Venezuela Economy in Trouble
Venezuela's economy is imploding.Its currency, the bolivar, is literally worth less than a penny.Just a month ago, $1 was worth 279 bolivars. That was already pretty dismal for Venezuela. Now $1 equals 408 bolivars, according to the unofficial exchange rate, which most Venezuelans get when they try to trade currency.
Put another way, one bolivar equals $0.002 -- less than a penny. The country's currency has lost nearly half its value since the beginning of May, according to dolartoday.com, a website that tracks the unofficial exchange rate.
It's another sign that Venezuela is arguably the world's worst economy. Venezuela primarily relies on oil exports to support its economy, which was already under pressure before oil prices tanked in the fall and winter.
Socialist President Nicolas Maduro goal is to equally distribute wealth among all the country's people. Maduro has continued massive public spending programs to appeal to the country's poor.But the bolivar's implosion has only created more inequality. There's a growing divide between Venezuelans who can pay to exchange bolivars for dollars and those who can't. The gap is most glaring at the local grocery store.
The government imports many consumer goods -- like toilet paper, beef and shampoo -- but it can't pay for these goods anymore. MNCs are getting crushed as they're losing hundreds of millions of dollars due to Venezuela's currency.A default by the Venezuelan Govt is impemding. The government owes about $5 billion in debt payments then, and there are few convincing signs that Maduro and his government can pay the bills. Venezuela could default on its debt in October, sending the country further into economic mire.