{"id":10840,"date":"2015-08-09T17:06:39","date_gmt":"2015-08-09T22:06:39","guid":{"rendered":"http:\/\/olduvai.ca\/?p=10840"},"modified":"2015-08-09T17:06:39","modified_gmt":"2015-08-09T22:06:39","slug":"brain-drained","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=10840","title":{"rendered":"Brain-Drained"},"content":{"rendered":"

Brain-Drained<\/a><\/h3>\n

Venezuela: Real Wages Collapse amid Continuing Crack-Up Boom<\/strong><\/p>\n

While the crack-up boom in Venezuela continues, real wages in the country have have utterly collapsed. The bolivar is still trading close to 700 to the US dollar on the black market, and the Caracas stock index keeps making new all time highs in nominal terms almost every day. Ironically, Venezuela\u2019s currency is called the \u201cbolivar fuerte<\/em>\u201d (VEF), i.e. \u201cthe strong bolivar<\/em>\u201d ever since it has been \u201creverse split\u201d 1 for 1,000 in January 2008.<\/p>\n

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\"brain-drain\"Image via designlimbo.com<\/p>\n

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As an aside, the stock market has likewise been subject to a reverse split of 1 for 1,000 about a year ago \u2013 pre-split the index would now be trading at a cool\u00a015.5 million points.<\/em><\/p>\n

\"Bolivar\"<\/a>The black market rate of the \u201cstrong\u201d bolivar (VEF) \u2013 1 USD now buys nearly 700 VEF \u2013 click to enlarge.<\/p>\n

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Meanwhile, Venezuela has the highest sovereign CDS spreads in the world. Below is a chart of Venezuela\u2019s annual default probabilities based on 5 yr. CDS spreads at a 40% recovery assumption:<\/p>\n

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\"VENZ<\/a>Venezuela: annual sovereign default probability from 5 year CDS spreads at an assumed recovery rate of 40% (which may prove to be a generous assumption) \u2013 click to enlarge.<\/p>\n

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Venezuela\u2019s Economy Loses its Best People<\/strong><\/h3>\n

The great successes of socialism in Venezuela aren\u2019t confined to increasing shortages of basic goods, a collapsing currency and extremely high sovereign CDS spreads.<\/p>\n

Businesses are confronted with a mixture of sharply rising input costs and price controls and as a result are unable to pay their employees wages that can even remotely balance the sharp losses in the bolivar\u2019s purchasing power. As\u00a0Reuters reports<\/a>, skilled workers have been hit the worst:<\/p>\n

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…click on the above link to read the rest of the article…<\/p>\n<\/div>\n

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Brain-Drained Venezuela: Real Wages Collapse amid Continuing Crack-Up Boom While the crack-up boom in Venezuela continues, real wages in the country have have utterly collapsed. The bolivar is still trading close to 700 to the US dollar on the black market, and the Caracas stock index keeps making new all time highs in nominal terms […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5728,7940,2492,1626,7822,195,200,6170,5650,851],"class_list":["post-10840","post","type-post","status-publish","format-standard","hentry","category-economics","tag-acting-man","tag-bolivar","tag-caracas","tag-cds","tag-crack-up-boom","tag-debt","tag-default","tag-pater-tenebrarum","tag-real-wages","tag-venezuela"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10840","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10840"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10840\/revisions"}],"predecessor-version":[{"id":10841,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10840\/revisions\/10841"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10840"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10840"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10840"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}