News and Commentary

Hey, Bernie, Who’s The ‘Banana Republic’ Now? Venezuela’s Inflation Rate Over 2600%.

Hey, Bernie, you see this?

Socialist heaven Venezuela, where the inflation rate reached a whopping 500% in July 2015, has seen its inflation rate skyrocket since July, reaching nearly 3500% on October 25, and still raging at 2662% as of November 10.

As Professor Steve Hanke of Johns Hopkins University noted, public sector external debts are massive:

On Friday, it was announced that Electricidad de Caracas, an electric company owned by the state, had defaulted on a $650 million bond payments. Russ Dallen, managing partner at Caracas Capital, stated, “This is the first official announcement of a default” in Venezuela. He added, “This was the canary in the coal mine to tell if the air is bad.”

As John Paul Rathbone wrote for Financial Times, “By Monday we will know if Venezuela has defaulted on its $65bn of outstanding bonds — or perhaps not … Whatever happens, Venezuela is approaching the beginning of its debt end-game. It is now a matter of days, not weeks, until default is confirmed.”

How much is Venezuela in debt? The country owes $16 billion to China, $3 billion to Russia, $1 billion to Brazil and $5 billion to multilateral lenders.

In August 2011, Sanders wrote:

These days, the American dream is more apt to be realized in South America, in places such as Ecuador, Venezuela and Argentina, where incomes are actually more equal today than they are in the land of Horatio Alger. Who’s the banana republic now?

Who, indeed.