This Is What Hyperinflationary Collapse Looks Like
There was some good news for citizens of Venezuela yesterday, when the government – having mostly given up on trying to provide its citizens’ with even the most basic food needs – announced it has opened its border with Colombia for the second time this month to allow people to buy food and medicine unavailable at home in their country’s collapsing economy. Colombia’s government said 44,000 people crossed on Saturday to buy food, medicine and cleaning products and said it expected that number to almost double on Sunday.
Bus terminals were packed and hotels filled to capacity in the border town of San Antonio, with many traveling hundreds of miles to shop.
The result of the scramble to obtain much needed staples is shown in the photos below.
Venezuelan citizens waiting to cross into Colombia to buy supplies
More than 100,000 Venezuelans crossed into Colombia over the weekend in
search for food and medicine.
Venezuelan women buy food staples at a local shop in Cucuta, Colombia
Tebie Gonzalez holds a wad of Bolivar bills as she exchanges what remains of
her and her husband’s savings.
Crowds of people flooded the bridge that links to the Colombian city of Cucuta
to cross the border on foot
Activists handed out anti-government pamphlets, looking to galvanize the
frustration that has characterized food riots
The border was heavily packed by Venezuelan troops, the crowds were mostly
orderly amin and atmosphere of tense excitement
According to Reuters, last week, over 35,000 people crossed over for the first time since the governor of Venezuela’s state of Tachira, opened the border. Socialist President Nicolas Maduro shut the border last year in an effort to crack down on smuggling of subsidised products.
Venezuela’s product shortages have since worsened, creating further incentives to buy goods in Colombia and bring them back. Venezuelans routinely spend hours in lines at home seeking items ranging from corn flour to cancer medication to car parts. Shoppers complain of violence in lines, and looting is on the rise.
* * *
That was the good news. The bad news for ordinary Venezuelans is that unless they can permanently move to Colombia or any other country, their plight is only going to get worse. The reason is that according to the IMF, Venezuela’s consumer-price inflation is forecast to hit 480% this year and top 1,642% in 2017, according to the International Monetary Fund. At that point it will proceed into suborbital hyperinflationary territory, hitting 2,880% in 2018 before “plateauing” at 3,500% in 2019.
While it has been speculated that the insolvent nation will soon have to ask the IMF for a bailout, Venezuela, whose government severed ties with the IMF nearly a decade ago under its former socialist autocratic leader, Hugo Chávez, hasn’t tried to restore relations with the world’s emergency lender. Cited by the WSJ, IMF spokesman Gerry Rice said that “there has been no change in Venezuela’s relationship with the fund. The Venezuelan authorities have not contacted us.”
China, seeking to take advantage of poor political relations that many African and Latin American nations have with the U.S. and Western-based institutions like the IMF, has been giving Venezuela and other commodity exporters cheap loans to help tide them through the commodity slump. Last year, the country supposedly secured $10 billion in cheap credit to help keep it afloat. The problem is that that loan was pledged by oil at much higher prices, which means that now Venezuela has to pump overtime just to meet its obligations to Beijing, as we explained previously.
While those loans may keep the state budget limping along, including massive costly subsidy programs, and strengthen political ties to Beijing, they don’t require the deep policy overhauls many economists say are vital to repairing the broken economy.
Meanwhile, Venezuela’s problem is simple: a lack of credible currency as the value of the Bolivar has imploded as a result of the policies of Maduro, leading to a collapse in the economy.
“A lack of hard currency has led to scarcity of intermediate goods and to widespread shortages of essential goods—including food—exacting a tragic toll.” –IMF Western Hemisphere chief, Alejandro Werner, “Latin America and the Caribbean in 2016: Adjusting to a Harsher Reality”
The bottom line is that even the IMF appears to have given up: “we have dire forecasts…predicated on very limited information that we have.” Gian Maria Milesi-Ferretti, Deputy Director, Research Department, IMF, at the October 2015 World Economic Outlook press conference.
So for those who are curious what modern-day, runaway hyperinflation looks like, here is the IMF’s forecast of Venezuela’s inflation over the next three years. We can’t help but chuckle that even in this dire case the IMF chooses to put a positive spin on events, and predicts that instead of exponential inflationary growth, somehow the country’s CPI will “taper” by 2019. Good luck.
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The Financial System Is Breaking Down At An Unimaginable Pace
Submitted by Simon Black via SovereignMan.com,
Now it’s $13 trillion.
That’s the total amount of government bonds in the world that have negative yields, according to calculations published last week by Bank of America Merrill Lynch.
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Chinese Military Vice Chairman Urges Troops to Get Ready For Combat: Xinhua
While it is unclear how much of it is populist bluster, how much is posturing, and how much an actual, objective caution, Bloomberg points out an article by China’s news agency Xingua posted on the website of the Ministry of National Defense, in which Fan Changlong, vice chairman of China’s Central Military Commission (which is chaired by Xi Jinping himself) “urges Chinese troops to get prepared for combat by improving planning, equipment and logistical support in order” to be ready to “win the war.”
Bloomberg adds that Fan made the comments in recent inspection tour of China’s Southern Theater Command. The warning comes days after China officially warned the US that its patrols in the South China Sea – which despite last week’s decision by the Hague tribunal – deems as its own, could end in “disaster.”
A quick bio of Fan Changlong:
Fan Changlong (born 1947) is a general in the People’s Liberation Army (PLA) of the People’s Republic of China. He is a Vice Chairman of the Central Military Commission, and formerly served as commander of the Jinan Military Region.
Fan was born in Dandong, Liaoning Province. He joined the PLA and the Communist Party of China in 1969. He became a major general in 1995, a lieutenant general in 2002, and general on July 15, 2008. Fan has been an alternate member of the 16th Central Committee of the Communist Party of China, and a full member of the 17th Central Committee. In 2012, ahead of the 18th Party Congress, he was appointed Vice Chairman of the Central Military Commission.
In mid-April 2016, he paid a visit to the disputed Spratly Islands in the South China Sea, according to the country’s Ministry of National Defense, which reported the visit on Friday 15 April 2016. Gen. Fan Changlong was said to have been the highest-ranking People’s Liberation Army officer ever to visit the Spratly Islands. General Fan led a delegation to the “relevant Nansha Islands to offer good wishes to officers and personnel stationed there, and also to understand the construction of facilities on the islands,” said a brief statement from the Ministry of National Defense. His tour appeared intended to show China’s determination to ward off any challenges to its claims over the islands, which are also the subject of claims by the Philippines, Malaysia, Vietnam, Brunei and Taiwan.
* * *
And here is the full article as it appeared on the Chinese Ministry of National Defense., google translated.
* * *
CPC Central Committee, Central Military Commission Vice-Chairman Fan Changlong emphasized recently in the southern theater forces research, to earnestly study and implement President Xi major strategic thinking and decision-making important instructions, adhere to the party’s absolute leadership over the army, firmly grasp the Party in the new situation strong military target under the full implementation of the political army reform and a strong army, in army stepping up preparations for military struggle, strengthen the combat of military training, and constantly improve deterrence and combat capability, and resolutely obey the Central military Commission and President Xi command, and resolutely safeguard national sovereignty, security and development interests.
Central Military Commission, commander of the Air Force Ma Xiaotian, CMC member and rocket forces commander Wei Feng and were about to participate in research.
Fan Changlong stressed the need to deeply understand the complexity of the grim situation facing the security, stepping up preparations for military struggle of the work to ensure that the order, be able to have to go win the war. Focus on the difficult situation to deal with complex, targeted research warfare countermeasures, revision and improvement plan program, deepen all aspects of preparation of personnel, equipment, security and so on. Depth specializing in refining and confrontational drills used in efforts to build a critical moment, to play a key role in the “dagger” forces, improve military and emergency response capabilities assault capability. Strengthen combat duty, well-organized air and sea patrol, firmly secure disposal of various contingencies, to ensure air safety side of the sea. We must resolutely implement the Party Central Committee and President Xi instructions requirements, support local flood prevention work to do, to protect people’s lives and property, to restore normal production and life order to contribute.
Fan Changlong pointed out that we should always put ideological and political construction in the first place the construction efforts in enhancing political awareness, the overall sense of core consciousness, awareness on par with efforts to lay a solid command of the Party’s ideological and political foundation. Should study and implement President Xi “July” important speech as a major political task, a thorough understanding of speech grasp the profound meaning and spirit, enhance crack army building, the actual ability to reform and preparations for military struggle puzzle. To continue thoroughly implement the spirit of the ancient Tianquan Jun political union, a strong push forward the reform of military education campaign and the “two learning to do a” study and education, a view to achieving real results.
Fan Changlong stressed the need to pay attention to changes in military research and external environment, the test of reform and adjustment of interests, arduous task forces and other factors soldiers thought to bring stability to focus on the grassroots level, unify ideological work fell to the grass roots, and create hold people’s hearts by undertaking internal environment, so that the officers and men have to realize the value of life and to get a sense of accomplishment. Strengthen military management, to maintain security and stability forces. Perseverance strengthen style building, completely eliminate Guo, Xu due to potential regulatory pernicious habits and promote overall improvement troops atmosphere, enhance the cohesion of combat troops to stimulate positive energy Army-strong army.
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Cleveland Police Police Denies Reports Of Shots On Transport Vehicle Near Republican National Convention
Update: Celveland Police has denied the original Reuters report that shorts were fired:
“We called all transport vehicles and they replied all clear – no shots fired. No injuries. That’s what I know at this time” — Cleveland PIO
— Ema O’Connor (@o_ema) July 19, 2016
What has already been a very tempestuous Republican National Convention for not only Donald Trump, but also his wife, has at least been mostly safe. However, a troubling development took place moments ago when Reuters reports that shots were fired at a Cleveland police transport vehicle near the site of the RNC. Luckily, there have been no injuries.
BREAKING: Shots fired at Cleveland police transport vehicle near site of Republican National Convention, no injuries: police #RNCinCLE
— Reuters Top News (@Reuters) July 19, 2016
Police: Shots fired at Cleveland police vehicle near site of Republican National ConventionTION, NO INJURIES-POLICE
— Eugen Tomiuc (@Etomiuc) July 19, 2016
No injuries after shots fired in Cleveland https://t.co/LoO172zI1v
— Scott Wong (@scottwongDC) July 19, 2016
More on this developing story as we see it.
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Which Countries Have The Most Immigrants?
Submitted by Dan Kopf via Priceonomics.com,
Immigration is now at the center of American and British politics.
One of the primary reasons the British voted to leave the European Union was anti-immigration sentiment. Donald Trump’s rise as a…
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Confidence In The Economy Slumps To Multi-Year Lows: Gallup
When we reported yesterday that “After Eight Years Of “Hope And Change”, Voters Are Angry” we pointed out one of the counterpoints presented by AP, according to which it is confusing why the US population would be angry when “the economy is growing, jobs are being created and unemployment is low.” We countered by observing that unemployment is low only because 94 million Americans are out of the labor force for reasons of their own choosing, while the jobs being created are mostly all in the minimum wage space, with an emphasis on waiters and bartenders.
Which leaves the economy, which to be sure, if only relies only on (double) seasosnally-adjusted government data and conflicted (seasonally-adjusted) manufacturing service sentiment surveys, is certainly in an upswing.
Yet one place which fails to corroborate the recovering economy are the monthly Gallup surveys, and especially the most recent one released earlier today, according to which Americans’ confidence in the economy remains weak, with Gallup’s U.S. Economic Confidence Index at -17 last week, consistent with levels seen since mid-June. This is in contrast to the stronger confidence levels seen for most of the first half of the year, when the index averaged -12. At -17, this reading is tied for the worst economic confidence reading recorded in the last few years, and suggests that Americans’ take on the economy is getting worse, not better.
Some further observations from Gallup, which is likewise confused by this disparity between the official narrative and what Americans themselves are reporting:
During the slow recovery from the worst recession since the Great Depression, Americans’ assessments of the economy became slightly more positive than negative from late December 2014 to mid-February 2015. However, those positive sentiments faded throughout the spring and summer of 2015. Confidence slowly inched up in late 2015 and early 2016 as gas prices plummeted nationally, but confidence dipped in mid-April and again in mid-June.
U.S. economic confidence in the second half of 2016 is off to a slow start, with each weekly index score so far in July below the first-quarter and second-quarter averages of -11 and -14, respectively.
Gallup’s U.S. Economic Confidence Index is the average of two components: how Americans rate current economic conditions and whether they feel the economy is improving or getting worse. The index has a theoretical maximum of +100 if all Americans were to say the economy is doing well and improving, and a theoretical minimum of -100 if all Americans were to say the economy is doing poorly and getting worse.
The current conditions score was -7 last week, similar to numbers since mid-April. This reflects 24% saying current economic conditions are excellent or good and 31% saying they are poor.
The economic outlook score averaged -27 last week, similar to figures since late June but slightly lower than scores before mid-June. This reflects 34% of Americans saying the economy is getting better and 61% saying it is getting worse.
The overall decline in Gallup’s U.S. Economic Confidence Index since early 2015 is almost entirely attributable to Americans’ worsening economic outlook. Perceptions of current conditions have been sturdier. Americans’ economic outlook has trailed their views of current conditions since March 2015.
As we noted above, Gallup is stumped:
The reasons for lower public confidence in the economy since mid-June compared with the beginning of the year are unclear. Economic confidence initially fell the week ending June 19, before the Brexit decision on June 23. Concerns about national security and its effect on the U.S. economy in the wake of international terrorism also do not appear to explain the dip. For instance, confidence remained level after the attack in Nice, France, last Thursday, averaging -18 for Monday through Thursday and -17 for Friday through Sunday.
Notably, several positive economic signs have not boosted confidence. National gas prices remain low; U.S. stock prices hit record highs last week; consumer spending is sturdy; and job creation, as reported by the U.S. Bureau of Labor Statistics, picked up in June after a disappointing May.
One possibility is that the U.S. presidential election is creating uncertainty about the future of the economy. Another possible explanation is that Americans need to see more evidence of GDP growth, wage growth and sustained improvement in the job market before their confidence in the economy will show signs of life.
Or, even simpler, reports of an economic recovery are vastly exagerated, if not outright “goalseeked”, while the only reason stock prices hit record highs is due to unprecedented central bank support, something which would otherwise only be present during times of extreme systemic stress, and the US public finally realizes that the higher risk assets rise on external support, the worse things really are.
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Strong Dollar Bad for Export Driven Agriculture Commodities (Video)
The Grains, and some of the Softs and Meats that have a substantial export market are getting hammered today and this week on the breakout in the US Dollar on European weakness.
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S&P Cuts Deutsche Bank Outlook To Negative On “Challenging Operating Conditions”
It has been a while since investors focused their attention on the world’s “most systematically risky” bank, Deutsche Bank. Moments ago, S&P made sure to remind us that nothing is fixed, when it released a report saying that “Operating Conditions M…
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Famous Melania Trump Quotes
Follow Zerohedge and other Finance memes on financialjuice.com
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Did Michelle Obama Also “Borrow” For Her 2008 Speech
Today’s political press has been captivated by the alleged plagiarism by Melania Trump, who is said to have stolen fragments of a speech delivered by Michelle Obama in 2008. The sections in question are the following:
Melania Trump (July 2016): “My parents impressed on me the values that you work hard for what you want in life; that your word is your bond and you do what you say and keep your promise; that you treat people with respect.
Michelle Obama (August 2008): “And Barack and I were raised with so many of the same values: that you work hard for what you want in life; that your word is your bond and you do what you say you’re going to do; that you treat people with dignity and respect, even if you don’t know them, and even if you don’t agree with them.
MT: “They taught me to show the values and morals in my daily life. That is the lesson that I continue to pass along to our son.
MO: “And Barack Obama and I set out to build lives guided by these values, and pass them on to the next generations.
MT: “And we need to pass those lessons on to the many generations to follow, because we want our children in this nation to know that the only limit to your achievements is the strength of your dreams and your willingness to work for them.”
MO: “Because we want our children, and all children in this nation, to know that the only limit to the height of your achievement is the reach of your dreams and your willingness to work for them.”
Or, seen otherwise:
However, in a curious development, the IOTWReport website finds some curious analogues between Michelle’s own 2008 speech, and a book written in 1992 by African author Rob Marsh titled, “Business success in South Africa.” Spot the similarities.
“And Barack and I were raised with so many of the same values: that you work hard for what you want in life; that your word is your bond and you do what you say you’re going to do; that you treat people with dignity and respect, even if you don’t know them, and even if you don’t agree with them.”
And Barack and I set out to build lives guided by these values, and pass them on to the next generation. Because we want our children — and all children in this nation — to know that the only limit to the height of your achievements is the reach of your dreams and your willingness to work for them.
1992 Book –
“…is based upon the application of certain basic truths: that integrity is all important, that your word is your bond, that if you owe a person money you pay him back, that you work hard, enjoy what you do and show a loyalty to those with whom you work and do business. He instilled in me simple, clear cut values and a will to succeed.”
We leave it up to readers to decide if the alleged plagiarist plagiarized from another alleged plagiarist, and what – if any – message this sends about the “authenticity” of US politicians.
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