08-30-2018, 09:37 PM
*** 31-Aug-18 World View -- US court seizes Venezuela's Citgo, as Argentina's peso crashes
This morning's key headlines from GenerationalDynamics.com
****
**** US court seizes Socialist Venezuela's Citgo as compensation for mine nationalization
****
![[Image: g180830b.jpg]](http://Media.GenerationalDynamics.com/ww2010/g180830b.jpg)
The Citgo sign has been a Boston landmark since its Cities Service predecessor sign was erected in 1940 (Boston Globe)
A US court has awarded Citgo, the Houston Texas based subsidiary of
Venezuela's nationalized state-owned oil company Petróleos de
Venezuela S.A. (PDVSA), to a Canadian mining firm Crystallex.
Allowing Crystallex to seize Citgo gives the mining company a kind of
revenge against the Socialist government of Venezuela. In 2008, when
Hugo Chávez was running Venezuela, Chávez ordered the seizure and
nationalization of Las Cristales, the local mining operation run by
Crystallex.
In 2016, a World Bank arbitration tribunal awarded Crystallex $1.2
billion plus $200 in interest, totaling $1.4 billion, which is the
amount that a US court judge is ordering Venezuela to pay to
Crystallex. In lieu of that payment, the judge has awarded Citgo to
Crystallex.
Citgo is valued at $8 billion, a lot more than the amount owed to
Crystallex. However another nationalized state-owned oil company,
Russia's Rosneft, claims that it owns 49.9% of Citgo. Rosneft
received the stake in Citgo in 2016 as collateral for a $1.5 billion
loan to Venezuela. Rosneft is asking the judge to split up Citgo into
pieces, rather award the whole thing to Crystallex. Venezuelanalysis and
OilPrice.com and Mining.com and Reuters and Boston Globe
****
**** Argentina's peso collapses after central bank raises interest rate to 60%
****
As we reported in June, Argentina forced to beg the International
Monetary Fund (IMF) for a $50 billion loan to prevent the country
from going bankrupt. The IMF is extremely unpopular in
Argentina, since the people blame the IMF for causing a major
economic crisis in 2000, when the IMF pulled the plug on another
load because Argentina was failing to live up to the austerity
commitments it made as a condition for receiving the loan.
Argentina is heavily in debt, having gone on a spending spree the last
decade. Since it's now impossible for Argentina to pay its debts, the
value of the peso has been falling continually against the dollar all
year. When the IMF agreed to loan the $50 billion in June, it was
hoped that the value of the peso would stabilize, but it hasn't.
People have been selling their Argentina bonds, denominated in pesos,
for US dollars to prevent personal losses, which has caused the peso
to fall.
On Thursday, the government increased its astronomical 45% interest
rate to an even more astronomical 60% interest rate, in the hope that
investors would stop selling bonds, since they could get 60% interest.
Furthermore, president Mauricio Macri announced that he was going to
ask the IMF to provide the $60 billion loan earlier than had been
previously agreed. Macri had hoped that these two announcements would
stabilize the peso.
Instead, investors seemed to have decided that the government was
desperate and panicking, so the peso ended the day down an additional
12% against the dollar.
IMF managing director Christine Lagarde says that revisions to the
timeline for the loan are being considered favorably, because of "the
more adverse international market conditions, which had not been fully
anticipated in the original program."
She added: "I am confident that the strong commitment and
determination of the Argentine authorities will be critical in
steering Argentina through the current difficult circumstances, and
will ultimately strengthen the economy for the benefit of all
Argentines." CNBC and NPR and Forbes
****
**** Turkey and Argentina lead the world's developing countries in falling currencies
****
Turkey's lira currency fell another 4% against the dollar on Thursday,
totalling 40% since the beginning of the year. Thursday's loss was
triggered by reports that a Turkish central bank deputy governor is
about to resign.
Like many countries, Turkey is deeply in dollar-denominated debt that
it can't repay, and investors holding Turkish lira are exchanging them
for dollars to preserve value. However, as we reported earlier this month,
Turkey's economic problems
are exacerbated by president Recep Tayyip Erdogan, who says that
interest rates are "evil," and who believes that lower interest rates
cause lower inflation, which is the opposite of the case, and who is
imposing his delusional economic theories on the central bank. No
wonder a central bank government may resign.
When we say that Turkey's lira currency has fallen 40% against the
dollar, we can say it a different way: that the value of the dollar
has been rising against Turkey's currency, as well as other national
currencies.
Developing country currencies have been particularly hard hit
by the strengthening dollar. Many of them have borrowed heavily
in dollar-denominated loans, which they can't repay with their
weaker currencies.
The following table shows the amount that different emerging country
currencies have fallen against the dollar this year:
Argentine peso -53.9%
Turkish lira -43.5%
Brazilian real -20.2%
South African rand -16.1%
Russian ruble -15.6%
Indian rupee -9.7%
Chilean peso -9.3%
Hungarian forint -7.7%
Indonesian rupiah -7.6%
Philippine peso -6.6%
Polish zloty -5.6%
The United States has one of the worst borrowing and spending records
in the world, but so far investors haven't punished us for this. When
investors decide to do that, it won't be pretty. CNBC and Bloomberg and Daily Express (London)
Related articles:
KEYS: Generational Dynamics, Venezuela, Hugo Chávez, Nicolás Maduro,
Petróleos de Venezuela S.A., PDVSA, Citgo,
Crystallex, Las Cristales, Russia, Rosneft,
Argentina, Mauricio Macri,
International Monetary Fund, IMF, Christine Lagarde
Turkey, Recep Tayyip Erdogan
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
This morning's key headlines from GenerationalDynamics.com
- US court seizes Socialist Venezuela's Citgo as compensation for mine nationalization
- Argentina's peso collapses after central bank raises interest rate to 60%
- Turkey and Argentina lead the world's developing countries in falling currencies
****
**** US court seizes Socialist Venezuela's Citgo as compensation for mine nationalization
****
The Citgo sign has been a Boston landmark since its Cities Service predecessor sign was erected in 1940 (Boston Globe)
A US court has awarded Citgo, the Houston Texas based subsidiary of
Venezuela's nationalized state-owned oil company Petróleos de
Venezuela S.A. (PDVSA), to a Canadian mining firm Crystallex.
Allowing Crystallex to seize Citgo gives the mining company a kind of
revenge against the Socialist government of Venezuela. In 2008, when
Hugo Chávez was running Venezuela, Chávez ordered the seizure and
nationalization of Las Cristales, the local mining operation run by
Crystallex.
In 2016, a World Bank arbitration tribunal awarded Crystallex $1.2
billion plus $200 in interest, totaling $1.4 billion, which is the
amount that a US court judge is ordering Venezuela to pay to
Crystallex. In lieu of that payment, the judge has awarded Citgo to
Crystallex.
Citgo is valued at $8 billion, a lot more than the amount owed to
Crystallex. However another nationalized state-owned oil company,
Russia's Rosneft, claims that it owns 49.9% of Citgo. Rosneft
received the stake in Citgo in 2016 as collateral for a $1.5 billion
loan to Venezuela. Rosneft is asking the judge to split up Citgo into
pieces, rather award the whole thing to Crystallex. Venezuelanalysis and
OilPrice.com and Mining.com and Reuters and Boston Globe
****
**** Argentina's peso collapses after central bank raises interest rate to 60%
****
As we reported in June, Argentina forced to beg the International
Monetary Fund (IMF) for a $50 billion loan to prevent the country
from going bankrupt. The IMF is extremely unpopular in
Argentina, since the people blame the IMF for causing a major
economic crisis in 2000, when the IMF pulled the plug on another
load because Argentina was failing to live up to the austerity
commitments it made as a condition for receiving the loan.
Argentina is heavily in debt, having gone on a spending spree the last
decade. Since it's now impossible for Argentina to pay its debts, the
value of the peso has been falling continually against the dollar all
year. When the IMF agreed to loan the $50 billion in June, it was
hoped that the value of the peso would stabilize, but it hasn't.
People have been selling their Argentina bonds, denominated in pesos,
for US dollars to prevent personal losses, which has caused the peso
to fall.
On Thursday, the government increased its astronomical 45% interest
rate to an even more astronomical 60% interest rate, in the hope that
investors would stop selling bonds, since they could get 60% interest.
Furthermore, president Mauricio Macri announced that he was going to
ask the IMF to provide the $60 billion loan earlier than had been
previously agreed. Macri had hoped that these two announcements would
stabilize the peso.
Instead, investors seemed to have decided that the government was
desperate and panicking, so the peso ended the day down an additional
12% against the dollar.
IMF managing director Christine Lagarde says that revisions to the
timeline for the loan are being considered favorably, because of "the
more adverse international market conditions, which had not been fully
anticipated in the original program."
She added: "I am confident that the strong commitment and
determination of the Argentine authorities will be critical in
steering Argentina through the current difficult circumstances, and
will ultimately strengthen the economy for the benefit of all
Argentines." CNBC and NPR and Forbes
****
**** Turkey and Argentina lead the world's developing countries in falling currencies
****
Turkey's lira currency fell another 4% against the dollar on Thursday,
totalling 40% since the beginning of the year. Thursday's loss was
triggered by reports that a Turkish central bank deputy governor is
about to resign.
Like many countries, Turkey is deeply in dollar-denominated debt that
it can't repay, and investors holding Turkish lira are exchanging them
for dollars to preserve value. However, as we reported earlier this month,
Turkey's economic problems
are exacerbated by president Recep Tayyip Erdogan, who says that
interest rates are "evil," and who believes that lower interest rates
cause lower inflation, which is the opposite of the case, and who is
imposing his delusional economic theories on the central bank. No
wonder a central bank government may resign.
When we say that Turkey's lira currency has fallen 40% against the
dollar, we can say it a different way: that the value of the dollar
has been rising against Turkey's currency, as well as other national
currencies.
Developing country currencies have been particularly hard hit
by the strengthening dollar. Many of them have borrowed heavily
in dollar-denominated loans, which they can't repay with their
weaker currencies.
The following table shows the amount that different emerging country
currencies have fallen against the dollar this year:
Argentine peso -53.9%
Turkish lira -43.5%
Brazilian real -20.2%
South African rand -16.1%
Russian ruble -15.6%
Indian rupee -9.7%
Chilean peso -9.3%
Hungarian forint -7.7%
Indonesian rupiah -7.6%
Philippine peso -6.6%
Polish zloty -5.6%
The United States has one of the worst borrowing and spending records
in the world, but so far investors haven't punished us for this. When
investors decide to do that, it won't be pretty. CNBC and Bloomberg and Daily Express (London)
Related articles:
- Socialist Venezuela introduces new fantasy currency and new Socialist changes (19-Aug-2018)
- Socialist Venezuela's state-owned PDVSA oil company near total collapse (21-Apr-2018)
- Argentina faces major financial crisis as IMF loans it $50 billion (09-Jun-2018)
- Turkey's lira currency crumbles as Trump turns the screws after Erdogan double-cross (11-Aug-2018)
KEYS: Generational Dynamics, Venezuela, Hugo Chávez, Nicolás Maduro,
Petróleos de Venezuela S.A., PDVSA, Citgo,
Crystallex, Las Cristales, Russia, Rosneft,
Argentina, Mauricio Macri,
International Monetary Fund, IMF, Christine Lagarde
Turkey, Recep Tayyip Erdogan
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
