Venezuela on the Brink of Complete Collapse as it Descends into Hyperinflation Hell

In the early 1990's, Venezuela was a beautiful country, with lovely beaches, modern cities, pretty girls, and a modern, European feel. That is all gone now, as most people struggle simply to survive and to find basics like toilet paper and medicine. The socialist leadership is determined to continue, even though it is destroying the country.

They call them bachaqueros. Venezuela’s army of black market shoppers descend every day at dawn outside Caracas’s biggest stores.

The men and women queue alongside hundreds of other Venezuelans for food, nappies, milk and other basic goods.

They stand for hours in the blistering heat, motivated not by hunger, but profit.

Half-empty shelves in most shops means goods bought at government-controlled prices can be sold at a significant mark-up.

Nicolás Maduro, Venezuela’s president, has described them as “human beings turned savage”.

But in a country where hyperinflation is quickly making the cash in people’s pockets worthless, it has become the only way to survive.

It wasn’t always this way. Diego Moya-Ocampos, senior political risk analyst at IHS, says the current crisis is the result of years of “economic mismanagement” by the ruling socialist party.

Led by Hugo Chávez, the country’s firebrand former president, the country embarked on a wave of expropriation and redistribution with the charismatic leader offering  cut-price fridges, appliances and even new homes to poor Venezuelans.

Chávez wanted to create a socialist paradise, an ideology that has been reinforced by his successor Maduro following his death in 2013.

“Even under Chavez and $100 a barrel oil, debt was rapidly rising and there were already food shortages,” he says, “This is ultimately to do with an interventionist model that is not sustainable and has reached a tipping point.”

Many Venezuelans have already left the country, including Francisco Flores. “Venezuela has taken good working companies, given them to the poor but not equipped them with the skills to run them so they go bankrupt,” he says.

“That’s just a recipe for destroying a country.”

Venezuela is now suffering from the effects of a deep recession and hyperinflation as the government prints money to try to plug a gap between revenues and spending that is on course to hit 25pc of gross domestic product (GDP) next year.

The International Monetary Fund has been banned from conducting its annual economic healthcheck of the country since 2004, but believes growth won’t get back to positive territory until the next decade, while inflation is on course to hit 4,505pc in 2021.

A recent study by the Council for Public Security and Criminal Justice ranked Caracas as the world’s most violent city.

Venezuela is also one of the most unfriendly places to do business, ranking 186th out of 189 countries in the World Bank’s Doing Business index.

Only Libya, Eritrea and South Sudan are further down the list. Bacalhau, 40, describes himself as one of the lucky ones.

The father of two is paid in dollars which can be exchanged on the black market for thousands of bolivars, protecting his family from rapid price rises.

Bacalhau, like many middle class Venezuelans, admits paying bachaqueros for goods. “There’s someone I contact on Whatsapp when I need to buy milk,” he says.

“I still go to the open market to buy fruit but even there it is ridiculous. In April 2015 I bought some fruit and vegetables for 430 bolivars. Last Saturday the same items cost me 14,000 bolivars. Isn’t that crazy?”

While the government regulates factory gate, wholesale and consumer prices, nobody pays attention.

“You know how much this cost me?” asks Bacalhau, waving a plastic bag stuffed with toilet rolls. “9,000 bolivars”. The average monthly salary in Venezuela is 15,000 bolivars.

Rich or poor, the situation is critical. “I recently met with a governor of one of Venezuela’s biggest states,” says one source, who asks to remain anonymous.

“He’s very popular and very well connected, but all of his staff needed three days to locate some medicine for his grandson. Three days.”

For Moya-Ocampos, the government can only ignore the will of the people for so long. “I go quite often to Caracas and what I feel is that people are starting to lose fear.

They are realising that regime change is a possibility.” For Bacalhau, who has a Portuguese passport, the end game is in sight. He is waiting until the end of the year to see if there will be regime change, or he’s ready to emigrate.

“The truth is my children don’t have a future in this country. It’s changed so much,” he says.

“Ten years ago I used to go to the beach with my father to camp overnight. Now it would be suicidal. I live in hope for change, but after living here all my life it’s got to the point that if I leave I’ll never come back.”

The current government of Venezuela controls the courts, the military, the electoral authority, the media, and many of the large businesses. They maintain control by dishonesty, manipulation, and finally, by force. That is the typical way with socialism, which begins with happy tales of equality and plenty for everyone. It ends with economies like North Korea and Cuba, and now with Venezuela, in spite of the gift they have of natural resources. The professors espousing the wonders of the failed economic system of socialism should spend some time in Venezuela. Perhaps they would see that the fruits of such a system are poverty, misery, shortages, and lawlessness. They would learn that Karl Marx was nothing more than a con man.




Leave a Reply

Pin It on Pinterest