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| Business as usual in downtown Caracas |
S&P cut Ukraine’s credit rating to CCC on Feb. 21, eight levels below investment grade, saying it risks default without “significantly favorable changes.” The Black Sea nation is grappling with a record current-account deficit and has seen foreign reserves plunge 28 percent in the past year to $17.8 billion at the end of January, the lowest level since 2006.If you ask me it's the same banana as the Europeans "ride to the rescue": the IMF will come in, Ukraine's leaders will balk at politically unpopular structural reforms demanded by it, and then Ukraine becomes more destitute than before as its financial situation deteriorates further as its balance of payments continues to hemorrhage money. The solution ultimately lies with Ukraine itself--not Russia, the EU, US, or IMF--but useless politicking as we've seen over the years seems to be the order of the day.
Turning to the other countries, which is going to blow out soon? What are their chances of remaining in power by the end of the year?
1. [5% survival chance] Thailand - Yingluck Shinawatra has already fled the capital Yanukovych style for an undisclosed location "150 km away" from Bangkok. Urban elites, royalists, the military and the judiciary all have an unfavorable opinion of her government. The court system will likely do her in ometime this year via corruption charges on the multibillion-dollar money-losing rice subsidy that is ruining the country's finances. It might take a while to establish a wiggle-free case, but she is most likely a goner since heavily subsidized farmers are deserting her as payments for rice are long overdue. In other words, she has next to no supporters left.
2. [33.3%] Argentina - There is now a notion that this country will experience a crisis every decade. These are usually accompanied by leadership change, so the chances of Fernandez-Kirchner staying in power are directly tied to staving off the day of reckoning:
In the 1940s, President Juan Peron closed the Argentine economy to trade with the rest of the world. In the 1960s, the country endured stagnation, inflation and military coups. In 1975, 1981 and 1989, failed economic plans led the currency to plunge. The last crisis hit in 2001, when Argentina defaulted on about $100 billion in sovereign bonds. The default—the largest ever at the time—brought down Argentina's banks, currency and government.Actually, the Argentinian government is also prone to dabbling with socialist economics:
[...]at the University of Buenos Aires, one of the school's top professors was Axel Kicillof, an economist with lamb-chop sideburns whose dissertation was a Marxist take on John Maynard Keynes. Today, Mr. Kicillof is Argentina's economy minister—the mind behind its nationalizations and its price, import and currency controls.3. [50%] Venezuela - This country is the most heavily mismanaged one with its retro-Leninist-Stalist-Maoist experiments in nationalization and state control. Yet, Chavismo remains strangely popular among certain segments, and it may be a while yet before the sheer economic destitution of Venezuela becomes apparent to them. With the military still in thrall, the socialists still appear safe despite everything:
The case of Zimbabwe demonstrates that regime survival and economic mismanagement are not directly correlated with each other. Thailand is far and away the best-run economy here, yet its leader is most likely to go. OTOH, Chavismo still has its rabid adherents in Zimbabwe-esque Venezuela, probably ensuring the Bolivarian Revolution may make it to 2015.There's one major reason analysts point to when they say that Venezuela's socialist government isn't approaching any sort of imminent collapse: Many people in the country are still behind the President. "Maduro has a lot of support," said George Ciccariello-Maher, an assistant professor of political science at Drexel University. "He's not Chavez, but he's seen as a relatively faithful representative of what Chavez stood for."The cornerstone of Chavez's presidency was the Bolivarian Revolution, his ambitious plan to turn Venezuela into a socialist state. Social "missions" aimed at eradicating illiteracy, distributing staple foods and providing health care popped up across the country.
I have a feeling that Argentina and Venezuela are wishing "Comrade Bob" Mugabe a happy 90th birthday right about now as proof of the durability of their favored policies. Speaking of whom, a power sharing agreement might just do the trick for Maduro as he meets the opposition.
