UPDATED: From the FT and per the below: “The prices of Venezuela’s government bonds have jumped from about 23 cents on the dollar earlier this month to over 33 cents on Monday, while bonds issued by PDVSA, the state oil company, have climbed from roughly 14 cents on the dollar to around 24 cents. ”
The drums of war have a certain rhythm. I’m starting to hear that cadence building around Venezuela. Not to say Venezuela and its government aren’t a disaster. But that is hardly new news. So why are we hearing so much about it now?
Because spending American lives and money could pay off nicely for a number of self-interested but influential parties. Socialism with that neat plutocratic twist – privatize the gains, socialize the losses.
- Trump et al need a distraction. Trump failed on the Wall/Shutdown. He needs to change the subject. So you start a war and hide behind the flag. A bi-partisan path so well worn they made a movie about it way back in 1997 (clip below).
- The old crew wants their kleptocracy back and Florida is a swing state. Venezuela’s current rulers aren’t Socialists. They are just a run-of-the-mill kleptocracy who wrested the money spigot away from a prior pack of jackals. Chavez’s crew took power by kicking out an entrenched 1% club of equally odious, country-wrecking self-dealers. That upper crust crowd “fled” to their second homes in Florida. So desperate and downtrodden some may have even flown Economy Class (gasp)! There they dusted themselves off and started howling for a US intervention. This should have a familiar echo. The equally odious, country-losing Cuban kleptocratic exile elite have been howling for the USA to give “their” country back since the 60’s. The Venezuelans just joined that chorus. It is no coincidence that (Cuban, Florida) Senator Marco Rubio has “become a lead policy architect and de facto spokesman in a daring and risky campaign involving the United States in the unrest that is now gripping Venezuela.“
- Venezuela has 300 billion barrels of oil, we have oil companies. Whatever the angle is, the oil companies probably stand to benefit. The Koch brothers, in particular, own refineries optimized for sludgy Venezuelan heavy crude. When Chavez turned on them, their first try was to replace that supply with Canadian Tar Sands (why we heard so much about the Keystone XL pipeline). But why not just get the old gang back at the old source? With some incremental new profit concessions for handing the slush money spigot back to the prior parasites.
- Fox news et al need a “socialist” enemy – preferably a Hispanic one. Alexandra Ocasio Cortez’s crazy Socialist ideas are getting way to much consideration. That 70% tax on incomes over $10m proposal has support of 59% of registered voters, 45% of Republicans, 60% of Independent voters and 71% of Democrats?!? Don’t those people understand they might win PowerBall one day? We’ve got the scare those folks back into their self-defeating crouch! But she’s a good dancer and brutal on Twitter. So lets attack her via proxy! OK her parents were from Puerto Rico not Venezuela. But who really knows the difference? And dark threats about “Latin American socialists” hits the right nerves for a whole generation of older Americans (see “Cuban kleptocrats” above).
- $90b in outstanding debt trading at pennies on the dollar but backed by all that oil: Lets say you buy a bunch of debt at 5c on the dollar and it goes to 25c. That is a damn good trade. Worth spreading some bucks around DC to make it happen? Definitely. Venezuela probably can’t pay it all off, but those 300b barrels of oil means they can pay off some. A short pause of responsible behavior to get the debt pumps primed again. In gratitude for their “liberation.” Before they get back to plundering the country for private gain.
- 2020 elections are looming we all need a win! Enough said.
Lot of upside, no downside. Nobody important has their wallets or children’s lives on the line. What’s not to like?
There are two positive (so far).
- Its better than North Korea or Iran. If we have to have a wasteful war, Venezuela is a lot less dangerous than some other intervention options. The lesser of three evils.
- The Pentagon and Military Industrial Complex haven’t joined the chorus (so far). We’ve got a few wars simmering. We probably won’t fire off enough munitions to make a decent profit. And we risk bogging down in peace-keeping.
A nice little “Wag The Dog” clip below. A brilliant movie except it keeps ringing true 20 years on. “Its not a war, Its a Pageant…”