Venezuela's "Death Spiral" - A Dozen Eggs Cost $150 As Hyperinflation Horrors Hit Socialist Utopia

Tyler Durden's picture

Submitted by Susan Warner via The Gatestone Institute,

  • The question of whether Socialism can be an effective economic system was famously raised when Margaret Thatcher said of the British Labor Party, "I think they've made the biggest financial mess that any government's ever made in this country for a very long time, and Socialist governments traditionally do make a financial mess. They always run out of other people's money. It's quite a characteristic of them. They then start to nationalise everything."
  • There are dire reports of people waiting in supermarket lines all day, only to discover that expected food deliveries never arrived and the shelves are empty.
  • There are horrific tales of desperate people slaughtering zoo animals to provide their only meal of the day. Even household pets are targeted as a much-needed source for food.
  • President Maduro is doubling down on the proven failed policies and philosophies of "Bolivarian Socialism," while diverting attention away from the crisis -- pointing fingers at so-called "enemies" of Venezuela such as the United States, Saudi Arabia and others.
  • A dozen eggs was last reported to cost $150, and the International Monetary Fund "predicts that inflation in Venezuela will hit 720% this year.

For many Venezuelans, by every economic, social and political measure, their nation is unravelling at breakneck speed.

Severe shortages of food, clean water, electricity, medicines and hospital supplies punctuate a dire scenario of crime-ridden streets in the impoverished neighborhoods of this nearly failed OPEC state, which at one time claimed to be the most prosperous nation in Latin America.

Today, a once comfortable middle-class Venezuelan father is scrambling desperately to find his family's next meal -- sometimes hunting through garbage for salvageable food. The unfortunate 75% majority of Venezuelans already suffering extreme poverty are reportedly verging on starvation.

Darkness is falling on Hugo Chavez's once-famous "Bolivarian revolution" that some policy experts, only a short time ago, thought would never end.

In a 2007 study on the Chavez years for the Washington, DC-based Center for Economic and Policy Research, Mark Weisbrot and Luis Sandoval wrote:

"[a]t present it does not appear that the current economic expansion is about to end any time in the near future. The gains in poverty reduction, employment, education and health care that have occurred in the last few years are likely to continue along with the expansion."

While it was not so long ago that many people heralded Venezuela as Latin America's successful utopian Socialist experiment, something has gone dreadfully wrong as the revolution's Marxist founder, Hugo Chavez, turned his Chavismo dream into an economic nightmare of unimaginable proportions.

The question of whether Socialism can be an effective economic system was famously raised when Margaret Thatcher said of the British Labor Party:

"I think they've made the biggest financial mess that any government's ever made in this country for a very long time, and Socialist governments traditionally do make a financial mess. They always run out of other people's money. It's quite a characteristic of them. They then start to nationalise everything, and people just do not like more and more nationalisation, and they're now trying to control everything by other means."

In short: "The trouble with Socialism is that eventually you run out of other people's money."

When President Nicolas Maduro inherited the Venezuelan Socialist "dream", in April of 2013, just one month after Chavez died, he was facing a mere 53% inflation rate. Today the Venezuelan bolivar is virtually worthless, and inflation is creeping to 500% with expectations of much more. A recent Washington Post report stated:

" ...markets expect Venezuela to default on its debt in the very near future. The country is basically bankrupt. It is not easy for a nation to go bankrupt with the largest oil reserves in the world, but Venezuela has managed it. How? Well, a combination of bad luck and worse policies. The first step was when Hugo Chávez's socialist government started spending more money on the poor, with everything from two-cent gasoline to free housing. That may all seem like it's a good idea in general — but only as long as there's money to spend. And by 2005 or so, Venezuela didn't have any."

Chavez had the good fortune to die just before the grim reaper showed up on Venezuela's doorstep. According to policy specialist Jose Cardenas:

"What began as a war against the 'squalid' oligarchy in order to build what he called '21st-century socialism' -- cheered on as he was by many leftists from abroad -- has collapsed into an unprecedented heap of misery and conflict."

Maduro is doubling down on the failed Chavismo economic and social policies that have contributed to an inflationary crisis not seen since the days of the 1920's Weimar Republic in Germany, when the cost of a loaf of bread was a wheelbarrow full of cash.

Demonstrations and public cries for food are the unpleasant evidence of a once-prosperous society being torn apart by the very largess that marked its utopian ideals less than a decade ago.

There are dire reports of people waiting in supermarket lines all day, only to discover that expected food deliveries never arrived and the shelves are empty.

In desperation, some middle class families have organized online barter clubs as helpless citizens seek to trade anything for diapers and baby food, powdered milk, medicines, toilet paper and other essentials missing from store shelves or available only on the black market for double and triple already impossibly inflated prices..

There are horrific tales of desperate people slaughtering zoo animals to provide their only meal of the day. Even household pets are targeted as a much-needed source for food. This is a desperate time for a desperate people.

As things continue to worsen, President Maduro, unfortunately, is doubling down on the proven failed policies and philosophies of "Bolivarian Socialism," while diverting attention away from the crisis -- pointing fingers at so-called "enemies" of Venezuela such as the United States, Saudi Arabia and others.

Efforts to convince Maduro to enlist help from outside have failed, according to a report in the Catholic magazine, Crux:

Maduro has refused to accept help from international charitable organizations, including the Vatican-sponsored Caritas Internationalis, which through different affiliates has tried to send medicine and food.

 

"Denying that there's a crisis and refusing to let the world send medicine and food is not possible," said Cardinal Jorge Urosa Savino, archbishop of Caracas.

 

The prelate believes that Maduro is refusing to accept help in an attempt to hide the "very grave situation of total shortage," which far from improving, he said, continues to deteriorate.

According to Breitbart:

"The Venezuelan Episcopal Conference, the organization of the nation's Catholic bishops, issued a scathing statement condemning president Maduro for giving the military full control of the nation's food supply, accusing him of being at the helm of a devastating "moral crisis" and crippling every aspect of life in Venezuela."

In what some economists have been calling a "death spiral", the government's failed economic policies are at the same time causing and trying to stem a runaway inflation with price-fixing policies which, in turn, are triggering shortages. Maduro is strongly urging businesses and farmers to sell their goods at severe losses, forcing shut-downs when the cost of doing business becomes prohibitive.

According to a recent Bloomberg report, the black market is thriving because goods are unavailable at prices fixed by the government. There are reports of ordinary people quitting inadequate-paying jobs to set up black market operations, hoping to be able to make enough to sustain life.

A dozen eggs was last reported to cost $150, and the International Monetary Fund "predicts that inflation in Venezuela will hit 720% this year. That might be an optimistic assessment, according to some local economic analysts, who expect the rate to reach as high as 1,200%."

According to a Bloomberg report from April:

"In a tale that highlights the chaos of unbridled inflation, Venezuela is scrambling to print new bills fast enough to keep up with the torrid pace of price increases. Most of the cash, like nearly everything else in the oil-exporting country, is imported. And with hard currency reserves sinking to critically low levels, the central bank is doling out payments so slowly to foreign providers that they are foregoing further business.

 

"Venezuela, in other words, is now so broke that it may not have enough money to pay for its money."

In the midst of this galloping cataclysm, there is no shortage of pundits who simplistically assert that the catastrophe is caused solely by the international collapse of oil prices. However, according to Justin Fox at Bloomberg:

"The divergence between Venezuela's revenue and spending started long before (the 2014) oil-price collapse. When oil prices hit their all-time high in July 2008, government revenue -- 40 percent of which comes directly from oil -- was already falling. The main problem was Venezuelan oil production, which dropped from 3.3 million barrels a day in 2006 to 2.7 million in 2011. It was still at 2.7 million in 2014, according to the latest BP Statistical Review of World Energy."

 

"Venezuela isn't running out of oil. Its proven reserves have skyrocketed since 2000 as geologists have learned more about the heavy crude of the Orinoco Belt. But getting at that oil will take a lot of resources and expertise, both things that Venezuela's state-owned oil company, Petroleos de Venezuela (PDVSA, best known in the U.S. for its Citgo subsidiary), has been lacking in since Chavez initiated a sort of hostile takeover starting in the early 2000s. First he kicked out 18,000 workers and executives, 40 percent of the company's workforce, after a strike. Then he started demanding control of PDVSA's joint ventures with foreign oil companies. One could interpret this in the most Chavez-friendly way possible -- he was aiming for a more just allocation of his nation's resources -- and still conclude that he made it harder for PDVSA to deliver the necessary tax revenue."

Cronyism and corruption prevailed under Chavez when oil was selling at almost $200 a barrel -- at a time when Venezuela could have put some money away for the inevitable rainy day. But President Hugo Chavez and successor president Maduro, were busy buying votes and consolidating power with free giveaways, according to Michael Klare in The Nation.

Behind the doom and gloom Venezuela's collapse is the continuing specter of street crime and murder, according to Time.com in a May 2016 report:

"The country's runaway murder rate is just one of the factors driving opposition to President Nicolas Maduro in a country where shortages of food and basic goods are chronic, inflation is running rampant and the government is jailing political prisoners. But it serves as a bloody illustration of just how close to outright societal collapse Venezuela has come since the end of the 20th century, as gangs, guerrillas and militia defend their turfs and traditional authority structures fall by the wayside."

Venezuela's crime rate is one of the highest in the world. Called the world's most homicidal nation, Venezuela has more than street crime, thuggery and murder. Drug cartels, black marketeers, narcoterrorists, white collar criminals and money launderers are unfortunate hallmarks of the Chavez/Maduro legacy.

The ruin of this once prosperous, oil-rich nation might be a harbinger for other nations, such as the United States, which may be tempted into believing that Socialist giveaway policies actually can provide the promise of a free lunch for longer than the next election cycle. Or might that be all many politicians need or want?

Venezuela's food shortages, hyperinflation, black marketeers, narcoterrorists and money launderers are unfortunate hallmarks of the legacy of Presidents Chavez (left) and Maduro (right).

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taketheredpill's picture

It's because of the Muslims, right?

ParkAveFlasher's picture

In all fairness, the eggs are organic.

MillionDollarBonus_'s picture

This is not real socialism! Socialists and Bernie supporters want to emulate the Scandinavian model, that works well! It's so unfair to take this one badly run country and use it to discredit a perfectly workable system of government!

WHY PAPER GOLD IS JUST AS GOOD AS PHYISCAL GOLD

 

MANvsMACHINE's picture

Are you also of the belief that sex with a blow up doll is just as good as sex with a human?

mtl4's picture

Their money may be crap but they still have some of the best looking women on the planet.

Boris Alatovkrap's picture

At first Boris is see $150 for egg, but then is read you are receive whole dozen of 12 egg for $150. That is not bad deal when you are take into high cost of socialism. Not just one egg, but you are receive full set of 12 egg for only $150 in Venezuela. Vive la Socialism!

LowerSlowerDelaware_LSD's picture

Tim to go into the egg shipping business.  I'll sell you a dozen for a mere $100.  Free shipping.

hedgeless_horseman's picture

 

Now that it has cooled off a little, our chickens are laying like crazy.

Add a little of mrs_horseman's homemade cheese from our family cow and some veggies from the garden, and we have a nice little lunch.

froze25's picture

Yeah man, my hens are cranking them out too. Makes up "Deplorables". Independence in any form is power. Trump 2016

hedgeless_horseman's picture

 

We still have a bunch of young cocks from our spring chicks that are getting a little...cocky...and really need to head off to freezer camp, probably this weekend.

MisterMousePotato's picture

I just gave MDB a happy uptwinkle. Never thought I'd say that (again), but his post is a good example of why he became a ZeroHedge meme in the first place. Haven't even bothered to read his postings for the last six months or so.

Kidbuck's picture

We still talking about Muzzies?

ThanksChump's picture

I want a "DEPLORABLE" t-shirt.

espirit's picture

$150.

US Currency?

Sounds moar like an egg shortage.

eltxamo's picture

in fairness 150$ at official exchange rates, 1.5$ at black market rates.

buttmint's picture

HH...muchas gracias for inviting all us ZHers over for a FEED!

eeer.....what can I bring?

ParkAveFlasher's picture

I like this time of year, we get HH off-grid food porn.  Show us the gravy, we wants it!

CheapBastard's picture

But for one of those 1/10th oz gold coins I hear you can buy three dozen eggs and a loaf of bread.

Slurm's picture

The obvious answer is to outlaw money.

 

Seems to be the stickler in most situations.

Korprit_Phlunkie's picture

 

Its even easier. Just outlaw ism and ist, then there can’t be an racism or racists, socialism or socialists, capitalism or capitalists, communism or communists.

 

SwiffFiffteh's picture

Can't we just outlaw hunger? Socialism would work awesomely if no one needed to eat.

willwork4food's picture

Didn't They have universities in Venenzuala?  I mean what did they do when they taught basic economics skip over it? Common sense would tell you the writing was on the wall when oil started going down. Smart people gtfo.

 

laser's picture

Cheaper than breakfast eggs at the Ritz.

Fuku Ben's picture

If you can't afford a whole cow or a farm you can buy a cow share.

Reichstag Fire Dept.'s picture

Didn't you read the article?! ...they already ate the cow.

goldsaver's picture

That is what frustrates me the most about Venezuela. It is in the tropical zone. It has plentiful precipitation. It has plenty of sunlight (insolation hours). It has fertile soil. AND PEOPLE ARE GOING HUNGRY????? WTF!!!

Seriously, this is as much a cultural problem as it is a government "socialism" problem. People were raised with the expectation that the government would take care of them. They grew up thinking that food comes from a supermarket, water from the tap and energy from the wall socket. They have refused to go beyond those limits. At this point, most are unable to see it otherwise.

What is needed, in the US as much as in Venezuela, is a new (old) paradigm. A return to self sufficiency and self reliance. Our great grandparents (and their grand parents) did not depend on the government to thrive and we shouldn't either. It is critical that we learn and teach our yung'uns the skills needed to thrive in peace with themselves and their neighbors. Watching Monday night football and facebooking your opinions of the latest Kardashian saga are not critical life skills. Planting a potato, raising chickens and rabbits, milking a cow or a goat. Those are critical life skills.

ebear's picture

One in five Venezuelan's have had cosmetic surgery, according to Viceland's Hailey Gates.

That pretty much makes your case, doesn't it?   

Their priorities are completely skewed.

ebear's picture

Is that a guinea pig up on the left there?  I hear they're delicious.

John_Coltrane's picture

I'm pretty sure they don't officially use $ in Venezuela so this claim doens't make sense.  I'm guessing if you have $ available you can purchase eggs from a farmer at the same price (in $) as any other country in North or South America.  What they mean to say is that at the real exchange rate of Bolivars to $ you would need around 150 times as many bolivars to buy eggs compared to a year or two back.  So, if you have $ or gold for that matter I'm guessing you can still obtain just about anything you want and the price won't change much since there isn't any $ inflation.  Also, true in the black market in N. Korea.  You can still get anything you want if you have a currency which can hold value and thus be exchanged.

ain't markets wonderful? 

Memedada's picture

Yep, Margaret Thatcher (one of the prime architects of the shit show we’re in toady) was an expert on socialism. She is an unbiased source if you want to understand socialism. /sarc.

Socialism is not about “other peoples” money or about “redistribution” of wealth within a capitalist economy. Socialism is publicly, socially and/or commonly owning the means of production (land, capital, resources). It’s not taxing the capitalist economy in order to give it a human face – that’s “social liberalism” or “the Scandinavian model of intelligent capitalism”. It is, however, not socialism.

Venezuela’s economic situation is nothing but the latest example of US economic hitmen in action. No socialist experiment will have a fair chance before the US global empire is gone – especially not in the US “interest sphere”/backyard. The US Empire will hopefully go to the wastebasket of history without dragging too much of the world with it – sadly, the US empire is like a giant baby and the most likely reaction to its demise is full blown war (kicking the chessboard over). Hugo Chavez was himself a symptom of the demise of US power in that hemisphere. He wouldn’t have had a chance 20 years ago. He knew he was on a suicide mission. He was attempted assassinated and couped many times (see the well-researched documentary “This revolution will not be televised”). CIA is not what it used to be – its power is not hegemonic anymore. New players have emerged on the global scene challenging the former successful strategies of CIA/NSA. So from just taking over countries (the strategy of yore) they now can do nothing much than disrupt them – making them fail. See the US involvement around the world – it’s not taking power it’s just making sure no power evolves. Creating and maintaining chaos is the new policy: In the Middle East, South America (including Venezuela), North Africa and East Europe.

 

shovelhead's picture

Dat's right.

Dem CIA guys is butt plugging dem shickens. Rat Bastards.

 

Lol. Someone's always messing with these "socialism experiments".

Stuck on Zero's picture

Maduro and his family have become extremely thanks to socialism. That should convince more politicians everywhere that socialism is a good thing.

DaveA's picture

You can never be too rich or too thin. Maduro and his family are now extremely *rich*, while everyone else is extremely *thin*.

Handful of Dust's picture

Maduro's portrait will be taken down from the Oval Office Wall when Barry leaves the wh.

Stuck on Zero's picture

Thanks for fixing my typo.

bookofenoch's picture

And you can buy them for a half dozen eggs!!!

Kirk2NCC1701's picture

Unlike the Saudis, whose currency is actually worth something, but their women are quite 'unattractive'.

therover's picture

Hey...sometimes it's better !!!

Calmyourself's picture

Y'all be careful in that Socialist paradise, the psychopathic bus driver is going to start murdering deplorable people's in massive numbers because after all Socialism just needs commitment.

Creepy Ass Crackers's picture

Depends on the quality of lube employed

rmopf2010's picture

My socialims is better than others!

Socialism is the Antichrist,

 

ebear's picture

 

<--- sex with a blow up doll

<--- sex with Hillary Clinton

 

I rest my case.

GunnerySgtHartman's picture

This is not real socialism!

"A society may be defined as socialist if the major part of the means of production of goods and services is in some sense socially owned and operated, by state, socialized or cooperative enterprises."

http://www.dictionaryofeconomics.com/article?id=pde2008_S000173

Venezuela fits the definition perfectly.  That, or MDB is right and the rest of the world lives in a yellow submarine ...

City_Of_Champyinz's picture

Keep in mind the idiot socialist moron Maduro is an 8th grade dropout and former bus driver.  A resume for success if you ask me.

MisterMousePotato's picture

Yeah? And what have we gotten with Yale graduates.

William F. Buckley once said that he'd rather be governed by the first ten people chosen randomly from the phone book.

GunnerySgtHartman's picture

The Yale graduates are no better than the socialists - in fact, many of them ARE socialists!

shovelhead's picture

The difference is that an average 8th grader can balance a checkbook.

Socialists can't.