Here is a link to MIT Prof. Roberto Rigobon´s talk which was made earlier this year but all is still relevant. Covers the history on how Venezuela, one of the richest countries in Latin America & the world went into one of the worst economic / humanitarian crisis the world has seen.
He goes on to explain the current situation in Venezuela and how we got to have two presidents and two congress at the same time. It really is painful to assimilate how we got to this crazy place.
This is a very pragmatic talk, putting a clear picture on the current distortions in the Venezuelan economy and provides perspective on what should / could happen in the future.
Some interesting points from the talk
- Venezuelan poverty levels went from 3% in 1965 to 45% in 2012. This was the last time the metric was measured and it was before the oil price collapse
- Populists like to offer destructive agendas; they never say what they are going to build
- Transition in Government is not achieved by only the removal of the president. Only way forward is to form coalition with organizations that we are not proud of
- Only way to get a change is to have leadership from China & Russia. The U.S. is not the key
- It’s difficult to negotiate with someone who doesn’t care (on Maduro)
- Economic collapse is massive: 50% drop in GDP in 3 yrs, only happens after war
- Bizarre situation where the way out of the economic crisis is through inflation (wage)
- Immediate need is basic necessities: Food, Water, Electricity & Medicine
- Way forward on the economic side: Shock strategy on the supply side (incentivize imports / production) while slowly moving the bar on the demand side (prices)
- No privatization strategy should be followed in a transition, would be very unpopular
The complexity of the situation in Venezuela makes it difficult to see the light at the end of the tunnel. In the short-medium term, I still think the crisis will get worse for Venezuela and its people. Long term, I am optimistic that there is the unique opportunity of rebuilding an entire country´s infrastructure from scratch. Time will tell.
“Venezuela is condemned to success”
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