A terrifying political battle is unfolding in Venezuela where Maduro is attempting to dissolve Congress (by influencing the courts) because they are trying to recall him.
The IBC Index, which tracks the 15 largest companies traded on the Caracas Stock Exchange (Venezuela), has crashed as the political drama unfolds.
The Washington Post reports that Venezuelans are storming supermarkets and attacking trucks as food supplies dwindle.
The Oil Bubble Pop Is To Blame
The problem in Venezuela is that the price of crude oil collapsed thanks to Saudi Arabia targeting the US shale industry. The Venezuela bolívar is a Petro-currency, and so its value crashed along with oil. The falling value of the bolívar pushed inflation through the roof. Consumer prices are up more than 700%.
Rating agencies' reports and credit default swaps estimate a high probability of default on Venezuela's debt. In 2015, the implied probability of default during the next five years, provided by the credit default swaps market, has been up to close to 95%. All the leading rating agencies have repeatedly downgraded Venezuela's credit rating.
Venezuela is close to falling into a civil war. Most people can only afford to eat one small meal, once a day. Decades ago, Hugo Chavez established a network of government-run supermarkets that sold basic foods at subsidized prices. The system of government-subsidized food has completely collapsed with the price of oil. Horrific inflation has caused just two pounds of yucca to cost a whopping 1/3 of the weekly minimum wage.
Citizens are organizing against their leaders, and things could turn violent quickly. In the past week, Venezuelans lined up to add their names to a recall petition that aims to kick President Nicolas Maduro out of power. Removing President Maduro from power would put an end to the socialist-inspired "revolution" started 17 years ago by Hugo Chavez.