Chavez Creates `Socialist' Bourse With `High Yields'

Source: Bloomberg

Venezuelan President Hugo Chavez said he is creating a “socialist” state-run Public Bond Market that will offer local investors high yields to stimulate saving and allow nationalized companies to seek financing.

The Public Bond Market, which will begin operations in December, will allow state-run companies to sell debt to finance operations and individuals to seek investment opportunities, Chavez said.

Chavez tightened his grip on the financial industry this year by closing more than a dozen banks and 40 brokerages that he said committed “fraud” and set artificial exchange rates. He said investors will have their investments guaranteed by the state. Caracas’s private stock exchange has seen trading plummet since 2007 after the nationalization of companies including Cemex SAB and Cia Anonima Nacional Telefonos de Venezuela, known as CANTV.

“The banking and brokerage crisis has allowed us to draft this law,” Chavez said yesterday on state television during his Alo Presidente program. “Don’t spend all your year-end bonuses, invest in the bourse, and the state will guarantee your money with good yields.”



Read more: http://www.bloomberg.com/news/2010-11-15/hugo-chavez-creates-socialist-bourse-in-venezuela-promises-high-yields.html

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I'd buy them.

Normally in a free market interest rates are set by the market, so, if I buy the bond of a risky company it pays me a higher interest rate than a safe company.

Who will set interest rates here? Also, Chavez is promising that yields will be high. Even for a strong company? If a strong company has to pay high yields then it will not be competitive globally.

:thumbsup:

K&R.

I hope it doesn't get him killed.

:kick: :kick: :kick: :kick:

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Merger between capitalism and socialism. I think he's on to something.

...should buy these bonds. You know, courage of one's convictions and all that. After all, with the great economic progress under Chavez it should be a no brainer. And these bonds are guaranteed too!

It's one thin to idolize him online, I doubt even the most adamant supporter here will actually buy one though.

...is anyone who buys these bonds. Actually, P. T. Barnum had another name for such folks...

Venezuela's inflation rate is someone around 25-30% annually. If one makes 13% on a bond, does that mean one loses money (in terms of real buying power) or are these in some way protected from inflation?