We’re going Down The Rabbit Hole shortly but first we have Telesur (government media) covering (if you want to call it that) Nicolas Maduro’s version of a “State Of The Union” address. Just as here in the US, it was pretty much what you would expect. There was no mention of anything really substantive, and how could there be, with no accomplishments to reference.

 He did get in plenty of praise for his more or less hand picked National Assembly. The legislative body “…passed 38 laws, 62 agreements,appointed 10 ambassadors, and performed 4 political controls.” Exactly what is a “political control”? I would also like to know if any of those laws or agreements they passed were of any consequence (no details were given). Maduro has been governing (again, if you want to call it that) by emergency decree since he took power eight years ago.

 He did surprise me by proposing that the National Assembly set up Special Economic Zones  providing better conditions for foreign investment and industrial development. My guess is those “special conditions” would be contrary to the conditions the Chavistas impose on the rest of the country. This could actually be a good idea…we’ll see if it really happens.

 Now we get to my favorite part of the address. Maduro was adamant, “Guaranteeing a better quality of life for the population is the essence of the Bolivarian Revolution.” At this point we needed someone to shout out the unasked question…” Mr. President, exactly what part of life is better for the population under your regime… The Bolivarian Revolution?” With no food, no medicine, no power,no water, and no Human Rights, to name a few…the response to the unasked question would be a short one…right before the person that asked it was hauled off to prison.

 The next story was everywhere so I’ll just pick an outlet.ABC reports Russia has warned of possible military deployment in Cuba and Venezuela if Ukraine tensions rise. It’s probably just bluster as Russia’s next military deployment will be in Ukraine.

 Then we have the UN – World Food Program telling us they will be expanding their school meals program after a successful pilot program in Falcon state. Maybe this is part of that “better quality of life ” Maduro was talking about.

 And as if we needed further confirmation of the Maduro regime’s priorities, Investing.com reports that since November the regime has been ramping up gasoline and food shipments to Cuba…OK, so, in a country with drastic food and fuel shortages is it really good for “the people” to be sending much needed food and fuel to Cuba?

 And then we have Telesur reporting that Chavismo considers Guantanamo a symbol of US torture and power abuse. So what is Chavismo’s symbol of torture and power abuse? Perhaps a living symbol…Nicolas Maduro?

 We also have The Cipher Brief telling us that Venezuela’s international relationships with Russia,China,Iran, Cuba,and Turkey combined with the economic and humanitarian crisis makes it a subject of concern for the US and the international community. Ya’ think! But for that to be the case somebody would have to be paying attention.

 Enough of that…let’s go Down The Rabbit Hole…

 Since everything Venezuela-related seems to be good news/ bad news let’s look at the upside.With all the oil they basically had to give away due to their totally irresponsible use of resources and finances there were still some paying customers out there.Year over year they were exporting about 300,000 bpd to India and another 800,000 bpd to North America, most of that to the US.Despite all the anti-capitalist and anti-imperialist bluster the USA was their number one trading partner. The downside regarding revenues from the US was that it wasn’t all cash. Remember, Venezuela needed dilutents to process the extra heavy crude and their number one supplier of these was the US. That said, the US still bought and paid for more Venezuelan oil than any other country.

 So now we have another 1,100,000 bpd to add to the ledger to maintain the status quo for a total of 2,700,000 bpd among the major players.Other than the peak production of 3,500,000 bpd PDVSA produced 2,500,000 bpd most of the time so, as you can see, they had to do some juggling.They were 200,000 bpd short so one month they would short the free shipments and the next month they would short the paying customers and take the financial hit. But that only worked for just so long. From time to time they still needed to raid their gold reserves. You can see where  we’re headed.

 Again, I apologize for the tedious nature of a lot of this but there are a lot of moving parts to this train wreck. I’ll try not to get too deep into the weeds but please bear with me, it’s worth it.

 As this scenario is unfolding let’s flip back to the personnel side of the story. Remember,even with the purge there were still some qualified people at PDVSA among the bloated payroll.That would begin to change when oil prices dropped and the Chavista credit dried up.First it was just people frustrated that Chavistas were promoted and the real oil professionals were expected to carry the load for the “dead weight.” The desertions accelerated when employees saw the handwriting on the wall. Things weren’t going to get better anytime soon so if they could get out they did.

 Now, with Maduro in control,things got really crazy.In one demonstration of paranoia or simply putting on a big anti-corruption show he fired the entire accounting department. For a few weeks there was absolutely nobody qualified to bill customers or pay bills. Then he turned PDVSA over to the military since he couldn’t buy their loyalty through any other means. In light of the recent and prior purges distrust ruled the day and more employees left. Now that the head of the company was a military general with no oil business experience it seemed that nobody had any idea what was going on.

 More tomorrow….