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Comment by roymurdock | Hacker News Reader

The second "conspiracy theory" explanation presented in the article seems the simplest and most plausible:

Close associates of the administration are major holders of the country’s bonds and...the government fears it’d lose their much-needed support if the payments stopped coming in. Efforts to obtain comment from government press officials on this and other aspects of the story were unsuccessful.

Either that, or debt-holding institutions are willing to kick back a fraction of coupon payments to high ranking officials as an incentive to keep the payments flowing for as long as possible before a civil war or coup forces a restructuring.

Either way, servicing the debt is keeping government officials paid to the detriment of their starving countrymen.

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Venezuela is one of those classic south American countries politically. It either has a government that is extremely socialist or extremely oligarchic.

Venezuela has traditionally been governed by people tied closely to the media empires in the country. Extremely powerful and rich people that use the counter as their plaything. The poor suffer and the upper class prosper. The gap between rich and poor grows.

At some point the balance tips and you get a coup d'etat. They promise the poor that they will take care of them and fuck the rich. Slowly the country turns into a dictatorship.

The US doesn't like socialist governance in their back yard, so they look for ways to turn the screws on that country to flip it back to the rich capitalist trickle down economics ideology.

In the old days they would just send the CIA down there and have a few people assassinated, or provoke unrest and supply weapons to right wing paramilitaries.

Today it is easier to starve then out financially and since both Russia and Venezuela both truly rely on raw material resource exports, especially oil and gas, persuading OPEC to crush the price of oil has been damaging to both of the US's enemies.

In Venezuela's case, it still had huge oil reserves and cash, so the US is just playing the waiting game.

I find both typical political models in south American politics bad, but the US foreign policy doesn't help matters either way.

You're right on many points, but I feel like Venezuela is more of just an innocent (or maybe not-so-innocent) bystander in the current energy tug of war going on right now between the U.S. and Russia / OPEC. The increased tapping on U.S. natural gas reserves hasn't helped any of the smaller nations that rely on energy exports, so I don't think the U.S. is intentionally trying to destabilize Venezuela like it would have in the 70's and 80's- it's just a side effect of the current global energy industry.

To be fair, the guy quoted in the article, who is urging Venezuela to default, probably has a huge bet placed that Venezuela will default.

During the 1990s when Nigerian brady bonds (restructured 80s-era emerging markets loans) were trading at prices in the 30s on the dollar, this was routinely cited by the sales and trading operation of the dominant brady-trading investment bank that I worked for, as a reason why they weren't defaulting... because chunks of them were held by Nigerian authority figures.

Just as a first-order guess of your second half, what you describe sounds highly illegal.

The first part makes more sense - and it's not a conspiracy theory - they want to keep access to bond markets.

Illegal, probably, but Venezuela is widely acknowledged as a pretty corrupt country.

There's illegal, and then there's "illegal". You'd think with what we see in the news today you wouldn't have as many people saying public officials can't do something because it's illegal.

The problem is that law and rules may constrain officials in unexpected ways, leading to "illegal" but maybe not so bad. Officials may have "the root password" so to speak.

In this case, I think it probably would be bad, but its a haul to say that this applies here. "Maintaining access to bond markets" requires less lifting so I'd start looking there.

The current email server controversy highlights this - an appointed cabinet official may actually be subject to slightly different rules than other people. Of course this is perceived as unfair, but it might just be inherent in the system design - I don't actually know. There is emerging in security and safety culture a Fundamentalist "no exceptions" mentality. But formal systems have holes - we know this.

I tend to like the pride argument more. To default is to lose face in the international world and at home. Better to sacrifice to uphold one's promises.

A false pretense when there is little respect outside of those receiving payments beyond their borders. Perhaps they think they would be admitting defeat and that would cause the coup to occur overnight?

Interesting that you would think Maduro and his Government have any honor. How could they possibly have any face left in the International world?

Communist/Socialist Governments typically use such financial vehicles among many others to systematically remove and transfer some/most of their countries wealth into their own/friends coffers through various arrangements with financial institutions et al all the time.

Just another day and another dollar. Pride/Honor have nothing to do with any decisions when it comes to stealing billions. The human cost isn't even part of the equation.

Cultural/Male honor is huge in LatAm

It's pretty silly to assume "male honor" would be the deciding factor in a country's politics.

Why? More than two millenia of that sort of thing preceeds the previous five decades of post-nuclear-age politics, no?

Because once you're corrupt, there is no honor.

I don't think you're using honor the same way OP is. In LatAm, honor is often used as synonymous of pride or in this case misplaced pride.

Whoa, haven't thought of that. Pride and honor are very distant in my spectrum of understanding. One is internal integrity, and the other is a form of social Google page rank.

> Communist/Socialist Governments typically use such financial vehicles among many others to systematically remove and transfer some/most of their countries wealth into their own/friends coffers through various arrangements with financial institutions et al all the time.

Oh, come on. Such activities happen the world and history over regardless of the ostensible public political veneer.

While all governments are funded by their citizen's wealth Communists almost always take it to the extreme. Read up on the aftermath of almost any communist takeover: currency exchanges, assets seizures, wage controls and/or outright murder of the former elite. The almost all the nations wealth is quickly transfered to the government/party/leaders.

Socialists practice the same - just in moderation - but it is how all governments are funded. The trick is just to not go full retard like Venezuela and kill the golden goose.

I'm not sure governments are funded by their citizenry, those citizens have to conduct commerce in the nation's currency and pay taxes in the same currency, which is solely issued by the government. It becomes more of a social relationship that way.

> Oh, come on. Such activities happen the world and history over regardless of the ostensible public political veneer.

Socialist/communist regimes are founded on a system devised to take away any and all wealth away from the people to handle it to the state, supposedly with the objective of spreading the wealth and taking care of everyone's needs.

In practice, the system takes away any and all wealth from the people, and handles it to the regime's cronies for them to use to pamper themselves as they wish.

The history of socialism repeats itself over and over again. We see it right now in Venezuela, we saw it in Brazil with the successive Worker Party's, we see it right now in Angola as well.

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