Why Venezuela is so desperate, in 5 easy charts

[Zorro]

Venezuela has the world's largest proven oil reserves—more than 297 billion barrels. But despite the tremendous windfall a resource like that should provide, Venezuela's economy is in free fall.

Why is Venezuela's economy such a wreck? It's a problem with much deeper and broader roots than just the turmoil in oil markets.

Oil production is declining. The chart above, part of a presentation from professor Francisco Monaldi at Harvard University's Kennedy School of Government, shows that back in the '90s, Venezuela was producing nearly 3.5 million barrels of oil per day. But then Hugo Chavez came to power in 1999, and he curtailed investment in the energy sector, using the money instead for social programs.

That's led to a sharp decline in production, to only 2.6 million barrels per day. Even worse, Venezuela doesn't get paid for almost half of the oil (1.2 million barrels) it produces because it's given away to places like Cuba, or supplied to the domestic market at below-market prices.

http://www.cnbc.com/id/102097797

[Bacchus4.0]

1. Zorro, where is Venezuela on the scale of angels to devils?

Are they up to Cuba, Zimbabwe, or Haiti quality?

[Zorro]

2. Now that's a question for our resident LatAm savant

She'd probably say it's becoming more Cuba-like every day, and that it's a good thing.

And I'd agree with her. Except for the good thing part.

[Bacchus4.0]

3. You're probably right. What was I thinking asking someone who actually knows about LatAm

when she is available.