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Venezuela and the Us, something alike banking crisis

Macroeconomic Implications of the crisis

A contraction in GDP of almost 3%

Contraction in aggregate domestic demand of 4.5%

A capital outflow estimated at U.S. $ 3,730 million

An inflation rate of 71%

In July 1994, there was the need to establish a system of exchange restrictions, with a fixed nominal exchange rate of Bs 170 per one dollar of U.S., which continued until December 1995 when the government decided to devalue the currency in a proportion of 70%, placing it in relation to the dollar at a level of Bs 290.

Arguments that led to the crisis of 1994-1995:

Change in macroeconomic factors produced by the political and social uncertainty of the period, this uncertainty led to a decrease in deposits that led to the failure of a group of banking institutions.
Failures in monitoring and regulating the financial system, this argument points out that in the crisis period were deregulated financial institutions on the other hand there were few regulations preventive technologies to assess minimum computer centers of banks and other financial institutions monitored, also spoke intermediaries able to use accounting tricks to disguise the financial statements submitted to the Superintendent without detection by this little trained personnel to perform inspections, etc.., many of these events resulted in the failure to prevent deficiencies and deviations that occurred in the Venezuelan financial system for that period.
Another argument refers to the liberalization of interest rates in an unstable macroeconomic environment and poor regulation and supervision of the financial environment.
The crisis of 1994 and its implications, something to think about it. Today 10/29/2009, Venezuela is living one of the worst crisis ever, which is a crisis of confidence in a system that is totally rotten, and its citizen have forgot how to be productive again, in fact now days 80% of the products that Venezuelan consume are imported from every part of the world, including live cows, milk, black beans, oil, and so on. Not to mention technology. Needless to say i think that one of the major crisis that the us in going through now, is that people don´t want to work any more. Jobs are not created because companies don´t want to, but because other people around the world do want to work, if you have any doubts ask the Philippines.

Disclosures,

AKS, BAC, CZZ, TCK, CHK,

and a lot of faith that things could change in the near future.