Venezuela officially in default

Venezuela officially in default
Starving Venezuelans sort through trash (Image: YouTube screen grab via Associated Press)

[Ed. – This is big, although there are other things to say about it.  For one thing, it was foreseeable from miles away, so we can be confident there is some kind of plan being worked.  What we can’t be confident of is the nature of that plan, or who’s behind it.  Russia has been shoring Venezuela up with complex asset-forfeiture schemes, basically gaining control of the Venezuelan oil and gas industry.  The next thing could well be Venezuela giving Russia basing rights: the use of property and infrastructure for Russian national purposes, including Russia having a veto over who else accesses or uses them.  Or, indeed, the deciding vote on that, in a positive as opposed to a negative (veto) sense.  Trump’s sense of where tripwires are is much closer to America’s borders than mine is; Venezuela looks like a national security emergency for the U.S. to me, but I don’t detect that in the Trump administration’s posture.]

The South American country defaulted on its debt, according to a statement issued Monday night by S&P Global Ratings. The agency said the 30-day grace period had expired for a payment that was due in October. …

Since Venezuela doesn’t have the money to pay all its bondholders right now, investors would then be entitled to seize the country’s assets — primarily barrels of oil — outside its borders. …

Venezuela and its state-run oil company, PDVSA, owe more than $60 billion just to bondholders. In total, the country owes far more: $196 billion, according to a paper published by the Harvard Law Roundtable and authored by lawyers Mark Walker and Richard Cooper.

Beyond bond payments, Venezuela owes money to China, Russia, oil service providers, U.S. airlines and many other entities. The nation’s central bank only has $9.6 billion in reserves because it has slowly drained its bank account over the years to make payments.

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