Things Could Get Worse For Venezuela

Actually not a joke:

Longstanding fears of a Venezuela debt default crystallized Wednesday, as the political crisis engulfing the sinking OPEC state deepened with a meeting set at the UN Security Council and the EU eyeing an arms embargo.

Investors were bracing for what looked to be an inevitable “credit event” that analysts said could arrive within days — before a “refinancing and restructuring” of the debt called for by President Nicolas Maduro.

While the country’s isolation means the risk of contagion to international financial markets is limited, a default could trigger a global rush to seize assets owned by the Venezuelan government and its state oil company PDVSA, and plunge the struggling nation into a full-blown humanitarian emergency.

They claim this isn’t contagious because Venezuela is economically isolated, but I think it could be contagious regardless, at least a little. The idea that money loaned out might not come back is the chemotherapy for the current degeneracy into r-selected wastefulness and all of the mortgaging of the future to try and keep the party going one more day. Right now we are still in an r-mindset, where threats can’t be seen, and every thought is about how to avoid being deprived of the free resources which everyone else is enjoying.

For the investors who are loaning money to states to keep it making more money, Venezuela will be a case where a state is going to tell them that their loaned money is gone. Now maybe that won’t happen with the US, or Italy, or Spain tomorrow. But clearly what was unlikely enough that it didn’t even happen with Venezuela yesterday, will be a little more likely tomorrow because it will have happened with Venezuela, and the question then will be where will it happen next.

Who will loan Puerto Rico money then? As that fear triggers a withdrawal of credit to dangerously unstable governments, it could trigger collapse of those governments, and then the contagion could spread, and advance up the line, eventually affecting the trust in first world debtors.

I think the shift from r to K will be swift, and probably unforeseen, because first the environment will change as resources constrict. But human psychologies will not shift until threats and consequences have had time to remodel the amygdalae of the financiers whose bad decisions are keeping things afloat. By the time those amygdalae have remodeled, and their psychologies have become more K and threat-aware, conditions will be substantially worse than need be to support a real shift to practical K-selection.

When those far more K-environmental conditions finally meet psychologies that see threat and are driven to pull their excess resources out of the system and horde, then the collapse will be swift. But it will be difficult to predict when it will happen because it will all depend on predicting when the economic conditions will decline sufficiently to K-ify the moneymen, and how much of that it will take to K-ify the money men who are keeping things afloat. Then you’d need to know exactly where those two graph lines, of increasing K and declining resource availability, crossed to combine effects sufficiently to produce the Apocalypse. But once you hit that point, the K will skyrocket, as the hording crushes resource availability, and each feeds the other explosively.

The only thing I think is undoubtable is that the decline now is irreversible. We are just arguing the timing.

Spread r/K Theory, because all it will take is a little common sense to bring this whole thing down

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10 Responses to Things Could Get Worse For Venezuela

  1. As with the housing bubble that we experienced in the US, when the funds to those who are not really credit worthy dry up, the market as a whole reverts to the mean, which is where it would have been without the artificial infusion of funds in the first place.

  2. Pitcrew says:

    Venezuela has the largest oil reserves on Earth. But they nationalized all of their Western oil company infrastructure.

    It’s always more human than environmental. Resource glut = stupid r-types who kill productivity. Humans are naturally creative problem solvers, left to our own devices, absent interference we naturally create bounty and abundance, its why we are such a successful species. r-types kill the productive, farmers, factory workers, businessmen, oil companies and such.

    It always comes back to choices a society and its people, make. If America had elected a President Trump in 2000 (or Buchanan in 1992) the only thing we’d be figuring out right now is how fast to grow the Mars Colony. Societies choose r over K.

    • Info says:

      At some point not only will we need to have a closed cycle economy where almost all resources are recycled and all diseases if genetically based or influence need to be wiped clean from the gene pool constantly. But that to increase further in numbers and quality we would need to go into space which in itself is a super-K environment relatively speaking with all the deadliness of space.

    • Info says:

      And we will need to find ways to reduce predation pressure constantly. So as to facilitate K-selection pressure. Rabbits need their hawks and by taking out the hawks we make rabbit reduction much more easier.

  3. John Morris says:

    I figure the fall will be swift because everybody seems to realize the current world is a bubble. Things just go up so they have to stay in the market anyway because the diehard bears are getting destroyed. But they all know the current valuation doesn’t mean squat unless you get out before the pop. With everybody looking for the right time to exit, not wanting to be left holding when things turn, it won’t take much to make a stampede.

    Wondering if the failure to pass a tax reform will be enough of a trigger. And it won’t pass.

  4. BrachaBenedicta says:

    Wow, that’s some serious s-hit. Any recommendations for a survival book? What to stock up on? This is seriously terrifying.

    • Physical dollars will probably inflate initially, and precious metals will eventually be invaluable. Food, ammunition, and medicines will be vital.

      What is coming will be worse than anything we have seen in our nations today. I expect considerable panic at the outset which will initially paralyze, like the days after 9/11. After that, anybody’s guess is as good as mine. But I think it will be bad, and I think the US Federal government remaining could be a 50-50 proposition. I will not be surprised to see a Soviet-like breakup.

  5. rien says:

    Can the amygdala be remodelled? Or do the r-selected bankers have to be replaced with K-selected bankers?
    A replacement may be much quicker than a remodelling.

    I am thinking that the institutions themselves are currently r-selected. But institutions can probably switch much faster and to more extreme ends bij simply replacing people.

  6. Robert What? says:

    Whenever someone says “Socialism doesn’t work” my first question is “Works for who?”. In terms of bringing economic opportunity to the most people, it fails miserably. But in terms of bringing unearned weath and power to the rulers and their cronies it is a rousing success and “works” very well. That is why nothing will change in Venezuela until a complete crash. Probably here too, despite Trump’s best efforts.

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