Friday, June 19, 2020

Thoughts #21: Venezuela

I have followed Venezuela's cautionary tale with sadness. It is a reminder to me how GFC could have crippled the world. What we see in Venezuela today is what could have happened with we screw up our financial system. Here's a quote from FT:

Nearly 5m Venezuelans have left since 2015 — about 15 per cent of the population — and another million are expected to depart this year. That could make the crisis the world’s biggest refugee emergency, surpassing Syria. Unlike other humanitarian crises, it is a disaster caused not by war or natural disaster but by misrule on a grand scale.

With GDP collapsing more than 60% and hyperinflation rendering its currency worthless, it is a broken country now with no recovery in sight. It is another reminder how commodities (Venezuela has oil and soft commodities and benefitted from the boom 2007-2012) can be the biggest curse.

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