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I don’t have to tell you: Across the globe, civil unrest is on the rise. And here at the Edelson Institute we have been watching these situations closely as the war cycles continue to point to an acceleration of conflicts over the coming years.
And one situation that is getting far less press than it rightly deserves is the tragedy in Venezuela.
Not that long ago, Venezuela was the envy of the world, possessing the greatest oil reserves of any country. But now, Venezuela is in a complete and total meltdown … people are starving and rioting in the streets … the economy is in shambles.
What went wrong?
Venezuela’s current troubles began in 2014 when the price of oil plunged 50%. Instead of taking action to detach the country from its oil dependence, Venezuela’s socialist government continued to mismanage its budgets and remained overly dependent on its oil-related industries.
Just how much does Venezuela depend on oil?
Oil accounts for nearly 95 percent of Venezuela’s exports, and it makes up a quarter of the country’s overall economy. To make matters worse, Venezuelan crude production has fallen off a cliff, adding even more pain to the country’s economic problems.
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| Oil accounts for nearly 95 percent of Venezuela’s exports. |
Now get this: Despite having the world’s largest oil reserves, Venezuela is suffering from a gasoline shortage. Terrible!
Why? Because Venezuelan refineries are running well below max capacity due to operational problems caused by a lack of investments and poor maintenance. As output falls at its refineries, Venezuela needs to import more gasoline, squeezing the national budget even further.
Like most delusional government officials – who will do anything to remain in power – President Nicolás Maduro has not taken any responsibility for the state of his country. Instead, he chooses to place the blame on an “economic war” waged by overseas businesses, chiefly in the U.S.
To make matters worse – lacking adequate revenue flow – the Venezuelan government has been compelled to issue more money to pay its bills, causing not just inflation, but hyperinflation.
In fact, inflation is completely out of control, reaching 800% in December, making basic goods unaffordable.
You read that right: 800% inflation!
Now, Venezuelans are living day-by-day in total chaos, and the Venezuelan government has lost the confidence of the people.
President Maduro and his military-supported government have backed themselves into a corner, refusing to take any of the blame. So, it’s no surprise that anti-government marches have been spreading throughout the country or that clashes have intensified between protesters and the security forces.
Unfortunately, there appears to be no easy solution to Venezuela’s economic and humanitarian crisis.
And I don’t expect this type of civil unrest to remain isolated to just Venezuela or to the Middle East for that matter. Turkey, the Philippines, and North Korea all face potential domestic chaos. And with the war cycles ramping up, I expect to see more chaos and more countries facing domestic unrest.
When it comes to investing during these times of rising crisis, I recommend that you stay away from government debt and park your money in gold and invest in high-quality blue-chip companies.
Best wishes,
David Dutkewych
{ 11 comments }
And the people will probably demand more govt to fix what govt caused.As long as people cling to thinking govt is the answer to all problems,not much hope.Here in the U.S.,I doubt more than .50 in useful spending comes out of govt,for every Dollar they take in.
Gents,
All I want to know is what is going to happen when all of these debt ridden countries go belly up? Currency devaluations or another Breton Woods agreement? Ideas?
Please consider the one to one correlation between population increase and instability. As the world population goes up, world instability goes up.
ARE YOU AND I THE ONLY ONES WHO CAN SEE THAT THE INCREASED POPULATION AND MOVEMENT OF THAT POPULATION IS CAUSING MANY OF THE WORLD’S PROBLEMS?
correlation isn’t causation. the total lack of understanding of money/credit is the problem, along with weak human nature.
Population increase is a weak/lame amateur analysis to the cause of many of the world’s problems. Increasing population in the proper light solves many of the world’s problems. More ideas, more manpower, more specialization in important/necessary industry, etc. Please, let’s stop wrongly blaming population increase for bad behavior, bad gov’t, etc. Those proposing it should start eliminating themselves and their families from the equation!?! Doesn’t sound very likely, does it? This is only meant to stir thought, not to advise people what to do.
Population increase and a flawed economic system that relies upon it is the ONLY cause of the world’s instability. There are many nuances but underneath it all it comes down to the fact that mother earth only has so much it can give us and we are rapidly reaching that limit. Never forget that EVERY war in history starts over money. Religion and nationalistic values are only excuses. The problem is that these “values” have made it impossible to control population growth. Do not blame large government for your problems. It is no more to blame than small government for the problems of the poor. Both sizes of government are run by people. People who obviously aren’t very good at it. But who’s to blame? All those too many people that keep falling for their lies.
bad behavior is the cause of bad behavior.
You are totally correct on Venezuela; only their nightmare began when the people
elected Chavez into office……….it has continuously gone down since them, and it is
the Chaos that you mention……..what causes it CORRUPTION IN GOVERNMENT.
NATO should have power to step in and take over Countries Lead by a Corrupt Leader that will not step down……..That is the only solution for Venezuela, the same for Brazil…….
People (citizens of a Country) are not the problem, given a just and fair education system;
without an educated society, you cannot have a Democracy.
Here’s a thought for the population deniers. The earth is a finite structure and it’s resources are finite. So to keep promoting larger and larger populations is a self fulfilling prophecy that will end in disaster . Also all animal populations end in a die off when they outstrip their resources. And oh yes we are animals to … our classification is mammals.
It’s because we believe we are entitle to life. liberty and ‘Happiness”. Happiness suggests some effort on the part of those who fell a fancy car, a fine house, hi quality clothes
are what they need to be happy; and even more of lifes finer things to make them even happier. No effort on their part, should be a sign that they have a change of mind and will act to provide life and liberty for themselves. Those who have very trying limitations can expect a measure of happiness as some empathy should be in all of us.