In addition to having collapsed into tyranny, the nation of Venezuela has also seen their internal economy implode. They’re only able to produce a trickle of oil compared to their full potential and their capital reserves are nearly at rock bottom. Unfortunately for their dictator, Nicolas Maduro, they are also deeply in debt. They have payments with interest totaling more than four billion dollars due before the end of the year.

What’s a dictator to do? He’s not going to make any progress with the United States since we’ve sanctioned pretty much everything down there that we can and President Trump signed an executive order forbidding American interests from taking on any more of Venezuela’s debt. So Maduro is turning to the host of other countries he’s in the hole with and would like a meeting to “renegotiate” things. (Reuters)

President Nicolas Maduro said Venezuela would keep paying its foreign debt, despite an economic crisis and U.S. financial sanctions, but was also hoping to talk to bondholders soon.

“Next week, all the holders of bonds with capital and interest due are invited,” he said in a speech late on Thursday to the new Constituent Assembly.

“This week, we have already had some bilateral conversations (with creditors),” he added after emphasizing that Venezuela would honor all its debt commitments.

Maduro did not give more details of what his government wanted to discuss with bondholders or where talks would be held.

Anyone holding on to any Venezuelan bond should be getting nervous about now. No doubt some of his creditors will agree to some new terms and give him more time because collecting something is generally better than nothing at all. But Venezuela isn’t offering any details of how this would all work out. Maduro is telling everyone that he wants to free his country from the U.S. dollar, preferring to shift over to some mixture of yuan, yen, rupees, euros and rubles. But translating your debt in some currency exchange deal doesn’t make it go away. Still, he’s pitching reform based on a “basket of currencies.” (Venezuela Analysis)

Venezuela’s President Nicolas Maduro announced Thursday plans to tweak his country’s currency exchange system for the sixth time since taking office.

“Venezuela is going to … create a basket of currencies to free us from the dollar,” he said.

Under the proposal, Maduro said his administration will fix the value of the Bolivar to a basket of currencies. Currently, Venezuela’s controlled exchange system fixes the Bolivar’s value to the dollar, though Maduro has long accused the US of an “economic war” against Venezuela’s economy and currency.

So does this lead to a final internal collapse for Venezuela? Probably not. The way these things usually work out involves long term periods of partial payments and second, third and fourth chances to make good. Maduro can probably count on both Russia and China to help him get a bit of credit back in addition to continuing trade. The Chinese are still backing the dictator strongly and Putin recently said that additional sanctions against Venezuela would be a “waste of time.”

Meanwhile, if you happen to be one of the rank and file Venezuelan citizens, best of luck. You still have essentially worthless money and no food or medicine in the stores to spend it on anyway. We’re witnessing the inevitable end of socialism playing out like a slow motion disaster.