Chavez steals millions from foreign companies.

[Velociryx]

I realize that there are long term investments, but there's also a lot of currency speculation. That's what causes the capital flight.

So in your estimation then, here in Ven. (the topic of the thread) is that if capital flight is occuring, or should occur in the country, it is occuring/will be occuring strictly on the basis of currency speculation?

Got nothing to do with 'Chevy' radically changing the rules of the game, or anything like that?

-=Vel=-

[Kidlicious]

Originally posted by Velociryx
I realize that there are long term investments, but there's also a lot of currency speculation. That's what causes the capital flight.

So in your estimation then, here in Ven. (the topic of the thread) is that if capital flight is occuring, or should occur in the country, it is occuring/will be occuring strictly on the basis of currency speculation?

Got nothing to do with 'Chevy' radically changing the rules of the game, or anything like that?

-=Vel=-

There's two types of capital flight. I'm refering to the type that occurs when there is the threat of currency devaluation, and that occurs in Venezuela when the price of oil falls.

[Lawrence of Arabia]

:hmm:

thats not a currency devaluation, thats a currency depreciation

but anyways. . .

venezuela currently has 23 million people living under $1 a day, or 0.906404 per million. lets see how that evolves. lets see if uncle chavy and uncle lenin can improve the plight of the worlds poorest.

http://www.nationmaster.com/graph-T/eco_pop_und_1_a_day

[Kidlicious]

Originally posted by Lawrence of Arabia
:hmm:

thats not a currency devaluation, thats a currency depreciation

In a country like Venezuela currency depreciation brings the threat of currency devaluation.

but anyways. . .

venezuela currently has 23 million people living under $1 a day, or 0.906404 per million. lets see how that evolves. lets see if uncle chavy and uncle lenin can improve the plight of the worlds poorest.

http://www.nationmaster.com/graph-T/eco_pop_und_1_a_day

Chavez is a populist, not a communist.

[Velociryx]

Chavez is close enough to a communist that he has the Reds jizzing all over themselves every time he makes an announcement, no matter how trivial.

-=Vel=-

[Lawrence of Arabia]

In a country like Venezuela currency depreciation brings the threat of currency devaluation.

no it doesnt - only if it is a massive sudden currency depreciation. in fact, developing countries prefer if they have slightly weaker currencies, becauses it makes their exports more competitive on the global marketplace. brazil has been so successful in its exports that its currency is now probably overvalued, and is hurting growth. (+1.4% is the latest)

Chavez is a populist, not a communist.

comon, you cannot believe that. he's a communist - nationalisation, high taxes on foreign oil companies, massive income redistribution are all in the works.

[Kidlicious]

Originally posted by Lawrence of Arabia


no it doesnt - only if it is a massive sudden currency depreciation.

It's got nothing to do with suddeness. When the central bank can't maintain their reserves it devalues.

[atawa]

Originally posted by Lawrence of Arabia
comon, you cannot believe that. he's a communist - nationalisation, high taxes on foreign oil companies, massive income redistribution are all in the works.

Thats socialism, a good way for poorer countries to take back what the first world stole from them in the first place

[Lawrence of Arabia]

FDI as % of GDP in Venezuela

1998: 5.20%
2003: 2.95%

and this is despite the fact that venezuela gdp had growth rates of +0,17%, -6,08%, +3.23%, +2,78%, -8,87% and -9,37% from 1998 to 2003.

which means that FDI is falling even faster than GDP is.

GDP (PPP)

1998: $138 billion
2003: $126 billion

FDI

1998: $8 billion
2003: $3 billion

The official exchange rate (LCU in $US, yearly average)

1998: 547/ $ US
2003: 1606/ $US

massive depreciation. the question is this: is it the FDI flight that is causing the depreciation, or the depreciation that is causing FDI flight?

I could probably figure it out, but no time. the game comes on soon.

[Kidlicious]

But their reserves are increasing I believe.

[Lawrence of Arabia]

data on foreign reserves.

no idea what the movement over time is, but

http://www.venezuelanalysis.com/news.php?newsno=1773

says that they have $30 or so billion, and is at historic highs, due to oil money and currency controls

[Kidlicious]

x-post

LoA cheated. (DanS)

[Lawrence of Arabia]

we got the same source within seconds.

which leads to the question, if there is that much in reserve (historic highs), then there wouldnt be any fear of a devaluation, which means your idea that Foreigners are leaving because they are afraid of devaluation isnt correct.

[Lawrence of Arabia]

damn im good.

[Kidlicious]

I didn't say that. I said this.

Originally posted by Kidicious


One factor in that is that capital flight occurs during the period of falling commodity prices. Don't you think the next period of falling oil prices will be easier on Velenzuela since they are less dependent on foreign investment now? I mean hell, they don't really need the foreign investment when the price of oil is high. They need it when the price falls, but then the investors sell out.

Venezuela is building up their currency reserves with oil revenue and making itself less dependent on foreign investment. The currency controls help keep that investment while the currency reserves build up.