expansionary monetary policy on the private sector. With the pending appointment of a new President with ideas of his own, this article turns our attention to the effects on government finances.
Government outlays are already set to increase, due to price inflation, more than the GDP deflator would suggest. The deflator is always a dumbed-down estimate of price inflation. At the same time, tax receipts will tend to lag behind any uplift from price inflation. Furthermore, the wealth-transfer effect of monetary inflation over a prolonged period reduces the ability of the non-financial private sector to pay the taxes necessary to compensate for the lower purchasing power of an inflating currency.
Trump is a businessman. Such people often think that running a country’s economy is merely a scaled-up business project. Not so. Countries can be regarded as not-for-profit organisations, and democratic ones are driven by the consensus of diverse vested interests. The only sustainable approach is to stand back and give individuals the freedom to run their own affairs, and to discretely discourage the business of lobbying. President Calvin Coolidge expressed this best: ‘Perhaps one of the most important accomplishments of my administration has been minding my own business’.

This post was published at GoldMoney on NOVEMBER 10, 2016.

Doug Noland: The Upshot of Inflationism

This election cycle has been a national disgrace. It finally comes to an end Tuesday, when a deeply divided nation heads to the polls. I recall having a tinge of hope eight years ago that there was a commitment to more inter-party cooperation and less partisan vitriol. There’s not even lip service this time around. As an optimist, I would like to believe that a period of healing commences Wednesday. The analyst inside knows things will continue to worsen before they get better.
Our nation and the world are paying a very heavy price for a failed experiment in Inflationism. At this point, economic stagnation, wealth redistribution and inequality, financial insecurity and corruption are rather obvious consequences. ‘Money’ and Credit have inflated, right along with government, securities markets, financial institutions, corporate influence and greed.
Along the way, there have been many subtle effects. To this day the majority still cling to the view that central bankers are essential to the solution – rather than the problem. But they are at the very root of disturbing national and international, economic, financial, societal and geopolitical degeneration.
For close to 30 years now, central bank policies have nurtured serial inflationary booms and busts. It’s a backdrop that has repeatedly forced investors, homebuyers and others into serious harm’s way. Buy or you’ll be left behind. Get aboard before it’s too late. It’s a system that systematically targets the unsophisticated and less affluent to take on a tenuous debt position to buy homes, cars and things in the name of promoting economic growth. It’s a system that devalues the wealth of savers. Somehow it’s regressed to a system with a policy objective to coerce savers and the risk averse, to ensure their buying power instead inflates the value of risky securities market assets

This post was published at Credit Bubble Bulletin

Former Treasury Secretary Summers Calls For End Of Fed Independence

At an event in Davos, Switzerland earlier today, Former U. S. Treasury Secretary, Larry Summers, argued that Central Bank independence from national governments should be scrapped in favor of a coordinated effort between politicians, central bankers and treasury to engineer inflation. Seems reasonable, right?…what could possibly go wrong?
According to Market Watch, Summers argued that Central Bank independence came from “an understanding of the macroeconomic policy problem that is not relevant to current times.” Ironically, he argued that Central Bank “insulation” was required in the 70s/80s when the “White House” and “Congress” could not be trusted to fight inflation.
So does this indicate that Summers’ baseline assumption is that politicians today are more trustworthy than in the 70s/80s? Perhaps Summers is the one that is “insulated” from reality? Is it possible that he’s completely missed the fact that one of our presidential candidates is currently under multiple investigations by the FBI for various allegations of corruption and fraud? Meanwhile, both presidential candidates are polling at among the lowest rates ever experienced for “trustworthiness” while the job approval rating of Congress has never been lower…but sure, we should grant them even more power to wreak havoc on the U. S. economy for political gain…why not?
Central bank independence ‘comes from an understanding of the macroeconomic policy problem that is not relevant to current times,’ Summers said in a speech at the International Monetary Fund.

This post was published at Zero Hedge on Nov 4, 2016.

Here’s What’s Booming: $6.6 Billion Plowed into 2016 Election

Who are the top 10 donor families? ‘Familiar names…’ For the most cynical among us, democracy in the US is just a codified peaceful way of swapping out the figureheads at the top. For the less cynical, there is a lot more at stake, and they’re willing to plow huge amounts of money into these elections so that this money will help them accomplish their goals afterwards.
Putting money to work in politics is easy in the US. It’s considered a legitimate investment with some sort of return. You have to be really careless, totally uninformed, and completely devoid of common sense to commit illegal acts of corruption because there are a million ways to do this legally. And the amounts changing hands are enormous.
Nearly $6.6 billion: that’s how much candidates, parties, and outside groups are raising and spending in trying to move things their way in the 2016 election cycle, the Center for Responsive Politics estimates on its website, OpenSecrets.org. It’s a new record. It’s up by $86.5 million, adjusted for inflation, from the 2012 presidential cycle, which had also been a record.

This post was published at Wolf Street on October 30, 2016.

What We’ll Get: the Best Politicians $6.6 Billion Can Buy

Money Boom: Record Amounts Plowed into 2016 Election
For the most cynical among us, democracy in the US is just a codified peaceful way of swapping out the figureheads at the top. For the less cynical, there is a lot more at stake, and they’re willing to plow huge amounts of money into these elections so that this money will help them accomplish their goals afterwards.
Putting money to work in politics is easy in the US. It’s considered a legitimate investment with some sort of return. You have to be really careless, totally uninformed, and completely devoid of common sense to commit illegal acts of corruption because there are a million ways to do this legally. And the amounts changing hands are enormous.
Nearly $6.6 billion: that’s how much candidates, parties, and outside groups are raising and spending in trying to move things their way in the 2016 election cycle, the Center for Responsive Politics estimates on its website, OpenSecrets.org. It’s a new record. It’s up by $86.5 million, adjusted for inflation, from the 2012 presidential cycle, which had also been a record.
Alas, it’s not over, and the Federal Elections Commission (FEC) hasn’t reported all the data yet, and some money doesn’t get reported at all. We’ll get to that in a moment. Hence the report: ‘The cost could be much higher – this is a conservative estimate.’

This post was published at Wolf Street by Wolf Richter ‘ October 30, 2016.

Could Venezuela Become The Next Syria?

Speaking of poor policymaking, hyperinflation and violence – Venezuela is sliding closer and closer to the brink of collapse, with some sobering consequences.
This was among the topics of conversation this week at the Mining & Investment Latin America Summit in Lima, Peru. While there, I had dinner with a couple of Canadian lawyers who represented a few Latin American oil producers, some of them based in Venezuela.
Things have gone from bad to worse, they informed me. Since 2013, when Nicols Maduro took power after the death of Hugo Chvez, the socialist country has struggled with skyrocketing inflation, food and medicine shortages, a shrinking economy and rising violence and corruption. (Its capital city of Caracas recently overtook San Pedro Sula, Honduras, for having the world’s highest homicide rate.)
These have only intensified since oil prices fell by half more than two years ago, as oil accounts for 95 percent of Venezuela’s export earnings.

This post was published at Zero Hedge by Frank Holmes, originally posted ValueWalk.com Oct 30, 2016.