While we await the next round of knuckleheaded essays from American liberals about how debt doesn’t matter and we can just keep borrowing money forever, the grim truth can be glimpsed on the thirsty streets of Venezuela. If you thought they hit rock bottom when the worker’s paradise could no longer provide adequate toilet paper, get a load of this report from Bloomberg News:
At a time when Venezuela’s record $25 billion in arrears to importers has its citizens waiting hours in line to buy drinking water and crossing borders in search of medicine, President Nicolas Maduro is using the nation’s dwindling supply of dollars to enrich bondholders.
Venezuela, which imports just about everything, and its state oil producer have paid $2.8 billion in interest to overseas creditors this year, according to Barclays Plc. Including debt principal, bondholder outlays will balloon to almost $10 billion by year-end, the London-based firm estimates.
By putting off the local companies responsible for supplying everything from diapers to cancer medications, Maduro can preserve access to debt markets and protect oil shipments that would be vulnerable to bondholder seizure, said Alejandro Arreaza, an analyst at Barclays. Even if that means fanning the world’s fastest inflation and inflaming protests over shortages that have left at least 42 people dead since February.
“The government’s priority is to pay the sovereign debt,” Alejandro Arreaza, an analyst at Barclays Plc, said in a telephone interview from New York.
Well, you’ve got at least one goober from the Venezuelan government, quoted later in the article, insisting that his country “doesn’t have debt with anyone” – they just have “pending foreign-exchange liquidations” – but basically they understand that the whole socialist house of cards will come tumbling down if they scare off their debtors.
We’re a long way from the American government is rationing tap water, but we’re already spending hundreds of billions of dollars per year in debt service. It won’t be long at all before mandatory spending – debt interest, Social Security, etc. – begins squeezing out the money for all the other stuff our super-government does. Actually, we’re within a generation of mandatory spending consuming the entirety of what we now give to our federal government, in the form of taxes. The people currently assuring you that tomorrow will never come are planning to be comfortably retired when tomorrow gets here, its barrel chest heaving, fangs eager for the blood of those who were duped into thinking government can make everyone happy by distributing “free” goods to the “deserving.”
When it’s time to choose between paying off promises made to government dependents, and satisfying the money men who allow high-rolling aristocrats to live in the style to which they have become accustomed, never doubt for an instant who will be expected to make “sacrifices.”
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