Signs Of Things To Come?

From Bloomberg:

Venezuela Pares China Debt With $20 Billion Oil Accord

Venezuela, the largest oil producer in South America, is shipping 200,000 barrels a day of crude to China to repay $20 billion of debt borrowed from the Asian nation to finance power, agriculture and technology projects.

The OPEC member, planning to ramp up China shipments to 1 million barrels a day by 2012, is selling oil at market prices to repay the 10-year loan, Oil Minister Rafael Ramirez said yesterday in an interview in Caracas. Shipments to repay the cash represent half Venezuela’s daily crude exports to China.

“We’re diversifying our export markets; our international policy is going in this direction,” Ramirez, also president of state oil company Petroleos de Venezuela SA, said at his office beneath paintings of Cuba’s Fidel Castro and Che Guevara. “We don’t cut prices in any of our international agreements.”

Venezuela is tapping Asian nations that need crude to fuel growth in their fast-growing economies for cash. President Hugo Chavez is seeking funds to restructure the country’s economy to provide more jobs for the poor and address power shortages.


Venezuela's leader, Mr. Chavez, is selling hard commodity assets to repay a Chinese loan to fund his socialist programs after nationalizing oil projects, electric companies, telecommunication companies, supermarkets and generally wreaking havoc on the nation's economy.

Mr. Chavez devalued the country's currency, the bolivar, by 50% in January 2010 and now is repaying a Chinese loan in crude oil.

We wonder if this sort of abuse of monetary and fiscal policy will soon be coming to America to repay our debts to the Chinese?
Will we repay in coal, or some other commodity, or will it be in advanced technology?
How soon will we see the Fed begin a gigantic quantitative easing scheme in an attempt to generate enough dollars to buy our own bonds, thereby devaluing our dollar?

Or will we see some return to fiscal and monetary responsibility.

The current picture is not promising.

Photo courtesy Ka Cao