Venezuelan Political Folly Is A Cue For Investors

Agenda-Setting Financial Insight.
Jan. 11 2013 12:37 PM

Venezuelan Political Folly Is A Cue For Investors

159260697
Just how sick Chavez is remains a mystery to most

Photo by Jose CABEZAS/AFP/Getty Images

The political folly in Venezuela is a cue for investors. Allies of ailing President Hugo Chavez seem to be taking even greater liberties interpreting the constitution than expected. There’s no inauguration, caretaker government or sign of a new election. If markets truly hate uncertainty, then animus toward Venezuela should be off the charts.

Just how sick Chavez is remains a mystery to most, though it’s obviously bad enough that he couldn’t get home from Cuba to be sworn in on Thursday. Venezuela’s government has coasted by with a series of cryptic messages about the recently re-elected president’s recovery from Dec. 11 cancer surgery.

Advertisement

For now, it’s easier to say what probably won’t happen than what will. A pro-Chavez congress and high court have shrugged off their obligation to form a medical panel to determine Chavez’s ability to rule. This means he won’t be deemed unfit to hold office any time soon, a needed precondition for the head of congress to usher in a caretaker regime. It also postpones - maybe indefinitely - a fresh national vote.

Time appears to be on the side of the Chavistas. A decision by lawmakers to grant the president an open-ended medical leave keeps his seat open as he fights to recover. It also provides his anointed successor, Vice President Nicolas Maduro, more exposure ahead of any eventual new election. Meanwhile, the opposition is weak after both national and regional losses at two different polls in the last three months.

The economy also isn’t likely to turn opinion against the government. Venezuela’s GDP grew by 5.5 percent last year and oil revenue continues to replenish Chavista-controlled coffers. An overvalued exchange rate is still a worry, but the incumbent team knows how to match partial devaluations with heavy spending to stay popular.

The new highs for Venezuela’s bonds almost certainly speak more to excess cash in need of a home somewhere in Latin America than confidence about post-Chavez reforms. Even so, it defies the old saying about investors despising ambiguity. They seem to love it in Venezuela, though may come to regret it when it becomes clearer that with or without Chavez, his market-unfriendly policies will live on. 

Read more at Reuters Breakingviews.

TODAY IN SLATE

Medical Examiner

Here’s Where We Stand With Ebola

Even experienced international disaster responders are shocked at how bad it’s gotten.

The U.S. Airstrikes on ISIS in Syria Will Probably Benefit America’s Other Enemies

Divestment Is Fine but Mostly Symbolic. There’s a Better Way for Universities to Fight Climate Change.

It’s Not Easy for Me, but I Stand With Emma Watson on Women’s Rights

It Is Very Stupid to Compare Hope Solo to Ray Rice

Building a Better Workplace

In Defense of HR

Startups and small businesses shouldn’t skip over a human resources department.

Why Are Lighter-Skinned Latinos and Asians More Likely to Vote Republican?

How Ted Cruz and Scott Brown Misunderstand What It Means to Be an American Citizen

  News & Politics
The World
Sept. 23 2014 10:55 AM This Isn’t the Syria Intervention Anyone Wanted
  Business
Business Insider
Sept. 23 2014 10:03 AM Watch Steve Jobs Tell Michael Dell, "We're Coming After You"
  Life
The Vault
Sept. 23 2014 10:24 AM How Bad Are Your Drinking Habits? An 18th-Century Temperance Thermometer Has the Verdict.
  Double X
The XX Factor
Sept. 23 2014 11:13 AM Why Is This Mother in Prison for Helping Her Daughter Get an Abortion?
  Slate Plus
Slate Plus
Sept. 22 2014 1:52 PM Tell Us What You Think About Slate Plus Help us improve our new membership program.
  Arts
Brow Beat
Sept. 23 2014 9:42 AM Listen to the Surprising New Single From Kendrick Lamar
  Technology
Future Tense
Sept. 23 2014 10:51 AM Is Apple Picking a Fight With the U.S. Government? Not exactly.
  Health & Science
Bad Astronomy
Sept. 23 2014 11:00 AM Google CEO: Climate Change Deniers Are “Just Literally Lying”
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.