"The government may be moving to repatriate reserves ahead of arbitration case rulings to avoid an “attachment risk” that could freeze international assets, Boris Segura, a New York- based strategist at Nomura Securities said in a research note."1
ORLY? What's the total value of a settlement that rules 100% in favor of... what... two or three junior mining companies? And for this you put your entire bond market at risk?
However this move could have unexpected consequences. Venezuela already has some of the highest borrowing costs of any developed nation. Hording assets and limiting transparency is not going to do anything but raise those costs further.
It is no surprise to most who have seen the socialist president nationalize pretty much everything under the South American sun. Chavez says he plans to move a total 211 tons of Venezuelan gold held in other countries to Caracas.
The problem with viewing everything Venezuelan through an ideological lens is that it misses the bigger picture. How long has Chavez been talking up a Latin American banking and currency union? Now even Colombia (the main holdout) is moving to normalize relations with Venezuela. Perhaps the nations of the south now see the writing on the wall and are moving in concert to protect themselves, using mr. Hugo (who doesn't mind the heat) to run cover for them? How much of that Venezuelan gold will actually end up in Caracas and how much will be lent to Bolivia, Ecuador, Colombia etc. to shore up their currency positions and facilitate trade amongst themselves? Venezuela may be moving to protect itself, but they're not alone. US influence in the region is waning - part of the price for waging two unsuccessful wars in Iraq and Afghanistan. When the cat's away the mice will play, and like Britain before them, the US is spread too thin to maintain its empire.
Another point to consider: Mr Hugo's prognosis is probably worse than we're being told. It's clear he sees himself as a historic figure, so maybe this has something to do with carrying out his grand vision on a more compressed timescale? If so, things could get even more interesting in the weeks and months ahead.
ebear
