Venezuela and its spiral of economic death


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This month, credit ratings agencies declared Venezuela in default on part of its massive foreign debt. That was bad news of course for the socialist regime. And some economists say it's helping send an already wrecked Venezuelan economy to life support.

Venezuela and its spiral of economic death

At the start of this month, you needed 41,000 Venezuelan bolívares to buy one U.S. dollar on the black market exchange – which experts call the only reliable gauge. But this week a dollar was suddenly worth twice as many bolívares.

Economists say that has to do with market panic caused by the news that Venezuela defaulted on some of its $150 billion foreign debt.

The currency collapse has helped push Venezuela’s annual inflation rate as high as 4,000 percent. Some economists suggest Venezuela’s economy is now in a “death spiral.”

“We always think it cannot get worse, and it continues to get worse," says Miami attorney Adriana Kostencki, who heads the Venezuelan-American Chamber of Commerce.

“One of the things we just heard was a Venezuelan who went to cash his monthly pension, and after he got his money, he went to buy an ice cream, and the price of the ice cream was the same amount he just had received as his monthly pension.”

Kostencki says that’s a reflection of how gigantic a task it has become for Venezuelans to buy basic foods, medicine and other goods.

“We’re at the very bottom." she said. "But I think we’re almost at the end of this nightmare for Venezuela.”

The Trump Administration calls Venezuela’s regime a dictatorship and has barred it from accessing any new debt in U.S. markets.

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