FT Latam Report 27 May, 2016

Thelma & Louise hit the tropics By Andres Schipani  May 27, 2016 This week, it has been a quarter of a century since Thelma & Louise sailed their battered convertible into the Grand Canyon, securing their place in Hollywood's pantheon of heroes. This week is another in the saga of the Venezuelan government's push on the gas pedal towards the approaching abyss. But unlike Susan Sarandon and Geena Davis - and to many Venezuelans, the late Hugo Chávez - if President Nicolás Maduro and his acolytes finally jump off the cliff, they won't leave as heroes. In a prelude to a humanitarian crisis, the incidence of looting is soaring as Venezuelans become ever more desperate in their search for basic goods on barren supermarket shelves. "[It is] written in the Bible, people will kill each other for food,"  the voice of a woman can be heard on an amateur video of a looting. Coca-Cola has halted production of sugary drinks due to a lack of sugar. Empresas Polar, the country's biggest food producer, which also bottles Pepsi products, may soon follow suit. More worrying, inventories of maize -the base ingredient for Venezuela's staple arepa- are running dangerously low. Amid a lack of medicines, Oliver Sánchez, a cancer-stricken eight year old boy who once participated in a protest holding a sign reading "I want to cure myself", died this week. If "Lord of Misrule" Maduro tries to cling to power, for opposition leader Henrique Capriles, "that will be throwing petrol on to the fire.” But things seem poised to get worse. Venezuela's government and state oil company PDVSA have decided to prioritise bondholders over its citizens and plans to continue to squeeze imports. Meanwhile, they are scraping every barrel, swapping gold and trying to restructure debts. The recent oil price rebound, and a deal with its main financier, China, to extend oil-for-loans deadlines may give this ravaged economy a little bit of oxygen. However, somebody made it clear this week that "China is now diversifying away from the seething cauldron of risk that Caracas has become." Despite being geographically closer to the Grand Canyon, Mexico City is far from Caracas' Thelma & Louise car sliding into the abyss. Yet endemic corruption, car fumes and a lack of running water are putting officials to test - while testing the nerves of my fellow correspondent there.  One country that seems willing to change course is El Salvador, which last year took the baton from Honduras as the homicide capital of the world (Venezuela is also one of the most murderous.) Now the government has vowed to bring the gangs to their knees in a year. Decision, skill, and time will tell. That applies to Venezuela too, where the crash is nigh but has not yet occurred. “The question is," someone said, "is it going to be a Thelma & Louise ending, where they drive off the cliff knowingly and deliberately, or will they just drive off the cliff? Their inability to change course, despite the obvious danger, is stunning." Quote of the week “We have to change the government to stop this bleeding”-  Brazil's former interim planning minister Romero Jucá caught on tape telling Sérgio Machado, former president of a subsidiary of the national oil company, Petrobras, that a change of government was needed to contain a sweeping corruption probe. Chartwatch Chinese to desert Venezuela infrastructure The week in review ‘Hot money’ flows into Argentine peso spook President Macri   Central bank restricts foreign investors from buying some local currency bonds as peso rises     Argentina set to tumble 22 places on global wealth list   Revision of figures from Fernández administration suggests 40% chasm in GDP per head     Venezuelans resort to looting as food shortages hit crisis point   Scarcity of basic goods threatens to worsen social unrest in recession-hit South American country     China takes long view on Latin American infrastructure investment   Appetite remains strong despite region’s political and economic woes, survey shows     Universal basic income: Money for nothing   Amid anxiety over technological disruption, is a guaranteed payment from the state the future of welfare?     Brazil: a lack of Temer-ity   New government faces intractable problems and shows few signs of implementing bold solutions     Venezuela sells gold reserves as economy worsens   State’s stock of the precious metal at record low     Corruption and car fumes clog up Mexico City   Notebook: Ninety minutes to drive 4km but still Mexicans use their cars, writes Jude Webber     WhatsApp ban ignites Brazil censorship fears   Judicial moves to temporarily block messaging service in Latin America’s biggest economy draw ire     Temer seeks Brazil spending cap after losing minister to scandal   Interim president announces ambitious budget measures a day after wiretap controversy     Brazil finds silver-lining in Petrobras probe   The political weather is changeable but institutions are holding firm, writes John Paul Rathbone     Trade pacts: Latin America’s new faultline   Despite talk of ‘convergence with diversity’, Pacific Alliance and Mercosur take different paths     Brazil’s Temer faces test as minister steps down over leaked tape   Romero Jucá allegedly plotted to stop Petrobras corruption probe     El Salvador declares bloody war on gangs   Police in world’s murder capital are accused of using violence ‘without limits’     Investors labour under delusion Brazil is a quick fix   Brazil’s structural problems will take steam out of rally in assets     Henrique Capriles rallies voter revolt in Venezuela   Opposition leader seeks recall referendum to remove president Maduro     Nicolás Maduro, Venezuela’s lord of misrule   The isolated president sits tight as his country slides deeper into chaos, writes John Paul Rathbone