Economy To an extent greater than that of the nationals of any other country, Venezuelans' fate relies on the unpredictable casino of oil prices, as they learn every Friday, when the Ministry of Energy and Petroleum issues updated oil prices, whether the façade of wellbeing thrives on or trying times begin take their toll.

Volatility abounds, and the effect of the US crisis may bring about even greater uncertainty. From July 5th to September 19th, the Venezuelan oil barrel lost USD 37 in record time and fell to USD 88.76. Gasping for air, the country felt relieved this week as prices rebounded to USD 98.28.

A closer look at the figures posted by the Central Bank of Venezuela denotes vulnerability: in December 1982, two months prior to the ill-fated Black Friday of February 1983, oil represented 94% of exports, and import reserves to cover the equivalent of nine months were available.

A year before the price adjustment of 1989 and the Caracazo, oil exports represented 80 percent of all exports and eight months of imports were in stock. By the end of the second half of that year, crude oil sales amounted to 94.6 percent of exports and, by September 25th, 10 months of imports were in reserve.

Enervated Capitalism
Theoretically speaking, banks play a vital role in the economy by receiving deposits from customers with surplus and then using those funds to grant loans to individuals and businesses. But Wall Street's financial engineering produced changes that went on to trigger an unprecedented financial crisis.

Banks granted loans to persons with low credit ratings. Then, those loans were bundled into packages and subsequently sold to investment banks. In addition, insurance companies issued policies to secure repayment of those loans.

As reality sunk in, the myth that home prices never fall dwindled and debtors stopped honoring their mortgages. As a result, a financial snowball was set into motion, rolling over the main US savings-and-loan entity (Washington Mutual), the world's leading insurance company (AIG) and two Wall Street powerhouses (Lehman Brothers and Bear Stearns).

The US economy is showing clear signs of deceleration, unemployment has surged to 6.1 percent in August, industrial production sank 1.1 percent and retail sales hit their biggest low since September 11th, 2001.

If the United States plunges into a recession and its consumption level drops, the economies of countries supplying it with products, such as China and India, would also be affected, which may result in fewer oil consumption and, accordingly, lower crude oil prices.

These scenarios are beginning to shape up, and oil prices have been falling significantly since July's spike. Trembling stock exchanges throughout the world have left investors seeking refuge in short-term oil agreements, a situation that momentarily supports current prices.

To steer clear of an imminent crisis, Venezuelans must continue to wager their stakes on a daily basis and hope that lady luck does not surface her capricious nature.

vsalmeron@eluniversal.com

Translated by Félix Rojas

Víctor Salmerón
EL UNIVERSAL