Hugo Chavez is running low on cash.
Should you care that he just had to withdraw $5Bn from reserves, sending them to a 10-month low and down 19% to $28.35Bn? Well it’s not just Venezuela but they are a good example of what’s happening around the World as even oil-rich nations can no longer prop up their economies and will have to begin competing with the US, Europe and Japan to borrow money on the internaitional markets. Venezuela may have external debt financing needs this year of as much as $19 billion and as much as $22 billion in 2011 should authorities choose not to use non-reserve savings estimated at $41.1 billion, according to Morgan Stanley. “Short of some break in Venezuela’s current dynamic, the economy may be faced with a severe dollar crunch as early as this year,” Pardelli and Volberg said. “The dollar crunch may prompt the authorities to attempt to buy time by drawing down their hard currency savings, issuing debt or significantly ratcheting up policy heterodoxy.”
Greece needs $15.6Bn by the end of May and that much again in August and November. Seven-year notes sold by the government this week fell even after the European Union and the International Monetary Fund crafted an aid package that would be triggered should the nation be unable to raise sufficient cash from capital markets to cover its financing needs. Greece may pay about 13 billion euros more in interest on the debt it sells this year than it would have to had yields stayed at their pre-crisis levels relative to Germany’s.
The UK will be spending 10% of their tax revenues just to pay the interest on their debt as debt itself soars to 90% of GDP with debt now costing the UK more than their Defence and Transportation budgets combined. Neighboring Ireland is looking at a $110Bn bill over the next 12 months to stablize it’s bad banks – and that’s AFTER giving the banks a 47% haircut on the value of the assets the government will be picking up. This will not be counted as an addition to Ireland’s already $95Bn in debt for 2010 because, technically, they are buying an asset – even if the asset is toxic. It’s the same trick our Fed uses every month to pretend things are fine…
Fed President Richard Fisher says the U.S. can’t ignore the effect of the growing federal deficit on Treasury yields and the outlook of investors. “Even under the…
