Socialist Venezuela, with gigantic reserves of oil and gas, prepares to go bust

Only socialism, or it's near kin Communism, can take a rich country and turn it poor.

"A CNBC report on the prospect of a Venezuelan default cited a Capital Economics report stating that a default could be expected by next September or October when $5 billion in debt payments come due. Only an upswing of oil prices to somewhere around $121/barrel would allow Venezuela to balance its budget, according to some estimates. But with OPEC recently slashing its 2015 production levels to a 12-year low in response to decreasing estimated global oil demand and increasing supply via U.S. shale production, a significant oil price increase in the short-term seems highly unlikely. Bloomberg reports that the implied probability of default—derived from complex financial formulas—in the next five years stands at 93%, the highest in the world."

How did otherwise rich and prosperous Venezuela reach this sad state?  Why, foolish socialist and anti capitalist governments, that's how.  Sound familiar to what we are experiencing here?

From the article:

2) Venezuela gives away almost half of its oil. CNBC reports that about 1.2 million barrels of Venezuela’s average 2.6 million barrel-per-day production go to Cuba for free and to its own citizens at heavily-subsidized prices. According to Bloomberg’s Pain at the Pump chart, the average cost of a gallon of gas in Venezuela is $0.04.

3) The windfalls from the days of high oil prices were squandered. Hugo Chavez and his successor Nicolas Maduro, leaders of the United Socialist Party of Venezuela, siphoned PVDSA’s earnings into social programs and their own political campaigns. Recently, Maduro spoke of making budget cuts to high-level officials’ salaries and “luxury” spending, but went on to say, “[W]e will never cut one bolivar [the Venezuelan currency] of what we spend on education, food, housing… on our people.” Maduro has also vowed to increase oil’s prices back to $100/barrel, which is“where they should be.”

4)  The Venezuelan government mismanaged PVDSA so badly that in early November the country, for the first time in its 100-year oil-exporting history, had to import oil to meet domestic demand, according to a USA Today report. Because PVDSA does not have enough money to invest in the infrastructure necessary to process the extra-heavy crude oil it drills, it uses an inefficient method of blending the heavy oil with lighter crude (this process removes minerals to make it ready for refining). This lighter crude is what the country imported, despite its domestic abundance. Central planning and mismanagement of PVDSA’s funds were so poor, the company also did not invest enough to produce as much lighter crude as needed.

5) The government ran huge budget deficits when oil revenues weren’t enough to fund its welfare state. In 2012, despite record-high oil prices, Venezuela’s deficit ran at 17% of GDP. In other words, despite squandering the oil revenues—thereby depriving its oil company of making the necessary capital investments to ensure sustained production—the Venezuelan government still did not have enough money to fund its numerous social programs.

Just because disaster - real disaster - hasn't happen in the US for a long time, doesn't mean it can't, especially with a part of the political class working diligently to create a huge class of government dependents, just like in Venezuela.

To the Anarchists/Communists/Socialists/Obamaists currently being allowed to run rampant in our streets, point out that what they want leads inevitably to what is now happening in Venezuela, or even worse.  That is, if it's even possible to reason with such folk.