The collapse of a Venezuelan bank owned by R. Allen Stanford, the Texas financier accused of fraud, is raising concern that the run on its deposits could spread to other banks, threatening the nation's economy.That last sentence is classic! You've gotta love economically ignorant dictators.
On Saturday, President Hugo Chávez blamed his political enemies for rumors about mass withdrawals, and urged depositors not to pull their savings from domestic banks. ...
Mr. Chávez moved to restore confidence a day after speculation spread among brokerage-house trading desks and businessmen that at least one major bank had faced unusually large deposit withdrawals. The speculation is difficult to confirm because it is too recent to be reflected in the latest official bank data.
While Mr. Chávez may succeed in restoring confidence, the concerns underscore the problems facing the 54-year-old, anti-American former soldier, who recently completed a decade in power and last month won a referendum to alter the constitution to permit indefinite re-election.
Mr. Chávez's ability to fund welfare programs and other subsidies at the core of his popularity is undercut by plunging oil prices. Increasingly, residents of Venezuela say they believe Mr. Chávez will have to devalue the "strong bolivar" currency he introduced last year. Price controls meant to contain 30% inflation have led to food shortages. On Saturday, Mr. Chávez dispatched troops to force rice makers to boost production.
Tuesday, March 3, 2009
Bank collapse could cause financial panic in Venezuela
It looks like the anti-American dictator might have his hands full: