Venezuela risk of default in 2012

According to Capital Economics, a research firm in London the next trouble spot could be Venezuela. “There is a growing risk that the government will default on its obligations in 2012,” its analysts wrote on February 17th. Some in the markets have taken fright, too: the country’s credit-default swaps imply a 50% chance of default by 2015. That may be overblown. Even so, Hugo Chávez, Venezuela’s leftist president, seems to be pulling off a dubious achievement by causing the bond markets to fear for the solvency of the world’s eighth-largest oil producer.

The chief cause of Venezuela’s travails has been Mr Chávez’s pillaging of PDVSA, the state oil firm. He has packed it with loyalists, starved it of investment and used it for social spending, cutting its output from 3.3m barrels per day (b/d) in 1998 to around 2.25m b/d, according to industry estimates. Of that, some 1m b/d is sold at subsidised prices at home or to regional allies, leaving just 1.25m b/d for full-price exports.

Meanwhile, the president’s hostility to business has devastated the rest of the economy. He has nationalised hundreds of companies and trumped up charges against their owners, causing much of Venezuela’s private sector to shut up shop and flee. As a result, the country has seen vast capital flight, and must import many goods that it used to produce. Non-oil exports have ground to a halt: petroleum now accounts for 92% of its dollar intake.

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Venezuela Travels: Relampago del Catatumbo

For 140 to 260 nights out of the year, for 10 hours at a time, the sky above the river is pierced by almost constant lightning, producing as many as 280 strikes per hour. Known as the "Relampago del Catatumbo," this lightning storm has been raging, on and off, for as long as people can remember.

It was first written about in the 1597 poem "The Dragontea" by Lope de Vega. De Vega tells of Sir Francis Drake's 1595 attempt to take the city of Maracaibo by night, only to have his plans foiled when the lightning storm's flashes gave away his position to the city's defenders.

In fact, the lightning, visible from 400 kilometers away, is so regular that it's been used as a navigation aid by ships and is known among sailors as the "Maracaibo Beacon." Interestingly, generally little to no sound accompanies this fantastic light show, as the lightning moves from cloud to cloud—far, far above the ground.

It's still unknown exactly why this area—and this area alone—should produce such regular lightning. One theory holds that ionized methane gas rising from the Catatumbo bogs is meeting with storm clouds coming down from the Andes, helping to create the perfect conditions for a lightning storm.

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With a total of roughly 1.2 million lightning discharges per year, the Relampago del Catatumbo is thought to be the world's greatest producer of ozone.