Venezuela’s downward economic spiral

Not everyone gets it, however. Unfortunately for Venezuelans, Mr. Putin’s lesson is lost on their own leaders, who are continuing to preside over an accelerating — and dangerous — economic collapse in one of the world’s biggest petroleum powers. The price of Venezuela’s heavy oil dropped below $70 a barrel last week, compared with an average of $98 in 2013. Balancing the government’s budget requires a price of $120 at the current exchange rate, according to the International Monetary Fund. However, rather than allowing its currency to decline like the ruble, the government of Nicolás Maduro has insisted on maintaining a fixed, multiple-tier exchange rate system that vastly undervalues the dollar. How much so? According to Francisco Rodriguez of the Bank of America, the dollar is now worth 1,700 percent more on the black market in Caracas than the price the government charges those lucky enough to obtain it legally. More…