Country With Biggest Oil Reserves Biggest Threat to World Economy

IEA just dubbed Venezuela, country with largest oil reserves, as the biggest risk to global markets.

 

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I really hope markets already took Venezuela's disaster into account since the production has been declining YoY for a while now. Unbelievable.

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50 minutes ago, Mauricio Machado said:

I really hope markets already took Venezuela's disaster into account since the production has been declining YoY for a while now. Unbelievable.

Yes, I'd be surprised if some of this wasn't already priced in

 

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Risk how? Production is falling steadily, nothing unpredictable there, should be factored in. Now if suddenly production starts climbing, that would swing prices but how likely is that?

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4 hours ago, Marina Schwarz said:

Risk how? Production is falling steadily, nothing unpredictable there, should be factored in. Now if suddenly production starts climbing, that would swing prices but how likely is that?

Well... Right now, the probability of that happening is about zero thousand zero hundred zero?

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2 hours ago, Mauricio Machado said:

Well... Right now, the probability of that happening is about zero thousand zero hundred zero?

that's possibly my new favorite number. Previously, my favorite number was eleventy-five.

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On 3/16/2018 at 2:59 PM, Mauricio Machado said:

Well... Right now, the probability of that happening is about zero thousand zero hundred zero?

Yeah, I figured it would be in that ball park somewhere. Though I'm sure there is someone thinking of ways to reverse the fall. There must be, right?

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The USA may need to "liberate" Venezuela from oppression.

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1 minute ago, Bobby Cullari said:

The USA may need to "liberate" Venezuela from oppression.

It will be China and/or Russia that will rush to "help" Venezuela with their crude oil problem when Venezuela gets more and more underwater with its debt to them.

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Yes, basically sanctions against Venezuela are how we get Russia and China further into the US backyard. 

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2 hours ago, Kate Turlington said:

Yes, basically sanctions against Venezuela are how we get Russia and China further into the US backyard. 

No, Venezuela is already sucking itself into a black hole. Trump is merely trying to strong arm Maduro into shaping up. Might be a lost cause...

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Alright so, this is going to be a little of a long post so I apologize.

 

On 3/19/2018 at 5:07 AM, Marina Schwarz said:

Yeah, I figured it would be in that ball park somewhere. Though I'm sure there is someone thinking of ways to reverse the fall. There must be, right?

@Marina Schwarz As far as people thinking how to reverse the fall, it is not really that difficult, it will cost some money for sure, but it's not a difficult way back. The reason why Venezuela is not going to change anytime soon has more to do with what people in power have to loose than the fact that the oil industry is destroyed from years of negligence and lack of maintenance. What do I mean by what they have to loose?

http://www.businessinsider.com/us-indicts-venezuela-officials-drug-trafficking-2016-8

Here you go. Our government is not only one of, if not the most, corrupt government in the planet, but a lot of high-ranking officials are linked directly to drug trafficking. There's simply no way for Venezuela to get out of the crisis while these people are in charge.

18 hours ago, Bobby Cullari said:

The USA may need to "liberate" Venezuela from oppression.

@Bobby Cullari Bobby, don't get me wrong, I had my hopes up while Rex was Secretary of State. Given that he is an oil man, I was kind of hoping that he pushed the "liberation" of Venezuela. You gotta understand, the crisis in Venezuela is such, that more people get killed everyday for food and medicines than Syria or any other war. So to me, anything that changes the situation, I'm up for it. Now that Tillerson is gone, is back to square one in my humble opinion.

18 hours ago, Rodent said:

It will be China and/or Russia that will rush to "help" Venezuela with their crude oil problem when Venezuela gets more and more underwater with its debt to them.

@Rodent As usual, right on point. Also, haven't you thought about the benefits of Venezuela's production issues to the OPEC? The other countries are probably very happy of what's happening, less supply, higher prices (maybe?) but definitely they will have more oil to sell to the world in place of Venezuela's.

17 hours ago, Kate Turlington said:

Yes, basically sanctions against Venezuela are how we get Russia and China further into the US backyard. 

@Kate Turlington If you only knew. We've had living in Venezuela anything from ETA (Spanish separatist group) to known terrorist, to the worst kind of drug dealers in the world. Chinese people have cornered the food market, heck, they own most of our ASSets anyway. 

15 hours ago, Missy said:

No, Venezuela is already sucking itself into a black hole. Trump is merely trying to strong arm Maduro into shaping up. Might be a lost cause...

@Missy With all due respect to the office of The President. I don't think there's any benefit to Trump in strong arming Maduro so I don't think this is coming from him, maybe some oil related people in government? Also, I honestly don't think there's any strong arming these people, all these sanctions and financial blocks really don't do much to Maduro an his people, the only thing these sanctions cause is extra burden to the people of Venezuela.

Look at it this way, $0.89 of every $1 in exports come from oil. Oil production's been declining YoY. We spend about $0.80 in imports and we produce near to zero for internal consumption. So basically everything we consume, from food, to... get this, gasoline! Comes from imports and we have no money to pay for it. What do we do? We borrow. But now, we can't borrow because banks are reluctant to loan to a criminal government (can't blame them). So, how do we buy food? Well we don't. How do we buy medicine? We don't. Now, don't get me wrong, is this U.S. fault? Absolutely not, as a matter of fact I believe sanctions are fair, and I actually appreciate them. However, my point is that the sanctions are not and will not strong arm Maduro's government, for one simple reason, survival. They all understand that either they stay in power, or they are going to jail for life or even maybe killed. So if you think about it, if your only other option was jail or death, how much would you fight?

Again, sorry for the long post and pardon my grammatical and spelling errors as English is not my first language!

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1 hour ago, Mauricio Machado said:

@Rodent As usual, right on point. Also, haven't you thought about the benefits of Venezuela's production issues to the OPEC? The other countries are probably very happy of what's happening, less supply, higher prices (maybe?) but definitely they will have more oil to sell to the world in place of Venezuela's.

I believe with all my heart and soul that OPEC is all to happy that Venezuela is under-producing. And yes, Venezuela has for sure contributed to higher prices, from which both US shale and other OPEC members are profiting. 

As for your reasons why strong-arming might not work, your arguments seem logical. I guess if I were similarly situated, I would fight to the death. What really does Maduro have to lose by fighting? Nothing more than what he would lose by giving in. 

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(edited)

There is just one reason for Venezuela's situation: resource nationalism. After a very short period of openness to foreign investment Mexico is in danger of going back down the same road. The country with the biggest production capacity remains the biggest threat to the world economy: Saudi Arabia. Only a lack of monetary reserves stops them repeating the oil price collapses of 1986 and 2014. 

Edited by Johnecon
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@Mauricio Machado, thanks very much for this detailed overview of the situation. Why is it that the people have not yet overthrown the government? Strong military on the government's side? I mean, Latin American people are not known for the sheeplike patience characteristic of other parts of the world. I would have thought a revolution was in order.

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5 hours ago, Marina Schwarz said:

@Mauricio Machado, thanks very much for this detailed overview of the situation. Why is it that the people have not yet overthrown the government? Strong military on the government's side? I mean, Latin American people are not known for the sheeplike patience characteristic of other parts of the world. I would have thought a revolution was in order.

@Marina Schwarz there a gazillion factors, way too many are very dark for me to know. However, in my humble opinion, it all comes down to leadership. Not long ago we had about 100 days of protest and it seemed that we were getting close to the light at the end of the tunnel. Then, the most bizarre thing happened. The opposition leadership asked everybody to stand down.

There are several reasons why this happened, like I said, this goes way beyond my citizen knowledge, we are talking drug dealers here, so you can imagine the kind of craziness that goes behind closed doors, but what I can tell you is that there's just way too much money and corruption involved in politics, to a point where politicians don't give asf about the people.

Now, granted, government is technically the only one with weapons and not I'm not talking only military, police, and every other law enforcement body. The government from the very beginning of Chavez, has been weaponizing what we call "popular zones" meaning they have been giving weapons to everyday thugs, we are talking military grade rifles, grenades even freaking RPGs...

So yeah, for a revolution to happen first thing we need, leaders willing to die for the country and then we would all have to be in agreement that it's either death or freedom, but, since mostly everybody is worried about how to get food and medicines, there's no time or energy to do anything else.

This is how communists control their people. It's important to note that Chavez and Maduro's mentor was Fidel Castro and that even today, we have several high ranking military officials who are not Venezuelans but Cubans trained to kill or suppress any kind of rebellion.

Like I said, I'm pretty sure there are a lot of other factors involved that maybe we will get to know one day... But then again, maybe not.

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Thank you, @Mauricio Machado, this has been very enlightening! I know about communism, I'm Romanian. 

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13 hours ago, Marina Schwarz said:

Thank you, @Mauricio Machado, this has been very enlightening! I know about communism, I'm Romanian. 

@Marina Schwarz Lovely! I have a very good Romanian friend myself, one of, if not THE smartest human being I've ever met in my entire life.

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On 3/16/2018 at 11:37 AM, Rodent said:

that's possibly my new favorite number. Previously, my favorite number was eleventy-five.

Oh yeah?  Well... previously my fave was the ratio of any circle's circumference to its diameter but I found that to be totally - like - irrational so then I, like, figured it should be more natural like 7 or some huge prime but now I dunno.  We'll see.

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On 3/20/2018 at 11:47 AM, Rodent said:

 

 

On 3/19/2018 at 6:38 PM, Missy said:

No, Venezuela is already sucking itself into a black hole. Trump is merely trying to strong arm Maduro into shaping up. Might be a lost cause...

Seriously, there is no existence-proof of a socialist bending toward reality due to outside market or economic forces; they just use that to further cement their position & justify themselves to the population.  They'll kill off their own people before ceding power -- and blame others.

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