Situation Worsening in Venezuela

May 7, 2007

So far the telephone and electricity companies have been nationalized in Venezuela and President Hugo Chaves is threatening to nationalize banks controlled by financial institutions from the United States and Spain. Rich Venezuelans rushed to take money out of the bank as the Bolivar weakened by 3%. Chavez has threatened to nationalize Sidor, the Argentine-controlled steel maker and take over banking system unless banks agreed to offer low-cost financing to domestic industry. The current inflation rate is 19.4% a year. There are scarcities in beef, eggs, sugar and milk which are subject to price controls making it hard for producers to meet labor demands. Investors have already begun selling Venezuelan bonds. More…

 

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