1 00:00:00,000 --> 00:00:01,880 Speaker 1: And I just remember I was in Miami a couple 2 00:00:01,880 --> 00:00:03,880 Speaker 1: of months and in the drug store and coming back, 3 00:00:03,920 --> 00:00:06,920 Speaker 1: and you kind of ask yourself, am I really doing this? Like? 4 00:00:06,960 --> 00:00:11,080 Speaker 1: Am I really filling an entire suitcase of toiletries and 5 00:00:11,520 --> 00:00:14,800 Speaker 1: laundry detergent and and and then yes, Yes, I'm doing it. 6 00:00:14,920 --> 00:00:24,880 Speaker 1: I have to go back. Wow. Hello, and welcome back 7 00:00:24,880 --> 00:00:28,400 Speaker 1: to Bloomberg Benchmark, a show about the global economy, Amakido, 8 00:00:28,440 --> 00:00:32,280 Speaker 1: Bloomberg News in San Francisco. Today, Tori is still traveling 9 00:00:32,280 --> 00:00:36,960 Speaker 1: with Treasury Secretary Jack lou but I'm joined by Bloomberg 10 00:00:37,040 --> 00:00:43,200 Speaker 1: Data editor Katerina Suriva in d C. Hey, Katerina HIJACKI, Hey, 11 00:00:43,280 --> 00:00:45,760 Speaker 1: do you want to tell everyone why your voice sounds 12 00:00:45,800 --> 00:00:50,080 Speaker 1: so familiar? Well, as you can recall, I was the 13 00:00:50,200 --> 00:00:56,080 Speaker 1: star of Benchmark podcast episode six, in which I talked 14 00:00:56,120 --> 00:01:00,920 Speaker 1: about how I use the low euro dollar exchange right 15 00:01:00,960 --> 00:01:05,200 Speaker 1: to my advantage when planning my wedding in Europe. Amazing. Well, 16 00:01:05,200 --> 00:01:07,679 Speaker 1: my mom has asked me over and over again the 17 00:01:07,720 --> 00:01:09,160 Speaker 1: next time we're going to have you on the show. 18 00:01:09,200 --> 00:01:11,119 Speaker 1: I think she really likes the sound of your voice, 19 00:01:11,560 --> 00:01:14,880 Speaker 1: said she. You have like a real radio voice. Oh, 20 00:01:15,080 --> 00:01:20,119 Speaker 1: thank you, Mrs Eto. Well, Karina, welcome back. Today. We're 21 00:01:20,120 --> 00:01:23,520 Speaker 1: going to be talking all about Venezuela, which has been 22 00:01:23,560 --> 00:01:26,800 Speaker 1: in a terrible economic crisis that only seems to be 23 00:01:26,840 --> 00:01:30,839 Speaker 1: getting worse by the day, everything from a deep, deep recession, 24 00:01:30,959 --> 00:01:35,399 Speaker 1: to hyper inflation, to a complete plunge in its currency, 25 00:01:36,080 --> 00:01:39,480 Speaker 1: and even the possibility of a sovereign default. And that's 26 00:01:39,480 --> 00:01:43,840 Speaker 1: how huge and tragic and and very real consequences for 27 00:01:43,880 --> 00:01:48,360 Speaker 1: everyone living there. So I have a few incredible stats here, 28 00:01:48,360 --> 00:01:52,400 Speaker 1: based on quarterly surveys that I do on Venezuela. The 29 00:01:52,520 --> 00:01:57,040 Speaker 1: economists survey, these are private sector economists, expect consumer prices 30 00:01:57,080 --> 00:02:00,240 Speaker 1: to rise by more than two hundred and fifty this year. 31 00:02:00,640 --> 00:02:04,320 Speaker 1: That's more than triple, and they expect the economy itself 32 00:02:04,360 --> 00:02:08,600 Speaker 1: to contract seven point eight percent this year. Um. I mean, 33 00:02:08,639 --> 00:02:12,800 Speaker 1: these are numbers so bad you rarely see them in 34 00:02:12,840 --> 00:02:15,520 Speaker 1: a modern economy. And I mean, I've been an economics 35 00:02:15,600 --> 00:02:18,880 Speaker 1: journalist for seven years, and even for me, I see 36 00:02:18,880 --> 00:02:22,919 Speaker 1: these numbers and my eyes just completely pop out. For context, 37 00:02:23,080 --> 00:02:26,480 Speaker 1: in the US banking crash, the worst annual contraction we 38 00:02:26,520 --> 00:02:30,520 Speaker 1: saw then was two point eight percent. And you know, Katerina, 39 00:02:30,560 --> 00:02:35,360 Speaker 1: would you say the situation Venezuela's worse than maybe Greece 40 00:02:35,480 --> 00:02:38,720 Speaker 1: in the recent years. Yeah, I would think so. I 41 00:02:38,760 --> 00:02:41,920 Speaker 1: mean Greece even during the worst of it when it 42 00:02:42,000 --> 00:02:46,520 Speaker 1: did have a pretty significant economic contraction. I mean, it 43 00:02:46,600 --> 00:02:49,240 Speaker 1: was still a developed country and you didn't see inflation 44 00:02:49,360 --> 00:02:52,680 Speaker 1: like this. I mean, this is just really scary, scary 45 00:02:52,840 --> 00:02:57,960 Speaker 1: price inflation. Yeah, definitely. So what people might not remember 46 00:02:58,360 --> 00:03:01,440 Speaker 1: was that the Venezuela Ina enemy did pretty well in 47 00:03:01,520 --> 00:03:04,520 Speaker 1: the two thousand's. You had the price of oil really 48 00:03:04,560 --> 00:03:07,440 Speaker 1: skyrocketing up until two thousand and eight when it hit 49 00:03:07,520 --> 00:03:11,920 Speaker 1: about a barrel, and Venezuela has the world's largest reserve 50 00:03:11,960 --> 00:03:15,240 Speaker 1: of oil, so it really should be doing pretty well. 51 00:03:15,760 --> 00:03:18,280 Speaker 1: But after two thousand eight, we saw the price of 52 00:03:18,320 --> 00:03:22,080 Speaker 1: oil come down, and the Venezuelan economy just kind of 53 00:03:22,120 --> 00:03:25,800 Speaker 1: came down with it. Wow. Well, you know, I really 54 00:03:25,840 --> 00:03:29,919 Speaker 1: think it's a fascinating story. Uh, not just about an 55 00:03:29,919 --> 00:03:33,440 Speaker 1: economy and complete crisis, but how a country kind of 56 00:03:33,440 --> 00:03:37,600 Speaker 1: squandered its opportunity with this incredible wealth and natural resources. 57 00:03:38,160 --> 00:03:40,760 Speaker 1: So to help us get a better understanding of what's 58 00:03:40,800 --> 00:03:44,200 Speaker 1: actually going on behind the scenes in Venezuela, we have 59 00:03:44,440 --> 00:03:48,960 Speaker 1: our Caracas Beer Chief Nathan Crux joining us. Hi Nathan. Hey, 60 00:03:49,000 --> 00:03:52,440 Speaker 1: how's it going? Hi Nathan. So we wanted to get 61 00:03:52,440 --> 00:03:55,040 Speaker 1: a look into how all of this started and what's 62 00:03:55,120 --> 00:03:58,320 Speaker 1: next for Venezuela. But first, would you tell us just 63 00:03:58,360 --> 00:04:02,560 Speaker 1: a little bit about you. Um, Are you from Venezuela originally? Oh? No, 64 00:04:02,680 --> 00:04:07,560 Speaker 1: I'm from the US. I'm from Pennsylvania. I studied here 65 00:04:07,560 --> 00:04:11,920 Speaker 1: in Venezuela as an exchange student after high school back 66 00:04:12,000 --> 00:04:14,440 Speaker 1: in two thousand one and two thousand two. And that's 67 00:04:14,480 --> 00:04:17,240 Speaker 1: a year when there was a lot of protests and 68 00:04:17,279 --> 00:04:19,240 Speaker 1: there was a coup and a counter coup that year. 69 00:04:19,279 --> 00:04:21,400 Speaker 1: So I was here as as a high school student 70 00:04:21,520 --> 00:04:25,600 Speaker 1: and saw a lot of of crazy action. Uh. And 71 00:04:26,000 --> 00:04:28,040 Speaker 1: you know, then I went to I went to university 72 00:04:28,080 --> 00:04:31,640 Speaker 1: in Canada, and and then my first job out of college, 73 00:04:31,680 --> 00:04:34,960 Speaker 1: I was in in Chile and Santiago and was there 74 00:04:35,000 --> 00:04:38,000 Speaker 1: five years. And and then yeah, I end up back 75 00:04:38,040 --> 00:04:40,960 Speaker 1: in Venezuela. And I've been back here now just about 76 00:04:41,000 --> 00:04:44,280 Speaker 1: five years. Wow, five years. So you've you've seen this 77 00:04:44,320 --> 00:04:49,200 Speaker 1: whole thing, this whole crisis, from pretty much the very beginning. Yeah, 78 00:04:49,240 --> 00:04:52,359 Speaker 1: and when I got here. Uh. And it's kind of 79 00:04:52,400 --> 00:04:54,880 Speaker 1: interesting if you think about because at least in the 80 00:04:54,880 --> 00:04:57,160 Speaker 1: past decade. You know, Venezuela has not been viewed as 81 00:04:57,320 --> 00:05:00,080 Speaker 1: as an easy place. Even before the economy start it 82 00:05:00,160 --> 00:05:03,600 Speaker 1: to tank there there were serious problems with really really 83 00:05:03,720 --> 00:05:07,040 Speaker 1: high crime rates. Uh and and it's never been kind 84 00:05:07,040 --> 00:05:10,440 Speaker 1: of an easy place to live. But I got here 85 00:05:10,839 --> 00:05:14,240 Speaker 1: the second time around right in two thousand and eleven, 86 00:05:14,320 --> 00:05:16,520 Speaker 1: and that was right after it had been announced that 87 00:05:17,640 --> 00:05:21,720 Speaker 1: chavez As cancer had returned. And and so my coverage 88 00:05:21,760 --> 00:05:24,880 Speaker 1: here started kind of just with the end of Chat 89 00:05:24,920 --> 00:05:28,040 Speaker 1: the air of Hugo Chavez and his death, the and 90 00:05:28,160 --> 00:05:31,920 Speaker 1: the election of the current president, Nicolas Maduro, and and 91 00:05:31,920 --> 00:05:36,280 Speaker 1: and kind of economic decline. Since when you moved to Venezuela, 92 00:05:36,360 --> 00:05:38,600 Speaker 1: do you think you'd be covering this, you know, kind 93 00:05:38,600 --> 00:05:43,160 Speaker 1: of once in a generation economic crisis. I don't think 94 00:05:43,680 --> 00:05:47,000 Speaker 1: I ever thought it would get so bad. I knew 95 00:05:47,040 --> 00:05:49,320 Speaker 1: that it was a tough country, you know, I've been 96 00:05:49,360 --> 00:05:52,719 Speaker 1: here before and had a kind of a crazy here 97 00:05:52,880 --> 00:05:56,640 Speaker 1: in terms of the political situation then, so I knew 98 00:05:56,720 --> 00:05:59,320 Speaker 1: that I was kind of coming to a volatile environment. 99 00:05:59,360 --> 00:06:03,080 Speaker 1: But I don't inc I ever expected to just find 100 00:06:03,120 --> 00:06:06,839 Speaker 1: myself one worrying about my personal personal security so much, 101 00:06:07,320 --> 00:06:11,000 Speaker 1: and to not being able to to find just really 102 00:06:11,480 --> 00:06:16,560 Speaker 1: basic things. So uh, deoda in shampoo, you name it. 103 00:06:16,200 --> 00:06:19,440 Speaker 1: It's it's really hard to find. And uh, you know, now, 104 00:06:19,480 --> 00:06:22,960 Speaker 1: whenever I go back to the US, to Miami or 105 00:06:23,000 --> 00:06:25,720 Speaker 1: Pennsylvania or New York or wherever, I always stop at 106 00:06:25,720 --> 00:06:28,320 Speaker 1: the pharmacy the night before I fly back, and I 107 00:06:28,360 --> 00:06:31,800 Speaker 1: literally fill an entire suitcase of of goods. And I 108 00:06:31,880 --> 00:06:33,760 Speaker 1: just remember I was in Miami a couple of months 109 00:06:33,760 --> 00:06:36,400 Speaker 1: and in the drug store and coming back, and you know, 110 00:06:36,520 --> 00:06:38,919 Speaker 1: you kind of ask yourself, am I really doing this? Like? 111 00:06:39,000 --> 00:06:44,120 Speaker 1: Am I really filling an entire suitcase of of toiletries 112 00:06:44,360 --> 00:06:48,000 Speaker 1: and laundry detergent and and and then yes, yes, I'm 113 00:06:48,040 --> 00:06:50,880 Speaker 1: doing it. I have to go back. Wow. So even 114 00:06:50,920 --> 00:06:53,839 Speaker 1: for someone like you, kind of like an urban professional, 115 00:06:54,200 --> 00:06:57,120 Speaker 1: it is very difficult to find a lot of these basics. 116 00:06:58,520 --> 00:07:01,240 Speaker 1: Oh It's it's near impossible here, except you know, I'm 117 00:07:01,400 --> 00:07:03,559 Speaker 1: one of the lucky few. I I mean, I I'm 118 00:07:03,600 --> 00:07:06,000 Speaker 1: I can travel, I can get out, I can buy 119 00:07:06,040 --> 00:07:08,120 Speaker 1: these things. I have the hard currency to kind of 120 00:07:08,160 --> 00:07:12,120 Speaker 1: acquire these things abroad. I mean, most Venezuelans can't do that. 121 00:07:12,280 --> 00:07:15,600 Speaker 1: So I mean, as as kind of annoying as it 122 00:07:15,680 --> 00:07:19,960 Speaker 1: is for me, it's it's not impossible. Most Venezuelans simply 123 00:07:20,080 --> 00:07:24,280 Speaker 1: cannot find this stuff. And what's it like day to day, 124 00:07:24,440 --> 00:07:28,200 Speaker 1: like buying groceries. I mean, have things been changing in 125 00:07:28,240 --> 00:07:31,040 Speaker 1: the past couple of months. Well, I'd say things have 126 00:07:31,120 --> 00:07:36,320 Speaker 1: been changing progressively over the past couple of years. You know, 127 00:07:36,360 --> 00:07:40,040 Speaker 1: when I first got here, I would shop at a grocery, 128 00:07:40,160 --> 00:07:43,000 Speaker 1: just at a regular grocery store in my neighborhood. You know, 129 00:07:43,200 --> 00:07:45,480 Speaker 1: it was more convenient to go to the grocery stores. 130 00:07:45,480 --> 00:07:49,120 Speaker 1: And and I guess it's maybe been now about two 131 00:07:49,160 --> 00:07:52,400 Speaker 1: years when the grocery stores have have started to distribute 132 00:07:53,240 --> 00:07:56,480 Speaker 1: these regulated goods. And I think if you look at Venezuelan, 133 00:07:56,560 --> 00:07:59,840 Speaker 1: if you ask yourself, what is the the one kind 134 00:07:59,880 --> 00:08:03,280 Speaker 1: of fundamental problem that is at the root of all 135 00:08:03,320 --> 00:08:06,320 Speaker 1: of this wacky stuff going on, And it's the exchange 136 00:08:06,400 --> 00:08:10,240 Speaker 1: rate system. You have three different exchange rates right now. Uh, 137 00:08:10,280 --> 00:08:12,760 Speaker 1: the official rate of ten bull of ours per dollar. 138 00:08:12,920 --> 00:08:15,440 Speaker 1: It's that's been devalued. When I first got here, it 139 00:08:15,480 --> 00:08:17,520 Speaker 1: was four point three, then it was six point three, 140 00:08:17,520 --> 00:08:19,520 Speaker 1: and now it's ten. Then we have kind of a 141 00:08:19,600 --> 00:08:23,240 Speaker 1: secondary exchange rate which has also been devalued since I 142 00:08:23,280 --> 00:08:25,800 Speaker 1: was here. First it was twelve, and then it was 143 00:08:25,920 --> 00:08:28,720 Speaker 1: something like fifty, and and then it went to two hundred, 144 00:08:28,760 --> 00:08:30,920 Speaker 1: and now it's at about five hundred and fifty. And 145 00:08:30,960 --> 00:08:34,000 Speaker 1: then we have a black market rate, which in Venezuela 146 00:08:34,000 --> 00:08:37,080 Speaker 1: it's it's illegal to give out that information, but you 147 00:08:37,120 --> 00:08:39,640 Speaker 1: can look it up there in New York and San 148 00:08:39,640 --> 00:08:42,800 Speaker 1: Francisco and Washington and uh and see that for yourself. 149 00:08:42,880 --> 00:08:46,360 Speaker 1: But um, so you have. What that's done is it's 150 00:08:46,400 --> 00:08:50,079 Speaker 1: made it It's made it cheaper for Venezuela to import 151 00:08:50,160 --> 00:08:53,160 Speaker 1: goods because companies try to get these preferential dollars at 152 00:08:53,160 --> 00:08:55,760 Speaker 1: the official rate of ten bull of ours per dollar 153 00:08:56,400 --> 00:08:59,439 Speaker 1: versus kind of the media the middle rate of five 154 00:08:59,760 --> 00:09:02,360 Speaker 1: and five people of ours per dollar, and so it's 155 00:09:02,440 --> 00:09:05,000 Speaker 1: much cheaper to import goods than it is to produce locally. 156 00:09:05,360 --> 00:09:08,319 Speaker 1: And but then all of a sudden, Venezuela ran out 157 00:09:08,320 --> 00:09:10,040 Speaker 1: of money and they couldn't import the goods and their 158 00:09:10,040 --> 00:09:13,520 Speaker 1: local economy had been kind of decimated. So there's these 159 00:09:13,559 --> 00:09:20,080 Speaker 1: regulated goods staples, corn, flour, milk, sugar, kind of the 160 00:09:20,120 --> 00:09:24,360 Speaker 1: basic items of of the Venezuelan diet. And then personal 161 00:09:24,920 --> 00:09:27,640 Speaker 1: hygiene items are are sold at these preferential rates, and 162 00:09:27,679 --> 00:09:30,520 Speaker 1: they were distributed in grocery stores, and they started to 163 00:09:30,600 --> 00:09:34,160 Speaker 1: run out of them because they're artificially cheap, and you've 164 00:09:34,200 --> 00:09:38,000 Speaker 1: got a whole black market for them. And and so 165 00:09:38,040 --> 00:09:42,360 Speaker 1: then what happened is, uh, they tried to restrict first 166 00:09:42,440 --> 00:09:44,560 Speaker 1: the number of items you could buy at the grocery store, 167 00:09:44,559 --> 00:09:48,560 Speaker 1: and then they restricted the days that you could shop 168 00:09:48,600 --> 00:09:52,160 Speaker 1: in the grocery stores by by your I D number. 169 00:09:52,280 --> 00:09:55,040 Speaker 1: And and so now it's to the point these grocery 170 00:09:55,080 --> 00:09:58,920 Speaker 1: stores have just become kind of centers where where these 171 00:09:59,000 --> 00:10:01,240 Speaker 1: cheap goods are being just ttributed because that's all most 172 00:10:01,280 --> 00:10:04,600 Speaker 1: Venezuelans can afford. So now if you walk around Caracas, 173 00:10:04,600 --> 00:10:07,680 Speaker 1: you will just see lines everywhere. And and so, you know, 174 00:10:07,720 --> 00:10:09,720 Speaker 1: you asked me how my my life has changed. I 175 00:10:09,800 --> 00:10:12,400 Speaker 1: don't really, you know, I don't shop at at the 176 00:10:12,400 --> 00:10:15,600 Speaker 1: grocery stores anymore, just because it's it takes too long. 177 00:10:15,800 --> 00:10:18,319 Speaker 1: I you know, I don't have time to to wait 178 00:10:18,520 --> 00:10:21,280 Speaker 1: six hours in the line. And that's what you have 179 00:10:21,320 --> 00:10:23,800 Speaker 1: to do if you go there. Six hours? Is that? 180 00:10:23,880 --> 00:10:26,360 Speaker 1: How long? Is that? How long? The lines are? Oh 181 00:10:26,400 --> 00:10:28,560 Speaker 1: they're huge, I mean people are in line all day long. 182 00:10:28,800 --> 00:10:31,440 Speaker 1: Some people we did a story a couple of weeks 183 00:10:31,440 --> 00:10:34,480 Speaker 1: ago on they call them bats and those are the 184 00:10:34,520 --> 00:10:38,560 Speaker 1: people who buy goods by the regulated goods and then 185 00:10:38,600 --> 00:10:41,840 Speaker 1: resell them. So and and some of the people in 186 00:10:41,880 --> 00:10:44,200 Speaker 1: the lines are the batri caros, and some are just 187 00:10:44,440 --> 00:10:47,800 Speaker 1: normal Venezuelans. But the point is, now, you know, I 188 00:10:47,840 --> 00:10:51,199 Speaker 1: find most of my goods and kind of just local 189 00:10:51,240 --> 00:10:55,959 Speaker 1: neighborhood shops or there's other stores kind of that focus 190 00:10:56,000 --> 00:10:59,760 Speaker 1: on specialty imported items, and uh, you know, that's not 191 00:10:59,800 --> 00:11:03,360 Speaker 1: some thing that your average Venezuelan can necessarily afford. But 192 00:11:03,440 --> 00:11:07,200 Speaker 1: there there is food here if you have if you 193 00:11:07,200 --> 00:11:10,360 Speaker 1: can afford it, but most people can't afford it because 194 00:11:10,400 --> 00:11:13,000 Speaker 1: they've seen there. Uh you know, we talk about currency 195 00:11:13,440 --> 00:11:15,920 Speaker 1: being at the center of all the issues. The minimum 196 00:11:15,960 --> 00:11:18,800 Speaker 1: wage right now is about thirty thousand boulevards a month. 197 00:11:18,880 --> 00:11:21,760 Speaker 1: So if you look at the official rate, it's that 198 00:11:21,920 --> 00:11:23,920 Speaker 1: sounds like three thousand dollars a month. That sounds like 199 00:11:23,960 --> 00:11:27,679 Speaker 1: pretty high for a minimum wage, but when you look 200 00:11:27,720 --> 00:11:32,000 Speaker 1: at the medium rate, it's about sixty dollars a month 201 00:11:32,200 --> 00:11:35,360 Speaker 1: and much less at the black market rate. So and 202 00:11:35,559 --> 00:11:38,000 Speaker 1: you go to one of these non regulated stores, and 203 00:11:38,800 --> 00:11:43,200 Speaker 1: kilogram of like two pounds of chicken will cost about 204 00:11:43,200 --> 00:11:46,960 Speaker 1: a third of a monthly salary, So people can't afford 205 00:11:47,120 --> 00:11:49,840 Speaker 1: to shop in in the stores where there are the 206 00:11:49,840 --> 00:11:52,240 Speaker 1: products that there are only choices to kind of wait 207 00:11:53,280 --> 00:11:56,160 Speaker 1: for our listeners. I was going to say that that 208 00:11:56,600 --> 00:11:59,880 Speaker 1: black market exchange rate that Nathan keeps mentioning but can't 209 00:12:00,080 --> 00:12:03,920 Speaker 1: legally say what it is, that's a thousand bowl of 210 00:12:04,000 --> 00:12:08,320 Speaker 1: oars to the dollar. Amazing. You know, Nathan, clearly all 211 00:12:08,360 --> 00:12:12,400 Speaker 1: of this has had very real human consequences. Is there 212 00:12:12,520 --> 00:12:14,800 Speaker 1: like one thing that you can think of that has 213 00:12:15,679 --> 00:12:19,880 Speaker 1: maybe made you the angriest or maybe has been the 214 00:12:19,920 --> 00:12:24,280 Speaker 1: most heartbreaking for you? You know, there's there's a couple, 215 00:12:24,720 --> 00:12:27,120 Speaker 1: uh you know, I remember, right when I moved here, 216 00:12:27,200 --> 00:12:31,439 Speaker 1: kind of before the current economic crisis started, my my 217 00:12:31,640 --> 00:12:35,720 Speaker 1: landlord's husband was was murdered. Uh and they have four 218 00:12:35,800 --> 00:12:39,240 Speaker 1: young kids. So, you know, I think everyone who who 219 00:12:39,280 --> 00:12:41,840 Speaker 1: spends a certain amount of time here you hear all 220 00:12:41,840 --> 00:12:44,880 Speaker 1: these stories and you think, oh, well, that's happening to 221 00:12:44,920 --> 00:12:47,559 Speaker 1: someone else. But the more time you start to spend here, 222 00:12:47,679 --> 00:12:52,200 Speaker 1: you will you start meeting people that get end up 223 00:12:52,240 --> 00:12:54,720 Speaker 1: being killed or kidnapped. You start to hear really horror 224 00:12:54,760 --> 00:12:58,360 Speaker 1: stories and kind of the current environment. I think you 225 00:12:58,440 --> 00:13:04,880 Speaker 1: hear tons of really big problems at the hospitals, people 226 00:13:04,880 --> 00:13:07,600 Speaker 1: that cannot get the medicine they need, people who are 227 00:13:07,760 --> 00:13:11,000 Speaker 1: are dying of cancer because they just are not getting 228 00:13:11,160 --> 00:13:15,120 Speaker 1: the right treatment. Here there's there's no medicine. So you 229 00:13:15,120 --> 00:13:16,960 Speaker 1: hear all these stories. But I think kind of another 230 00:13:17,520 --> 00:13:20,360 Speaker 1: another theme that I think about a lot is is 231 00:13:20,480 --> 00:13:24,880 Speaker 1: just the loss of of potential. Uh, you know, I 232 00:13:25,200 --> 00:13:27,360 Speaker 1: think one one of the whole interesting things of this 233 00:13:27,480 --> 00:13:30,120 Speaker 1: Venezuelan crisis. And and you look at the stats and 234 00:13:30,160 --> 00:13:32,480 Speaker 1: you think, why isn't it worse, you know, why aren't 235 00:13:32,480 --> 00:13:36,000 Speaker 1: people starving on the streets. And for me, it's most 236 00:13:36,080 --> 00:13:41,600 Speaker 1: Venezuelans uh own their residents, or they live with their parents, 237 00:13:41,720 --> 00:13:44,440 Speaker 1: or they're in some kind of government housing. So most 238 00:13:44,440 --> 00:13:47,280 Speaker 1: people are not worrying about paying rent or a mortgage. 239 00:13:47,480 --> 00:13:50,280 Speaker 1: So all the money they get they're spending on food, 240 00:13:50,360 --> 00:13:54,079 Speaker 1: but they're not facing kind of that that imminent risk 241 00:13:54,240 --> 00:13:56,200 Speaker 1: of you know, losing their home that you see in 242 00:13:56,240 --> 00:13:59,320 Speaker 1: other countries. But at the same time, if you're kind 243 00:13:59,320 --> 00:14:02,439 Speaker 1: of a recent college grad or or maybe you graduated 244 00:14:02,480 --> 00:14:04,760 Speaker 1: five years ago and are looking to start your career. 245 00:14:04,800 --> 00:14:08,240 Speaker 1: There's not a whole lot of opportunities. Uh, you're gonna 246 00:14:08,280 --> 00:14:12,480 Speaker 1: get a job that's probably gonna pay maybe two minimum wages, 247 00:14:12,520 --> 00:14:14,280 Speaker 1: you know, if you're lucky. So you're looking at like 248 00:14:14,280 --> 00:14:17,720 Speaker 1: a hundred dollars a month, and that that's not anywhere 249 00:14:17,760 --> 00:14:22,800 Speaker 1: near enough to kind of start your life. New apartments 250 00:14:22,920 --> 00:14:24,680 Speaker 1: kind of in the nice part of town, they're all 251 00:14:24,680 --> 00:14:26,760 Speaker 1: being rented in dollars. If you want to buy something, 252 00:14:26,800 --> 00:14:28,440 Speaker 1: it's all dollars. If you want to buy a car, 253 00:14:28,520 --> 00:14:31,480 Speaker 1: it's all dollars. And you know, things kind of are 254 00:14:31,520 --> 00:14:34,760 Speaker 1: all being bought and sold in dollars. But the people 255 00:14:34,760 --> 00:14:37,240 Speaker 1: are making boulevards. So there's just not a lot of 256 00:14:37,240 --> 00:14:39,760 Speaker 1: opportunity here. I was at the you know, I went 257 00:14:39,760 --> 00:14:42,160 Speaker 1: to the gym the other day, and the lady behind 258 00:14:42,160 --> 00:14:45,000 Speaker 1: the counter, you know, said goodbye. I'm I'm getting ready 259 00:14:45,040 --> 00:14:47,520 Speaker 1: to leave the country. And I said, oh, that's too bad, 260 00:14:47,640 --> 00:14:50,440 Speaker 1: and and she she broke down crying. She goes, I'm 261 00:14:50,480 --> 00:14:52,400 Speaker 1: twenty seven years old. What am I supposed to do? 262 00:14:52,560 --> 00:14:55,920 Speaker 1: There's nothing for me here? And and so I think 263 00:14:55,960 --> 00:14:59,320 Speaker 1: that's Uh, you know, the longer time you spend here, 264 00:15:00,040 --> 00:15:02,760 Speaker 1: the more people you see go and you know you can. 265 00:15:02,840 --> 00:15:06,080 Speaker 1: You can you live in kind of the expat bubble 266 00:15:06,160 --> 00:15:08,800 Speaker 1: here if you want, and and it's you know, it 267 00:15:08,840 --> 00:15:12,000 Speaker 1: can be very fancy. There's fancy parties, there's fancy restaurants, 268 00:15:12,040 --> 00:15:14,760 Speaker 1: there's stuff to do here, and you can kind of 269 00:15:14,800 --> 00:15:17,440 Speaker 1: get lost in that bubble. But the more you get 270 00:15:17,440 --> 00:15:21,240 Speaker 1: out of it and really start asking, you know, Venezuelans, 271 00:15:21,240 --> 00:15:23,880 Speaker 1: how they're doing it, They're they're really struggling. I've seen, 272 00:15:24,200 --> 00:15:26,480 Speaker 1: especially in this past two years. And this once again 273 00:15:26,480 --> 00:15:28,840 Speaker 1: all goes back to the currency. You've just seen real 274 00:15:28,880 --> 00:15:31,800 Speaker 1: wages declined so much, and and you've seen kind of 275 00:15:31,800 --> 00:15:35,440 Speaker 1: white collar professionals who two years had what they thought 276 00:15:35,480 --> 00:15:38,040 Speaker 1: were good jobs. They were making money, they could travel, 277 00:15:38,120 --> 00:15:41,200 Speaker 1: they they could buy goods on Amazon and have it 278 00:15:41,280 --> 00:15:42,800 Speaker 1: shipped here, and you know, it was kind of a 279 00:15:42,920 --> 00:15:47,720 Speaker 1: very standard middle class life to vacations a year, they'd 280 00:15:47,720 --> 00:15:50,360 Speaker 1: go to Miami and shopping trips. But now they're they're 281 00:15:50,400 --> 00:15:54,920 Speaker 1: finding themselves entering poverty. And you're seeing people like this 282 00:15:55,040 --> 00:15:58,560 Speaker 1: who you kind of identify with, and and they're they're worried, 283 00:15:58,680 --> 00:16:01,920 Speaker 1: worried about where they're gonna get their their next meal from. 284 00:16:01,920 --> 00:16:05,560 Speaker 1: It's kind of a staggering shift. So Nathan, Um, could 285 00:16:05,600 --> 00:16:07,800 Speaker 1: you take us back a little bit to how all 286 00:16:07,880 --> 00:16:10,200 Speaker 1: of this started. Um, take us back to the years 287 00:16:10,200 --> 00:16:13,880 Speaker 1: of Javis. Sure, well, you first saw Jovis come to power, 288 00:16:14,640 --> 00:16:18,000 Speaker 1: first elected in ninety eight and came to power. It 289 00:16:18,080 --> 00:16:21,720 Speaker 1: was complicated, He was controversial. I think he really became 290 00:16:21,840 --> 00:16:25,240 Speaker 1: radicalized in two thousand two and afterwards when there was 291 00:16:25,280 --> 00:16:27,880 Speaker 1: a brief coup that that removed him from from power, 292 00:16:27,920 --> 00:16:30,560 Speaker 1: and then he came back. There was a big strike. 293 00:16:31,160 --> 00:16:33,840 Speaker 1: But then oil the price of oil rose and there 294 00:16:33,880 --> 00:16:37,640 Speaker 1: was money everywhere. So so they had these currency controls 295 00:16:37,640 --> 00:16:42,760 Speaker 1: and these policies that that privileged imports versus domestic production, 296 00:16:42,880 --> 00:16:45,880 Speaker 1: and they nationalized things, and there was a lot of rhetoric, 297 00:16:46,640 --> 00:16:48,840 Speaker 1: but they had they had the money. So so the 298 00:16:49,080 --> 00:16:53,240 Speaker 1: these high oil prices really covered up a lot of things. 299 00:16:53,520 --> 00:16:56,600 Speaker 1: Like if you look at everything now, nothing that's going 300 00:16:56,600 --> 00:16:59,760 Speaker 1: on is really new. I mean, this is policies that 301 00:16:59,840 --> 00:17:01,960 Speaker 1: the country has been doing for the past a decade. 302 00:17:02,280 --> 00:17:05,080 Speaker 1: They've doubled down on some of them and and things 303 00:17:05,080 --> 00:17:08,120 Speaker 1: have gotten worse. But this, you know, everything that's going 304 00:17:08,119 --> 00:17:10,440 Speaker 1: on now was started with Chaves. The only difference between 305 00:17:10,520 --> 00:17:13,600 Speaker 1: Chaves and Moduto was well one. Chaves was a little 306 00:17:13,680 --> 00:17:16,080 Speaker 1: better liked by his supporters and maybe had a little 307 00:17:16,119 --> 00:17:21,080 Speaker 1: more personality. But the current president, Nicolas Madutro, just doesn't 308 00:17:21,080 --> 00:17:24,920 Speaker 1: have the money to cover up the problems that Chaves had, Right, Nathan, 309 00:17:24,960 --> 00:17:27,280 Speaker 1: I wonder if you think, you know, in some ways 310 00:17:27,359 --> 00:17:30,440 Speaker 1: Venezuela kind of squandered this opportunity when it had all 311 00:17:30,480 --> 00:17:33,960 Speaker 1: these rich natural resources. You know, could have saved it 312 00:17:34,040 --> 00:17:36,600 Speaker 1: up the way that maybe like a country like Norway does, 313 00:17:37,040 --> 00:17:40,560 Speaker 1: but instead it ended up, uh you know, creating these 314 00:17:41,000 --> 00:17:44,480 Speaker 1: big subsidies, ended up spending all that money instead of 315 00:17:44,480 --> 00:17:48,120 Speaker 1: storing it for rainier days. Yeah. I think that's one 316 00:17:48,160 --> 00:17:51,200 Speaker 1: of the thing why people and anyone who spent any 317 00:17:51,200 --> 00:17:54,719 Speaker 1: time in Venezuela or covered Venezuela, you you really get 318 00:17:55,240 --> 00:17:57,520 Speaker 1: almost addicted to the place. And I think one of 319 00:17:57,520 --> 00:18:00,000 Speaker 1: the reasons for that is everywhere you look, you see 320 00:18:00,560 --> 00:18:04,240 Speaker 1: just potential that you don't see anywhere else. I mean, 321 00:18:04,280 --> 00:18:07,160 Speaker 1: besides the largest oil reserves in the world, this place. 322 00:18:07,720 --> 00:18:12,639 Speaker 1: They have big mining resources, diamonds, gold minerals. It has 323 00:18:12,680 --> 00:18:16,959 Speaker 1: the biggest Caribbean coastline in the world. You know, famous 324 00:18:17,040 --> 00:18:20,960 Speaker 1: tourist destinations like case in the Caribbean and Angel Falls, 325 00:18:20,960 --> 00:18:23,520 Speaker 1: the highest waterfall in the world, and and it's beautiful. 326 00:18:23,520 --> 00:18:26,159 Speaker 1: And Caracas is a really pretty city. And you know, 327 00:18:26,240 --> 00:18:28,480 Speaker 1: every day of the year the weather is about the same. 328 00:18:28,560 --> 00:18:31,000 Speaker 1: It's high of seventy five and a low of sixty five. 329 00:18:31,080 --> 00:18:34,040 Speaker 1: The weather is perfect. It's I mean, this place could 330 00:18:34,119 --> 00:18:37,880 Speaker 1: could really be paradise, but it's obviously not. And it's 331 00:18:37,960 --> 00:18:41,800 Speaker 1: kind of maddening to just look around and just see them. 332 00:18:42,040 --> 00:18:45,280 Speaker 1: And it's only three hour flight from Miami. Geopolitically, it's 333 00:18:45,680 --> 00:18:49,119 Speaker 1: in a very interesting place. So uh, you know, you 334 00:18:49,160 --> 00:18:52,920 Speaker 1: really see just all this potential everywhere and and then 335 00:18:52,920 --> 00:18:55,720 Speaker 1: you look at what's happening and it's kind of maddening. 336 00:18:56,480 --> 00:19:01,720 Speaker 1: So Chavas died from his cancer and Mahuto, who was 337 00:19:01,800 --> 00:19:05,240 Speaker 1: kind of his seen as his successor for a while, right, 338 00:19:05,400 --> 00:19:08,520 Speaker 1: he came to power, and of course we've had the 339 00:19:08,560 --> 00:19:11,560 Speaker 1: problems with the oil price which have exposed all of 340 00:19:11,600 --> 00:19:16,680 Speaker 1: these issues. Now with the government policies, what is the future? 341 00:19:16,840 --> 00:19:21,320 Speaker 1: I mean in December, the opposition one a majority in Congress, 342 00:19:21,359 --> 00:19:25,640 Speaker 1: but they haven't been able to do too much with that, right, Yeah, 343 00:19:25,640 --> 00:19:28,800 Speaker 1: we've seen after they won, Uh, they even got a 344 00:19:28,840 --> 00:19:31,680 Speaker 1: two thirds majority, which they did better than they were expected, 345 00:19:31,720 --> 00:19:35,240 Speaker 1: but they saw their majority kind of reduced by the 346 00:19:35,320 --> 00:19:38,720 Speaker 1: Supreme Court. Right right after that election, Maduro put some 347 00:19:38,760 --> 00:19:41,240 Speaker 1: more justices on the Supreme Court, they stacked it in 348 00:19:41,280 --> 00:19:44,960 Speaker 1: his favor, and and and so one the Supreme Court, 349 00:19:45,040 --> 00:19:48,720 Speaker 1: the National Assembly had its majority reduced. And then we've 350 00:19:48,720 --> 00:19:51,120 Speaker 1: seen every initiative that they have passed has just been 351 00:19:51,160 --> 00:19:54,840 Speaker 1: overturned by the Supreme Court. So they've really had their 352 00:19:54,920 --> 00:19:57,920 Speaker 1: their hands tied. And in fact, recently the government has 353 00:19:58,200 --> 00:20:01,280 Speaker 1: has said they're suing the Supreme Court or the National 354 00:20:01,280 --> 00:20:06,520 Speaker 1: Assembly president for for trying to do too much, and 355 00:20:06,200 --> 00:20:09,479 Speaker 1: and so they've really been under attack. We were starting 356 00:20:09,520 --> 00:20:13,440 Speaker 1: to see the opposition demand a recall referendum on Maduro. 357 00:20:13,560 --> 00:20:17,000 Speaker 1: That's kind of been the current focal point of activity. Uh. 358 00:20:17,040 --> 00:20:19,480 Speaker 1: You know, right now, for instance, in Karakas, they're they're 359 00:20:19,480 --> 00:20:23,639 Speaker 1: holding a big march and they're the government is shooting 360 00:20:23,640 --> 00:20:26,800 Speaker 1: tear gas at the protesters. So um. But but that's 361 00:20:26,800 --> 00:20:30,480 Speaker 1: what the opposition is calling for, is a recall referendum. 362 00:20:30,600 --> 00:20:33,679 Speaker 1: Do you think there's going to be a coup? Um? 363 00:20:33,760 --> 00:20:36,800 Speaker 1: You know, I don't think that's for me to to 364 00:20:36,960 --> 00:20:41,000 Speaker 1: say um, you know, I think that that certainly is 365 00:20:41,040 --> 00:20:43,520 Speaker 1: a heated word that that you see thrown around in 366 00:20:43,600 --> 00:20:47,760 Speaker 1: Venezuela a lot that Maduro always accuses his his opponents 367 00:20:47,800 --> 00:20:50,560 Speaker 1: of of plotting coups. I mean, the number of times 368 00:20:50,600 --> 00:20:53,000 Speaker 1: I've seen Maduro on TV say there's a coup plot 369 00:20:53,040 --> 00:20:56,399 Speaker 1: against me, I mean, it's it's it's in you know, 370 00:20:56,760 --> 00:20:59,639 Speaker 1: many many hands to count that number. But you know, 371 00:20:59,680 --> 00:21:02,440 Speaker 1: I think if you look at what a coup is, 372 00:21:02,880 --> 00:21:05,639 Speaker 1: I mean, normally a coup comes from the military, and 373 00:21:05,640 --> 00:21:10,520 Speaker 1: in Venezuela, the government is pretty much controls the military, 374 00:21:10,560 --> 00:21:12,840 Speaker 1: and we've we've not seen a whole lot of signs 375 00:21:12,840 --> 00:21:16,560 Speaker 1: that the military wasn't completely with the government. There's there's rumors, 376 00:21:16,600 --> 00:21:19,280 Speaker 1: and there's some ex generals who come out and and 377 00:21:19,320 --> 00:21:22,040 Speaker 1: say things, but overall it still looks like the military 378 00:21:22,119 --> 00:21:25,880 Speaker 1: supports the government for now. But you know, that said, 379 00:21:25,880 --> 00:21:28,080 Speaker 1: there have been lots of coups here in the past, 380 00:21:28,160 --> 00:21:32,800 Speaker 1: so I don't think it would surprise anyone. But we 381 00:21:32,440 --> 00:21:34,840 Speaker 1: we've seen the opposition come out and say that they 382 00:21:34,880 --> 00:21:38,240 Speaker 1: don't want a coup, that that they want this recall referendum. 383 00:21:38,280 --> 00:21:41,399 Speaker 1: They want they want the people to have a chance 384 00:21:41,520 --> 00:21:45,439 Speaker 1: to express their will through democracy. So no one at 385 00:21:45,480 --> 00:21:48,280 Speaker 1: least publicly in the opposition that you see, is advocating 386 00:21:48,280 --> 00:21:51,800 Speaker 1: for a coup. But we will see what happens, right, 387 00:21:51,920 --> 00:21:54,880 Speaker 1: And you know, Nathan, on top of all this, Venezuela 388 00:21:55,119 --> 00:21:57,720 Speaker 1: is quite a bit of money to foreign countries, and 389 00:21:58,040 --> 00:22:02,480 Speaker 1: there's been some nervousness about possibility of Venezuela defaulting on 390 00:22:02,560 --> 00:22:06,600 Speaker 1: that debt. What's that situation looking like? Now, well, that's 391 00:22:06,800 --> 00:22:10,320 Speaker 1: another really interesting question. And and you know, one it 392 00:22:10,359 --> 00:22:12,480 Speaker 1: all goes back, I think to another reason why there's 393 00:22:12,920 --> 00:22:15,679 Speaker 1: there's so much interest in Venezuela, and it's because of 394 00:22:15,720 --> 00:22:17,920 Speaker 1: the debt. It's because of these bonds, and a lot 395 00:22:18,000 --> 00:22:20,920 Speaker 1: of them are are traded on Wall Street so and 396 00:22:20,920 --> 00:22:23,879 Speaker 1: and owned by by US funds. And and if you 397 00:22:23,920 --> 00:22:26,240 Speaker 1: look at at the bonds, I mean by Petavisa, which 398 00:22:26,240 --> 00:22:29,199 Speaker 1: is the state oil company or the sovereign these are 399 00:22:29,240 --> 00:22:32,440 Speaker 1: bonds kind of backed in a way by the country's 400 00:22:33,000 --> 00:22:35,040 Speaker 1: oil reserves at one point, which are the largest in 401 00:22:35,040 --> 00:22:37,399 Speaker 1: the world. And these bonds are dollar bonds, and they 402 00:22:37,480 --> 00:22:40,840 Speaker 1: yield like twenty to thirty percent a year. So you're 403 00:22:40,880 --> 00:22:44,760 Speaker 1: not going to find that investment anywhere else except now 404 00:22:44,800 --> 00:22:48,560 Speaker 1: they're trading at thirty forty cents on the dollar. I 405 00:22:48,600 --> 00:22:52,280 Speaker 1: think credit default swaps show about a seventy percent risk 406 00:22:52,280 --> 00:22:54,719 Speaker 1: of default in the next twelve months and uh like 407 00:22:54,720 --> 00:22:57,720 Speaker 1: a chance in the in the next five years. So people, 408 00:22:57,800 --> 00:23:00,360 Speaker 1: really the market doesn't seem to think that they're gonna 409 00:23:00,400 --> 00:23:03,400 Speaker 1: make it much longer. But the government, they've said over 410 00:23:03,440 --> 00:23:06,040 Speaker 1: and over and over again, we will pay the bonds. 411 00:23:06,040 --> 00:23:09,760 Speaker 1: We're paying the bonds. They've paid everything so far, they've 412 00:23:09,840 --> 00:23:13,359 Speaker 1: never even hinted that they might not pay. But to 413 00:23:13,520 --> 00:23:17,240 Speaker 1: do that, they've had to reduce imports and at this 414 00:23:17,320 --> 00:23:21,120 Speaker 1: time of you know, lower oil revenue. And this gets 415 00:23:21,160 --> 00:23:24,520 Speaker 1: back to the whole current problem with shortages is they're 416 00:23:24,920 --> 00:23:26,760 Speaker 1: they're using the money they do have to pay their 417 00:23:26,800 --> 00:23:30,919 Speaker 1: debt instead of importing goods that Venezuelan's needs. So you 418 00:23:30,960 --> 00:23:33,640 Speaker 1: know that and as things get worse here, I think 419 00:23:33,680 --> 00:23:35,760 Speaker 1: people are going to have to start looking at the 420 00:23:35,840 --> 00:23:38,040 Speaker 1: question do we pay the bond holders or do we 421 00:23:38,080 --> 00:23:42,960 Speaker 1: import food? And and that's kind of a tough question. So, uh, 422 00:23:43,000 --> 00:23:47,440 Speaker 1: if the situation starts to really deteriorate, deteriorate here, you're 423 00:23:47,600 --> 00:23:52,040 Speaker 1: you're going to see the government being forced to answer that. Yeah, gosh, 424 00:23:52,040 --> 00:23:55,600 Speaker 1: that's totally riveting. I guess we're gonna keep a really 425 00:23:55,640 --> 00:23:58,520 Speaker 1: close eye on this situation. Nathan, thank you so much 426 00:23:58,560 --> 00:24:09,320 Speaker 1: for joining us today. Thank you anytime. Benchmark will be 427 00:24:09,359 --> 00:24:11,719 Speaker 1: back next week and until then, you can find us 428 00:24:11,720 --> 00:24:14,760 Speaker 1: on the Bloomberg Terminal and Bloomberg dot com, as well 429 00:24:14,800 --> 00:24:18,560 Speaker 1: as on iTunes, pocket Cast, and Stitcher. Take a minute 430 00:24:18,600 --> 00:24:21,240 Speaker 1: to rate and review the show so more listeners can 431 00:24:21,280 --> 00:24:23,159 Speaker 1: find us and let us know what you thought of 432 00:24:23,200 --> 00:24:25,320 Speaker 1: the show. You can talk to us and follow us 433 00:24:25,359 --> 00:24:30,119 Speaker 1: on Twitter at Ako seven and at Katarina Surviva and 434 00:24:30,720 --> 00:24:35,960 Speaker 1: n M Crooks for Nathan our guests. See you next week. M.