Chavez Runs Short of Cash for Takeovers as Oil Slumps

[WriteDown]

Source: Bloomberg

March 19 (Bloomberg) -- Venezuela is holding up payments to contractors, oil services companies and targets of President Hugo Chavez’s nationalization drive, indicating the country is running short of cash after petroleum prices collapsed.

Service providers to the state oil company are idling rigs for nonpayment, and Brazil’s Odebrecht SA said last week it’s slowing work on the Caracas metro because the government is past due on its bills. Chavez also owes $10.2 billion for companies he’s taken over, according to an estimate by Caracas-based economic consulting company Ecoanalitica.

“The economic environment isn’t particularly conducive for any good deals for companies awaiting payment,” said Alvise Marino, an emerging markets economist at IDEAglobal in New York. “If I was one of the companies involved, I wouldn’t keep my hopes up.”

The moves to conserve cash haven’t damped Chavez’s enthusiasm to expand state control of the economy as part of his “Bolivarian Revolution.” This month he seized a rice plant from Cargill Inc., the biggest U.S. agricultural company, a tree farm from Dublin-based Smurfit Kappa Group Plc, and threatened to expropriate the country’s biggest private company, Empresas Polar SA, and pay for it with “paper” instead of cash....

Read more: http://www.bloomberg.com/apps/news?pid=20601109&sid=aU.8nsUrsBbU&refer=home

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More good news. :sarcasm:

[dkf]

1. Any company that invests in Venezuela is crazy.

All they are is future Chavez assets.

[Renew Deal]

9. I agree

There is way too much risk and instability.

There will be a parade of people that will tell you that a chinese cell phone company invested in Venezuela, but it's BS spin. There is too much risk of government takeover, lost assets, and general instability in the country.

[EFerrari]

13. In contrast, the only ones getting stiffed here are us.

You're right, though. There is no place for locusts in Venezuela. They'd do better to go invest or more accurately, rape our clients, Peru or Bolivia.

[Winterblues]

2. This is a very interesting experiment going on in Venezuela

We will see in a decade or so how effective Socialism can actually be. We see what happens with unrestrained Capitalism. I suspect Venezuela is in far better financial shape than the USA currently is. I am fairly certain they do not have a ten trillion dollar debt. I can remember when America was not a Debtor Nation. I can also remember when Venezuela was very much in Debt and they managed to pay it off and start investing back into their country..I guess the proof will be in the pudding as to whether Chavez is a Devil or a Saint.

[Peace Patriot]

3. Total bullshit, Bloomlessberg trying to "jawbone" attack Venezuela's economy.

Venezuela has $42 billion in international cash reserves, due to its good management of the oil industry and Venezuela's economy in general. This gives them great flexibility in handling this Bushwhack Financial 9/11. Decisions the Chavez government make to delay payments are NOT related to lack of cash, but rather to judicious use of their money and other economic decisions.

You want an objective take on Venezuela's economy? Try Inca Kola News. Don't expect Bloomofftheroseberg to tell you the truth, any more than you would the Wall Street Urinal.

[WriteDown]

4. So both...

Odebrecht SA AND Ecoanalitica are lying? :eyes:

[Name removed]

7. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Renew Deal]

10. And how do you know that?

How do you know what they have in cash reserves? Got a link? Also, $42 Billion isn't that much money when you're talking about a nation of their size.

[EFerrari]

12. I remember 42 as well but CEPR says 82:

"The current situation and challenges:

Venezuela's most important immediate challenge is, as for most countries, the world economic recession. This affects Venezuela's economy mainly through oil prices, which have fallen about 70 percent from their July peak last year. At oil prices below $45 per barrel (for Venezuelan oil), Venezuela would begin to run a current account deficit. However, because Venezuela has an estimated $82 billion in reserves, it could finance a modest current account deficit for some time - e.g. even if oil prices were to remain at their current depressed levels for the next two years. But economists and the futures markets are not predicting oil prices to remain at current levels for that long: futures markets are pricing oil at above $60 per barrel in December 2010."

http://www.venezuelanalysis.com/analysis/4182

[Peace Patriot]

15. $42 billion "isn't that much money"? It's a helluva alot more than WE have!

We're friggin broke, insolvent, bankrupt. We're looking at a ten trillion dollar deficit over the next ten years, and counting--massive debt unto the 7th generation. Our government is having to mint money in a desperate effort to jumpstart a Bushwhack-murdered economy. Venezuela's economy is solid. They are in the black. They don't have any debt they don't want. And they could pay it all off tomorrow, but that's a stupid thing to do in current circumstances. What you do with international cash reserves like Venezuela has is leverage it, and set your own terms for use of the money.

Find your own link. I told you. Inca Kola News--excellent market and financial analysts. Go there and search the site for Venezuela. I do my homework. You apparently don't. So get a F. I'm not doing the work for you. You want to believe Bloomdeadberg, go right ahead. You want to believe lies and bullshit, of the kind that got us into this goddamn mess? That's your right. Stay ignorant.

[EFerrari]

5. You are being robbed blind by Wall Street WITH the collusion of your government

and ON television but your beef is with CHAVEZ?

[onehandle]

6. Who knew that totaliarism doesn't work without cash in a non-slavery environment?

I did.

Chavez should look toward China for direction.

Slavery = Profit.

[Renew Deal]

8. The all-mighty, all-knowing Chavez saw this coming.

:eyes:

[ohio2007]

11. and now he will have to weed out the collaborators and yankee spies

Hugo has been stiffing his lenders for months. This isn't news.
except that there is only ten more months left to "Rule by Decree"

Then I suspect he goes Mugabe on his plethora of enemies
:sarcasm:

[EFerrari]

14. China 'worried' about its American debt

SHANGHAI - China is "a little bit worried" about the safety of all the American debt it holds, Premier Wen Jiabao said Friday.

"We have lent a huge amount of money to the United States. Of course we are concerned about the security of our assets and, to be honest, I am a little bit worried," Wen said at a news conference ending the annual meeting of National People's Congress, the country's top advisory body.

Wen called on Washington "to honour its words and stay a credible country and ensure the safety of Chinese assets."

Analysts estimate China's foreign exchange reserve reached almost US$2-trillion at the end of 2008, with about half invested in American Treasury bonds and other notes.

http://www.financialpost.com/personal-finance/wealthy-boomer/story.html?id=1385945

[Mudoria]

16. Maybe he should nationalize someone who knows how to run a country

[Odin2005]

17. Populist demagogues are generally epic failures when it comes to economics.

This is nothing we haven't seen before.