Don't look now, we may be next. ($$$$)

[NeoConMan]

Signs of things to come?

We can't go on like this, national debt now in excess of $12.1 trillion and no end in sight.

 

Venezuela is run 100% by Hugo Chavez, and even he cannot control the economy with over-spending.

In a USA 'democracy' we're being buried one shovel-full at a time - with Chinese shovels....

 

If this doesn't make you think, do a web search for Weimar Republic inflation and Zimbabwe inflation.

 

This ain't politics, this is reality. Doesn't matter which party you support when the truth is finally grasped.

 

 

 

Devaluation Ups Stakes In Venezuela Election Year

 

* Chavez popularity could suffer after devaluation

 

* Venezuelans rush to shops anticipating price hikes

 

* Inflation will jump this year

 

Reuters

By Frank Jack Daniel and Eyanir Chinea

 

CARACAS, Jan 9 (Reuters) - Venezuelans rushed to the shops on Saturday, fearful of price rises after a

currency devaluation that will let President Hugo Chavez boost government spending ahead of an election

but feeds opposition charges of economic mismanagement.

 

In a bid to jump-start the recession-hit economy of South America's top oil exporter, Chavez on Friday

announced a dual system for the fixed rate bolivar. It devalues the currency to 4.3 and 2.6 against the dollar,

from a rate of 2.15 per dollar in place since 2005, giving the better rate for basic goods in an attempt to

limit the impact of the measure on consumer prices.

 

The opposition seized on fears that prices for imported goods will double as shoppers formed lines of more

than a hundred people outside some stores in the capital Caracas.

 

"It was a Black Friday, tinted red," said sales executive Diana Sevillana in reference to the crimson color of Chavez's

socialist party. She stood in a line of 30 people outside an electrical goods store in a middle class neighborhood.

 

The socialist Chavez believes the state should have a weighty role in managing the economy.

During his 11 years in office he has nationalized most heavy industry, and business and finance are tightly

regulated. The devaluation is politically risky but means every dollar of oil revenue puts more bolivars in

government coffers. That allows Chavez to lavish cash on social projects and fund salary increases ahead

of parliamentary elections in September.

 

Opponents were quick to criticize the socialist, who a year ago promised the global financial crisis would not

touch "a hair" of Venezuela's economy. He announced the devaluation on Friday night during an important

baseball game.

 

"By establishing the exchange rate at 4.3 bolivars per dollar, the quality of life for Venezuelans is automatically

devalued since we now have half the money we had before," said Caracas Mayor Antonio Ledezma, a Chavez

opponent.

 

BLACKOUTS, WATER SHORTAGES

 

Opposition parties, emboldened by public dissatisfaction at frequent blackouts and water shortages and a

2.9 percent economic contraction in 2009, hope to strip Chavez of his legislative majority in September.

The devaluation is embarrassing for Chavez, who resisted calls from economists and many government allies

to make the move last year when oil prices were at their lowest and elections a long way off.

 

"Venezuela's decision to devalue the Bolivar culminates an event that the market has been anticipating for a

long time," said Walter Molano, an analyst at BCP Securities. "It helps alleviate the country's fiscal woes and

puts it on a sounder macroeconomic footing."

 

The measure is a relief for state oil company PDVSA, which has struggled to pay service providers and meet

requirements to fund social projects since crude prices dropped sharply last year. It also makes Venezuelan

businesses more competitive.

 

Holders of Venezuela's foreign debt are also pleased, since the devaluation improves government finances

and lessens the need to issue more bonds. However, Chavez risks taking a blow to his popularity ratings,

which are about 50 percent, as prices for many products inevitably will rise in the country of 28 million people,

which relies on imports for much of its consumption.

 

Finance Minister Ali Rodriguez said the devaluation will add 3 percent to 5 percent to inflation, already the

highest in the Americas at 25 percent last year.

 

"The popularity of the government is obviously going to be sharply and negatively affected," said economist

Pedro Palma. "The inflationary impact of the measure diminishes the real income of people. People can

consume less."

 

The new two-tiered exchange system offers the 2.6/dollar rate for goods deemed essential including food,

medicine and industrial machinery. Other products, including cars and telephones, will be imported at the

higher 4.3 rate. Last month, BMO Capital Markets cut ratings on Colgate-Palmolive Co, Avon Products Inc and

Kimberly-Clark Corp (KMB.N) to "market perform" saying a possible devaluation in Venezuela could hurt the

U.S. consumer goods makers' profits.

 

Economist Pavel Gomez of the IESA economic school said the new system will increase opportunities for graft

in a country that already is corruption-ridden. "Multiple exchange schemes are incentives for corruption, more so

if they are applied in the Venezuela way," he said. "Those who have good contacts can buy at 2.6 and sell at 4.3."

 

Chavez, whose popularity usually rises in correlation with public spending, also said on Friday that the Central

Bank had transferred $7 billion of foreign reserves to a development fund used to finance investment projects.

[Murph]

You are so correct, Neo.....

 

It's sad, but it's over......

 

America is broke...

 

Buckle up........

[NeoConMan]

Buckle up indeed........

 

You know the biggest heartbreaker for me?

The young people out there that don't understand this, maybe don't even care.

They will get hammered the hardest with entry-level jobs and no way to move up the economic ladder.

At the mercy of everybody above them.

 

 

Two things we haven't seen yet, and nobody seems to remember the last go-around in the seventies;

 

Inflation and crime.

Both are gonna be mind-blowing realities when they return.