“Cash-Strapped” Venezuela Stares Into The Abyss… And Its Default Risk Goes Parabolic | Zero Hedge.
Some two weeks ago (when Venezuela CDS was trading at only 2300 bps) we previewed what – with almost absolute certainty – would be the first “casualty of the crude carnage” – Nicholas Maduro’s little socialist paradise that couldn’t: Venezuela. As a reminder, back then we learned that the OPEC member was in such dire straits it had burned through a third of a Chinese’ bailout loan in the matter of days.
Since then it only got worse, and as we reported early last week in How Goldman Sachs Became Broke Venezuela’s Loan Shark, Venezuela is now scrambling to obtain any cash even if it means doing deals with the devil, or, alternatively, god’s busy worker on this planet, Goldman Sachs.
Then, in a bout of desperation, late the same week, the country – desperate to give the impression that it is not terminally insolvent and still has some foreign reserves left – ordered its Central Bank to dramatically change the rules, in a step “that enables them to count a whole new set of ‘assets’ as potential international reserves including “stones” and “precious metals held in their vaults on behalf of foreign financial institutions.”
Some free advice to Maduro: if there is anything that screams panic, it is when countries begin changing the rules in the last minute and, just as bad, the definition of terms, be it Europe which recently added the “contribution” from hookers and blow to GDP, or Venezuela, which overnight made its reserve calculation meaningless.
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