Wednesday, September 24, 2014

Venezuela's Gold

It sounds almost medieval. People want a look at Venezuela's $15 billion in gold to provide assurance for investment. From B of A economist Francisco Rodriguez, who got to see it:

In a Sept. 23 note to clients, Rodriguez said the “rare” visit was “largely symbolic yet reassuring.” 
“It’s not that the majority of the people doubt that the gold is there,” he said over the telephone. “But it’s one of these things that linger, something that’s nagging you and makes you wonder: What if it’s not?”

This can easily be spun as conspiratorial. The crazed fascist right spreads rumors about whether there is in fact any gold. Yet Rodriguez is one of the people refuting Ricardo Huasmann's suggestion that Venezuela should default.

Oil prices are falling, economic reforms aren't happening, while perception of risk is increasing and so it's getting more expensive for Venezuela to borrow. Outside of the Venezuelan government, it seems harder and harder to find optimistic views of the economy (not even from the Center for Economic and Policy Research). The "glass half full" argument is just "with oil they won't default."


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