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Step by Step: How to fabricate news about the 'default' in Venezuela

Let us not forget that Standard & Poor, Moody and Fitch rating services are financed by the banks and therefore have no real independence.

Part 1

The media fabricated "default" comes before the real one. The stage is slowly being set with economic sanctions; psychological pressure on Venezuelan bondholders and a media campaign that blows out of all proportion routine financial transactions.

Last Sunday, Venezuelan President Nicolas Maduro said that "default" will never come to Venezuela because the South American country "will always have a clear strategy" aimed at the renegotiation and restructuring of debt – as reported by the Spanish daily El Mundo.

However, just a day later, dawn broke in Venezuela with the news that the U.S. rating agency Standard & Poor's, S&P, downgraded the country’s CC rating (very vulnerable) to "selective default" due to non-payment of US$200 million of the coupon on its bonds 2019 and 2024 within the 30-day grace period, according to a report in the Venezuelan daily El Universal.

So why did S&P jump the gun with a “selective default” classification when for a country to be declared in default, that country must also expressly declare that it accepts that it is insolvent and would be able to repay its commitments. This is the usual mechanism and such an acceptance has not been declared by or in the case of Venezuela. All the economic spokespeople of Venezuela indicate that the country is paying and will continue to pay its commitments.

But such headlines make good reading for a “media default” and good reading in newspapers such as the Financial Times that, as a world leader in its field, should know better than talk about a “default” when officially this cannot happen without Venezuela declaring itself insolvent.

Let us not forget that Standard & Poor is one of the international rating agencies that had Lehmann Bros at the highest AAA rating in September 2008 – one day before Lehmann collapsed and almost took the whole world financial system down with it. So much for the credibility and expertise of S&P if you want to look at it objectively and there is little doubt that this arch-capitalist agency is at the beck and call of the U.S. Treasury Department that is hell-bent on trying to force Venezuela into a debt default to contribute to the U.S. Administration’s plans of ousting President Maduro and refounding a newly compliant Venezuela as the “U.S. gas station on the northern coast of South America”.

On Monday, a group of bondholders of Venezuelan debt from the U.S., Panama, United Kingdom, Portugal, Colombia, Chile, Argentina, Japan and Germany met in Caracas with the Venezuelan Government as part of the first approach for the renegotiation and restructuring proposed by Maduro.

The Venezuelan authorities described this meeting as "highly positive" and "very auspicious," in a statement in which it was recalled that in the last 36 months the South American country had canceled US$73.359 billion in capital and interest payments.

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