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==Effects== ==Effects==
Effects included a refugee crisis, with many fleeing in boats, massive inflation, electicity blackouts, and a dramatic increase in crime, particularly homicide.<ref>{{cite web|url=http://www.latimes.com/world/mexico-americas/la-fg-venezuela-violence-20160605-snap-story.html|title=The biggest worry in crisis-ridden Venezuela: crime|first=Patrick J.|last=McDonnell|publisher=}}</ref><ref>{{cite web|url=http://time.com/4341450/venezuela-state-of-emergency-murder-caracas/|title=Venezuela's Murder Epidemic Rages on Amid State of Emergency|publisher=}}</ref><ref>{{cite web|url=http://www.cnn.com/2016/04/26/americas/venezuela-blackouts/index.html|title=Venezuela blackouts: 'We can't go on'|first=Osmary Hernandez and Rafael Romo|last=CNN|publisher=}}</ref> From 1 November to 28 November 2016, the black-market value of a ] rose from 1467 to 3480 Bolivars.<ref>{{cite web|url=http://money.cnn.com/2016/11/29/investing/venezuela-worthless-currency/index.html|title=Venezuela's currency is in 'free fall'|first=Patrick|last=Gillespie|date=29 November 2016|publisher=}}</ref> Hence, the 100 Bolivar note, the largest note in circulation at the time, saw its value fall to roughly 3 U.S. cents. Even in 2015, people were carrying backpacks full of cash to pay for purchases,<ref>{{cite web|url=http://time.com/4135247/venezuela-hyperinflation-congressional-elections/|title=Why Venezuelans Are Carrying Backpacks of Cash on the Streets|first=Ioan|last=Grillo/Caracas|publisher=}}</ref> and the problem became worse in 2016, with people often visiting multiple ATMs in order to get cash.<ref>{{cite web|url=https://www.bloomberg.com/news/articles/2016-12-02/in-cash-short-venezuela-the-atm-hustle-is-driving-people-mad|title=Want Groceries in Venezuela? First Stop at Six ATMs|publisher=|via=www.bloomberg.com}}</ref> Hungry crowds stormed supermarkets and attacked food trucks. Some residents crossed into ], legally or otherwise, in order to purchase food.<ref>{{cite web|url=http://www.miaminewtimes.com/news/on-the-venezuelan-colombian-border-the-tide-has-turned-8785497|title=On the Venezuelan-Colombian Border, the Tide Has Turned|first=Elizabeth|last=Dickinson|date=21 September 2016|publisher=}}</ref><ref>{{cite web|url=http://www.bbc.com/news/world-latin-america-36818030|title=Venezuela reopens Colombian border to allow shoppers to cross|date=18 July 2016|publisher=|via=www.bbc.com}}</ref> Some wealthy residents shopped online for food, which arrived from ], while others were able to purchase food at upscale stores in ], with prices tied to the value of the U.S. Dollar.<ref>{{cite web|url=https://www.washingtonpost.com/world/the_americas/venezuelans-are-storming-supermarkets-and-attacking-trucks-as-food-supplies-dwindle/2016/06/28/70020a14-37c8-11e6-af02-1df55f0c77ff_story.html|title=Venezuelans are storming supermarkets and attacking trucks as food supplies dwindle|publisher=}}</ref><ref>{{cite web|url=http://www.telesurtv.net/english/news/Rich-Eating-Well-in-Venezuela-Basque-Executive-Shows-20160530-0001.html|title=Rich Eating Well in Venezuela, Basque Executive Shows|first=teleSUR /|last=rt-egb|publisher=}}</ref> Effects included a refugee crisis, with many fleeing in boats, massive inflation, electicity blackouts, and a dramatic increase in crime, particularly homicide.<ref>{{cite web|url=http://www.latimes.com/world/mexico-americas/la-fg-venezuela-violence-20160605-snap-story.html|title=The biggest worry in crisis-ridden Venezuela: crime|first=Patrick J.|last=McDonnell|publisher=}}</ref><ref>{{cite web|url=http://time.com/4341450/venezuela-state-of-emergency-murder-caracas/|title=Venezuela's Murder Epidemic Rages on Amid State of Emergency|publisher=}}</ref><ref>{{cite web|url=http://www.cnn.com/2016/04/26/americas/venezuela-blackouts/index.html|title=Venezuela blackouts: 'We can't go on'|first=Osmary Hernandez and Rafael Romo|last=CNN|publisher=}}</ref> From 1 November to 28 November 2016, the black-market value of a ] rose from 1467 to 3480 Bolivars.<ref>{{cite web|url=http://money.cnn.com/2016/11/29/investing/venezuela-worthless-currency/index.html|title=Venezuela's currency is in 'free fall'|first=Patrick|last=Gillespie|date=29 November 2016|publisher=}}</ref> Hence, the 100 Bolivar note, the largest note in circulation at the time, saw its value fall to roughly 3 U.S. cents. Even in 2015, people were carrying backpacks full of cash to pay for purchases,<ref>{{cite web|url=http://time.com/4135247/venezuela-hyperinflation-congressional-elections/|title=Why Venezuelans Are Carrying Backpacks of Cash on the Streets|first=Ioan|last=Grillo/Caracas|publisher=}}</ref> and the problem became worse in 2016, with people often visiting multiple ATMs in order to get cash.<ref>{{cite web|url=https://www.bloomberg.com/news/articles/2016-12-02/in-cash-short-venezuela-the-atm-hustle-is-driving-people-mad|title=Want Groceries in Venezuela? First Stop at Six ATMs|publisher=|via=www.bloomberg.com}}</ref> Hungry crowds stormed supermarkets and attacked food trucks. Some residents crossed into ], legally or otherwise, in order to purchase food.<ref>{{cite web|url=http://www.miaminewtimes.com/news/on-the-venezuelan-colombian-border-the-tide-has-turned-8785497|title=On the Venezuelan-Colombian Border, the Tide Has Turned|first=Elizabeth|last=Dickinson|date=21 September 2016|publisher=}}</ref><ref>{{cite web|url=http://www.bbc.com/news/world-latin-america-36818030|title=Venezuela reopens Colombian border to allow shoppers to cross|date=18 July 2016|publisher=|via=www.bbc.com}}</ref> Some wealthy residents shopped online for food, which arrived from ], while others were able to purchase food at upscale stores in ], with prices tied to the value of the U.S. Dollar.<ref>{{cite web|url=https://www.washingtonpost.com/world/the_americas/venezuelans-are-storming-supermarkets-and-attacking-trucks-as-food-supplies-dwindle/2016/06/28/70020a14-37c8-11e6-af02-1df55f0c77ff_story.html|title=Venezuelans are storming supermarkets and attacking trucks as food supplies dwindle|publisher=}}</ref><ref>{{cite web|url=http://www.telesurtv.net/english/news/Rich-Eating-Well-in-Venezuela-Basque-Executive-Shows-20160530-0001.html|title=Rich Eating Well in Venezuela, Basque Executive Shows|first=teleSUR /|last=rt-egb|publisher=}}</ref>


A few professions remained profitable. ] were able to earn large sums of money due to the subsidised price of ], but they feared for their safety.<ref>{{cite web|url=https://www.cryptocoinsnews.com/bitcoin-miners-make-big-profits-but-fear-for-safety-in-venezuela/|title=Bitcoin Miners Make Big Profits but Fear for Safety in Venezuela - CryptoCoinsNews|date=30 November 2016|publisher=}}</ref><ref>{{cite web|url=http://reason.com/archives/2016/11/28/the-secret-dangerous-world-of|title=The Secret, Dangerous World of Venezuelan Bitcoin Mining|date=28 November 2016|publisher=}}</ref> Many poor people found work in ], but ] was also prevalent.<ref>{{cite web|url=http://www.nytimes.com/2016/08/15/world/venezuela-malaria-mines.html|title=Hard Times in Venezuela Breed Malaria as Desperate Flock to Mines|date=15 August 2016|publisher=|via=The New York Times}}</ref> People close to the regime earned money through ], though some ended up in U.S. prisons.<ref>{{cite web|url=http://www.businessinsider.com/us-indicts-venezuela-officials-drug-trafficking-2016-8|title=The US government is zeroing in on a suspected 'global hub of drug trafficking'|publisher=}}</ref><ref>{{cite web|url=http://www.wsj.com/articles/venezuelas-maduro-promotes-general-indicted-by-u-s-on-drug-trafficking-charges-1470197967|title=Venezuela’s Maduro Promotes General Indicted by U.S. on Drug-Trafficking Charges|first=José De|last=Córdoba|date=3 August 2016|publisher=|via=Wall Street Journal}}</ref><ref>{{cite web|url=http://www.wsj.com/articles/venezuelan-president-nicolas-maduros-nephews-found-guilty-on-drug-charges-1479510289|title=Venezuelan President’s Nephews Found Guilty on Drug Charges|first=Nicole|last=Hong|date=19 November 2016|publisher=|via=Wall Street Journal}}</ref> Others found work in the Venezuelan ], allowing them to earn money, but also risking prison.<ref>{{cite web|url=http://www.theatlantic.com/international/archive/2016/05/venezuela-is-falling-apart/481755/|title=Venezuela Is Falling Apart|first=Moisés Naím and Francisco|last=Toro|publisher=}}</ref> A few professions remained profitable. ] were able to earn large sums of money due to the subsidised price of ], but they feared for their safety.<ref>{{cite web|url=https://www.cryptocoinsnews.com/bitcoin-miners-make-big-profits-but-fear-for-safety-in-venezuela/|title=Bitcoin Miners Make Big Profits but Fear for Safety in Venezuela - CryptoCoinsNews|date=30 November 2016|publisher=}}</ref><ref>{{cite web|url=http://reason.com/archives/2016/11/28/the-secret-dangerous-world-of|title=The Secret, Dangerous World of Venezuelan Bitcoin Mining|date=28 November 2016|publisher=}}</ref> Many poor people found work in ], but ] was also prevalent.<ref>{{cite web|url=http://www.nytimes.com/2016/08/15/world/venezuela-malaria-mines.html|title=Hard Times in Venezuela Breed Malaria as Desperate Flock to Mines|date=15 August 2016|publisher=|via=The New York Times}}</ref> People close to the regime earned money through ], though some ended up in U.S. prisons.<ref>{{cite web|url=http://www.businessinsider.com/us-indicts-venezuela-officials-drug-trafficking-2016-8|title=The US government is zeroing in on a suspected 'global hub of drug trafficking'|publisher=}}</ref><ref>{{cite web|url=http://www.wsj.com/articles/venezuelas-maduro-promotes-general-indicted-by-u-s-on-drug-trafficking-charges-1470197967|title=Venezuela’s Maduro Promotes General Indicted by U.S. on Drug-Trafficking Charges|first=José De|last=Córdoba|date=3 August 2016|publisher=|via=Wall Street Journal}}</ref><ref>{{cite web|url=http://www.wsj.com/articles/venezuelan-president-nicolas-maduros-nephews-found-guilty-on-drug-charges-1479510289|title=Venezuelan President’s Nephews Found Guilty on Drug Charges|first=Nicole|last=Hong|date=19 November 2016|publisher=|via=Wall Street Journal}}</ref> Others found work in the Venezuelan ], allowing them to earn money, but also risking prison.<ref>{{cite web|url=http://www.theatlantic.com/international/archive/2016/05/venezuela-is-falling-apart/481755/|title=Venezuela Is Falling Apart|first=Moisés Naím and Francisco|last=Toro|publisher=}}</ref>

Revision as of 17:25, 11 December 2016

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During 2016, the economy of Venezuela entered a state that news outlets variously described as "collapse", "chaos", or "starvation". The collapse was caused by a combination of the fall in oil prices, the socialist economic policies of Hugo Chavez and Nicolás Maduro, economic mismanagement, and price controls.

Effects

Effects included a refugee crisis, with many fleeing in boats, massive inflation, electicity blackouts, and a dramatic increase in crime, particularly homicide. From 1 November to 28 November 2016, the black-market value of a United States Dollar rose from 1467 to 3480 Bolivars. Hence, the 100 Bolivar note, the largest note in circulation at the time, saw its value fall to roughly 3 U.S. cents. Even in 2015, people were carrying backpacks full of cash to pay for purchases, and the problem became worse in 2016, with people often visiting multiple ATMs in order to get cash. Hungry crowds stormed supermarkets and attacked food trucks. Some residents crossed into Colombia, legally or otherwise, in order to purchase food. Some wealthy residents shopped online for food, which arrived from Miami, while others were able to purchase food at upscale stores in Caracas, with prices tied to the value of the U.S. Dollar.

A few professions remained profitable. Bitcoin miners were able to earn large sums of money due to the subsidised price of electricity, but they feared for their safety. Many poor people found work in gold mines, but Malaria was also prevalent. People close to the regime earned money through drug trafficking, though some ended up in U.S. prisons. Others found work in the Venezuelan black market, allowing them to earn money, but also risking prison.

Causes

The socialist Chavez-Maduro regime believed that the source of all of Venezuela's problems was the partnership between the U.S. and Venezuela's business elite. To combat this, the government enacted regulations controlling every aspect of business life in great detail and itself taking control. Businesses were either outright taken over, or were regulated so thoroughly that they effectively lost their independence. For example, it became illegal to fire a worker who threatened violence against their manager. The only significant export business that survived was oil, which represented 96% of Venezuelan exports as of 2011. While oil prices were high, the oil exports were enough to pay for necessary imports, but after the drop in oil prices, this was no longer true. Making matters worse, Venezuelan crude oil is of poor quality and trades at a discount to standard blends. For example, in January 2016, when oil prices were around $30 a barrel, some Venezuelan blends were as low as $15, which was less than the cost of production. The country could no longer afford to pay its oil workers sufficiently, and some even sold their uniforms to buy food. This in turn caused oil production to decline. From 3.28 million barrels a day in 1998, it fell to 2.4 million barrels in 2015, and to 2.15 million by June 2016.

Furthermore, many farms were taken over by the Government. By 2015, domestic food production had fallen sharply. Hence, when oil prices fell, Venezuela neither produced domestically nor could afford to import sufficient food.

See also

References

  1. "Hungry Venezuelans Flee in Boats to Escape Economic Collapse". The New York Times. 25 November 2016.
  2. "Venezuelans face collapsing economy, starvation and crime".
  3. Stolk, Raúl (25 May 2016). "Venezuela Has Become a Starvation State".
  4. "My Venezuela Nightmare: A 30-Day Hunt for Food in a Starving Land" – via www.bloomberg.com.
  5. Bremmer, Ian. "These 5 Facts Explain Why Venezuela Could Be on the Brink of Collapse".
  6. Reporter, Nick Robins-Early World News; Post, The Huffington (2 June 2016). "What's Behind The Economic Chaos In Venezuela".
  7. "Venezuela Reaches the End of the Road to Serfdom".
  8. McDonnell, Patrick J. "The biggest worry in crisis-ridden Venezuela: crime".
  9. "Venezuela's Murder Epidemic Rages on Amid State of Emergency".
  10. CNN, Osmary Hernandez and Rafael Romo. "Venezuela blackouts: 'We can't go on'". {{cite web}}: |last= has generic name (help)
  11. Gillespie, Patrick (29 November 2016). "Venezuela's currency is in 'free fall'".
  12. Grillo/Caracas, Ioan. "Why Venezuelans Are Carrying Backpacks of Cash on the Streets".
  13. "Want Groceries in Venezuela? First Stop at Six ATMs" – via www.bloomberg.com.
  14. Dickinson, Elizabeth (21 September 2016). "On the Venezuelan-Colombian Border, the Tide Has Turned".
  15. "Venezuela reopens Colombian border to allow shoppers to cross". 18 July 2016 – via www.bbc.com.
  16. "Venezuelans are storming supermarkets and attacking trucks as food supplies dwindle".
  17. rt-egb, teleSUR /. "Rich Eating Well in Venezuela, Basque Executive Shows".
  18. "Bitcoin Miners Make Big Profits but Fear for Safety in Venezuela - CryptoCoinsNews". 30 November 2016.
  19. "The Secret, Dangerous World of Venezuelan Bitcoin Mining". 28 November 2016.
  20. "Hard Times in Venezuela Breed Malaria as Desperate Flock to Mines". 15 August 2016 – via The New York Times.
  21. "The US government is zeroing in on a suspected 'global hub of drug trafficking'".
  22. Córdoba, José De (3 August 2016). "Venezuela's Maduro Promotes General Indicted by U.S. on Drug-Trafficking Charges" – via Wall Street Journal.
  23. Hong, Nicole (19 November 2016). "Venezuelan President's Nephews Found Guilty on Drug Charges" – via Wall Street Journal.
  24. Toro, Moisés Naím and Francisco. "Venezuela Is Falling Apart".
  25. http://abcnews.go.com/ABC_Univision/News/ways-chavez-destroyed-venezuelan-economy/story?id=18239956
  26. http://www.vox.com/2016/5/26/11774482/venezuela-socialist-collapse
  27. https://www.washingtonpost.com/news/worldviews/wp/2016/08/02/how-the-crash-in-oil-prices-devastated-angola-and-venezuela/?utm_term=.81c0b015dc22
  28. http://money.cnn.com/2016/07/12/investing/venezuela-crisis-oil-production-plunges/
  29. http://www.reuters.com/article/oil-latam-prices-idUSL2N14Z2ZF
  30. http://www.reuters.com/article/oil-latam-prices-idUSL2N14Z2ZF
  31. http://www.indexmundi.com/energy/?country=ve&product=oil&graph=production
  32. http://fortune.com/2016/10/05/venezuela-oil-pdvsa-food-shortage/
  33. http://www.npr.org/templates/story/story.php?storyId=106620230
  34. http://www.bbc.com/news/world-latin-america-35642365
  35. https://www.bloomberg.com/news/articles/2016-09-01/venezuelan-credit-dashboard-attention-shifts-to-final-quarter
  36. http://www.cnbc.com/2015/10/13/food-inflation-its-getting-hard-for-venezuela-to-feed-itself.html
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