Location: Pantego, Texas, United States

Friday, May 08, 2009

This has been a bad week for capitalism. In Venezuela Chevez has nationalized oil service companies:

"Today, the private services companies disappear, we don't need them, the people and workers can do the labor and be more efficient," Chavez said. "We're going to bury capitalism in Venezuela."

The fact that Venezuela owed the oil service companies $13.8 Billion may have been a factor, providing an immdiate gain. Longer term it probably means that oil production will decline even farther and faster than it already has following nationalization of the oil companies. The actions of Chevez seem likely to discourage foreign investment in Venezuela.

Then, we have the case in the US where the government has coerced Chrysler bondholders of senior debt to give up the collateral owed them in the name of "fairness." Actually this is to make a political payoff to Obama's UAW supporters. Howard Dean explains that we have had enough of capitalism in America. Could it be that the actions of Obama and the pronouncements of Dean will serve to discourage investment in America. As a general rule uncertainty frightens investors.


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