Venezuela continues slide into chaos – 6

Shipwreck standing on the beach with the sea in the background. Margarita Island. Venezuela. Photo courtesy of DollarPhotoClub.com

Shipwreck standing on the beach with the sea in the background. Margarita Island. Venezuela. Photo courtesy of DollarPhotoClub.com

Things are bad and likely to get far worse for the people living in Venezuela. More reports of looting are appearing in news stories. Read between the lines on the comment from a mayor who says that dogs and cats are disappearing from the streets.

(Cross-post from my other blog, Outrun Change.)

5/14 – Zero Hedge – Scenes From the Venezuela Apocalypse: “Countless Wounded” After 5,000 Loot Supermarket Looking for Food – Opening photo shows over 100 soldiers (by my count) holding back a huge crowd on a street.

Article reports on several specific stores being looted with comments there have been many more in the last two weeks. There is so little food and when available it is expensive. More people are slipping into severe hunger. Widespread looting is the expected next step in the collapse of the country.

The mayor of Chacao in Caracas said the cats and dogs in the city are disappearing. Pigeons as well. That is traditionally a sign of famine.

5/13 – Reuters – U.S. concern grows over possible Venezuela meltdown – officialsOff-the-record briefing from US intelligence officials indicate worry there could be an economic and political meltdown. Opening paragraph refers to increasing number of street protests.

If my inferences from the article are reasonably correct, the three most likely scenarios are the Venezuelan president preventing the recall referendum which is scheduled for this year, or his party forces him out of power, or a military coup.

The officials say that the US has little leverage to influence the growing crisis.

The Venezuelan president declared a 60 day state of emergency. Article does not specify what that involves.

Article refers to multiple looting incidences having already taken place.

 5/35/13 – Wall Street Journal – US Sees Growing Risk of Coup in Venezuela – WSJ reporter was in the same meeting mentioned in the Reuters article above. Two unnamed sources, referred to as “senior US intelligence officials” see a serious risk of violence. Increasing possibility he will be removed either through a “palace coup” or a military coup. Dangers increasing of either an overthrow or rioting in the streets.

Article says the Venezuelan president did not specify what actions will be included in the “state of exception and economic emergency.” Article cites unnamed sources speculating this will lead to is cracking down on any dissent.

Article provides more background on financial pressures the government faces this year. There are $6.7B of bond payments due this year. A Bank of America analysis says this will only be able to funded by slashing consumption to the lowest level ever in order to divert currency to the bond payments.

Officials think oil production could drop to 2.0M barrels of oil per day (bopd) from the current level of 2.3M bopd.  One of the major compounding factors is that Halliburton and Schlumberger have cut back operations because they’re not getting paid. The service companies pulling back along with reduced amount of electricity for operations will make it harder for the nationalized oil company to keep pumping oil.

Additional compounding factor is the oil company has not been making any investments in capacity.

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