Alfred Woody's Kewl Blog [ 椼森 ]: Mar 11, 2016

Friday, March 11, 2016

Is surprisingly strong gasoline demand a sign of what’s to come this summer?

Big difference compared to high-demand 2007 is today’s lower prices

MyraP. Saefong

Markets/commodities reporter

Drivers may be more eager than usual to fill up this summer.

The latest weekly decline in U.S. gasoline supplies wasn’t a surprise, but the strength in demand for the fuel at this time of the year is a shocker.
That means that even if pump prices nose higher by Memorial Day as some predict, stronger-than-usual driving demand could help sop up some of the excess domestic crude supplies.
“The last few weeks with impressive gasoline demand could be a harbinger of what’s to come for the summer-driving season,” said Patrick DeHaan, senior petroleum analyst at GasBuddy.com.

‘The last few weeks with impressive gasoline demand could be a harbinger of what’s to come for the summer-driving season.’
Patrick DeHaan, GasBuddy.com

“Perhaps we’re underestimating consumption,” he said. “I expected this summer to be robust, but wow, this latest data makes me pause.”
On Wednesday, data showed that U.S. gasoline supplies dropped by 4.5 million barrels for the week ended March 4, according to the Energy Information Administration. It was the fuel’s third weekly decline in a row.
Supply drops are expected this time of year because it’s refinery maintenance season, a slower demand period in which refiners perform upkeep and change equipment to ready for more environmentally stringent summer gasoline grades. It typically peaks in April.
But the EIA report also showed that over the last four weeks, a key measure of demand known as motor gasoline product supplied was up by 7% year over year at more than 9.3 million barrels a day.
“The data shows strong gasoline demand that’s outpacing the 2007 and 2008 rates for this time of year, with 2007 the current record high in annual U.S. gasoline demand,” said Brian Milne, energy editor and product manager at Schneider Electric.
Usually, gasoline demand is weakest in January and February and increases as the weather warms once past maintenance season, he said.
These months are “the shoulder periods between peak heating demand during the winter and peak driving demand during the summer,” said Milne. “That hasn’t changed.”
What’s different this time around is that drivers are taking advantage of lower prices for gasoline.
“Affordability, and people … aware they’re spending much less to fill their tanks than they did a couple of years ago, [are] breeding an optimistic outlook that has propelled driving activity,” said Milne.
U.S. gasoline prices at the pump averaged at about $1.867 a gallon Thursday afternoon, according to GasBuddy.com. That’s down more than 58 cents from the year-ago average.
But the low prices might not last for long. Here are the areas where GasBuddy.com on Thursday was seeing “significantly” higher gas prices compared to prior reports:

Milne said prices are now “on course” to move above $2 a gallon before Memorial Day.
“Gasoline demand appears to be among the heaviest, seasonally, that I’ve ever witnessed,” DeHaan said. “Couple [the] warmer-than-average temperatures in much of the country with relatively cheap gasoline and it’s a recipe to drive, apparently.”
And when gasoline RBJ6, +1.58% is in demand, so is the crude oil CLJ6, +2.33% that’s used to make it.
That’s part of the reason why crude-oil prices rallied this week to their highest levels of the year.
“Strong gasoline demand would definitely help shrink the oil-supply surplus,” said Milne.
But it would only help to a certain point. The market “would still need lower crude production, and it will take time as well to find a closer supply-demand balance,” he said.

Asian markets take ECB stimulus moves in stride

Largely muted reactions amid doubts of eurozone growth

Asian stocks were choppy Friday as investors brushed off a bigger than expected stimulus package from the European Central Bank.
Japan’s Nikkei Stock Average NIK, +0.51% was down 0.9%, Australia’s ASX/S&P 200 XJO, +0.32% was up about 0.2%, and Korea’s Kospi SEU, +0.11% was up 0.1%.
In China, the Shanghai Composite Index SHCOMP, +0.20% was down 0.5%. Hong Kong’s Hang Seng Index HSI, +0.85% was up 0.4%.

The reaction in Asia was largely muted on rising doubts that the ECB has enough policy tools to bolster growth and inflation in the eurozone.
“Further ECB action looks unlikely until at least the second half of the year,” said Colin Graham, chief investment officer of multi-asset solutions for BNP Paribas Investment Partners. “We believe fresh steps will depend on incoming data and might well reflect lessons learned from the market reaction to the latest measures.”
The ECB on Thursday unveiled stimulus measures that were more aggressive than economists expected. The package included expanding the scope and size of the ECB’s bond purchases each month and slashing three key interest rates.
Stocks initially rallied in Europe and the U.S. on Thursday, but retreated after ECB President Mario Draghi signaled that no further rate cuts were coming in the near future due to concerns about their impact on banks.
In other Asian markets Friday, the Korean won and Malaysian ringgit were slightly weaker against the U.S. dollar, highlighting investors’ risk aversion across the region. Chinese authorities also guided the yuan to its strongest value against the U.S. dollar this year, which triggered selling of the greenback Friday morning.
Korean shares were extending gains after the benchmark index on Thursday pushed into positive territory for the first time this year. The Kospi is up 0.5% since the start of January.

European Central Bank Surprises With Broad Stimulus Action

FRANKFURT, Germany — European Central Bank launched an unexpectedly broad array of stimulus measures Thursday aimed at boosting a modest economic recovery in the 19 countries that use the euro and nudging up dangerously low inflation.

The steps, which ranged from interest rate cuts to cheap loans to banks, included several measures many analysts hadn't anticipated, such as expanding its monthly bond-buying stimulus program to include corporate bonds.

The ECB, the monetary authority for the euro countries, is struggling to raise inflation from a worryingly low annual rate of minus 0.2 percent toward its goal of just under 2 percent, considered healthiest for the economy.

ECB President Mario Draghi said the bank's decisions at the meeting of its 25-member governing council were the best answer to recent questions about whether central banks were reaching the limits of what they can do.

"We don't give up in our fight to bring inflation back to our objective," Draghi said. He added that the steps to increase bank lending would "reinforce the momentum of the euro area's economic recovery and accelerate the return of inflation to levels below, but close to, 2 percent."

The market's reaction was volatile. The Stoxx Europe 50 blue chip index ended 1.8 percent lower after spiking higher earlier. The euro rose 1.5 percent to around $1.11 — though it usually falls in response to more stimulus.

Laith Khalaf, senior analyst at stockbrokers Hargreaves Lansdown, said the use of ever more unusual stimulus measures was hard to see as positive.

He said the fact the ECB is "still pursuing such extreme monetary policy paints a depressing picture of the European economy." Investors, he adds, "are beginning to question what central banks have left in the locker if the global economy slips back towards recession."

More economic malaise in Europe is the last thing the global economy needs. The region is a key market for major companies, from automakers Ford and General Motors to technology companies Apple and Samsung. Trouble in Europe would compound woes from slowing growth in many parts of the world, particularly China.

The ECB's stimulus efforts over the past year seemed a long way away for Portuguese pensioner Dolores Tavares.

"I haven't noticed any difference in my life," Tavares said as she and her husband put the shopping in their car trunk outside a Lisbon vegetable market. "I don't expect the benefits to reach me anyway. All that will be for the big financial people, not people like us."

In Spain, Enrique Quero took a more upbeat view.

"These measures have more of an overall global effect and, yes, are positive in general for society and for markets, although they don*t affect people directly," said Quero, 42, who works in an employee recruitment agency in Madrid. "In Spain, they have a good influence on investments and helping getting money moving because they liven up markets."

The breadth of Thursday's measures suggests the ECB was determined to impress markets, which had been underwhelmed by the bank's last package of stimulus in December.

Here's what the ECB did:

— It cut its main benchmark rate to zero from 0.05 percent

— Lowered the rate on deposits from commercial banks at the central bank to minus 0.40 percent from minus 0.30 percent, an unconventional move aimed at pushing banks to lend rather than hoard cash

— Boosted its monthly bond purchases to 80 billion euros ($88 billion) from 60 billion euros, pushing more newly printed money into the economy

— Added corporate bonds to the assets it can buy, expanding the potential scope of the stimulus program

— And announced long-term loans at zero or negative interest of up to four years to help support banks.

The negative rate on deposits is an unusual step aimed at pushing banks to lend rather than leave money at the central bank. More lending would in theory promote growth and push up inflation.

Alasdair Cavalla at the Centre for Economics and Business Research in London suggested that the latest ECB steps were comparable to the last stage of U.S. Federal Reserve's stimulus efforts that promised open-ended stimulus until unemployment fell. The Fed has ended its stimulus efforts and has made a first interest rate increase, as the U.S. economy has strengthened.

"The ECB has been far more cautious than the Fed throughout the Great Recession, and may at last be realizing that this may have at least something to do with the divergence in economic performance since then," Cavalla wrote in an email.

Yet the ECB's cut of the deposit rate below zero — also deployed by central banks in Japan, Denmark, Switzerland and elsewhere — has raised fears of side effects, in particular that it could dent bank profits. The cheap loans appear aimed at removing that concern.

Having healthy banks is crucial because they provide most business financing in Europe — a contrast with the United States, where most business credit comes from financial markets. Also, weak banks don't lend.

Despite unconventional measures such as negative rates, central banks in Europe, Japan, the United States and elsewhere have had little luck recently in pushing up inflation. The Bank for International Settlements, an international organization of central banks, said in a report Sunday that central bank policies were reaching their limit.

Many economists say that the key to boosting global growth must come from governments spending more and tackling the obstacles to growth in their own economies. That would include clearing away regulation that makes it hard to start a business and excessive employee protections that make companies reluctant to hire in the first place.

Austerity is an ideological smokescreen for class warfare – UK economists

(RT) –

Chancellor George Osborne’s post-2015 spending cuts are an ethically bankrupt assault on the public interest that serves the agenda of the one percent, leading UK economists have said.

Criticism of Osborne’s austerity plans surfaced on Wednesday in response to analysis conducted by academics from Sheffield Hallam University’s Centre for Regional Economic and Social Research.
The study revealed large families will be the worst affected by the chancellor’s plans to slash £13 billion (US$18.5 billion) off the government’s welfare bill, with Asian communities expected to be at the forefront of the firing line.
The report expands on an Austerity Audit conducted for the Financial Times in 2013, and is the first academic study to scrutinize the impact of Osborne’s latest round of cuts.

‘Austerity isn’t working’

The report predicted over 80 percent of the £10.7 billion due to be slashed from the government’s welfare bill between now and 2021 will impact upon families with dependent children.
Eight out of 10 of the worst hit regions across the UK will have a high proportion of households with three or more children, while half will have an Asian population of more than 10 percent, the study found.
A growing income gap between homeowners and those who rent social housing was also apparent. While the report predicted social renters will lose almost £1,700 per year on average, home owners of working age were predicted to lose £290.
The study also revealed 50 percent (£6.2 billion) of the annual welfare cuts planned post-2015 will fall on working-age households.
Lecturer in economics at Bristol Business School Jo Michell said that Osborne’s latest round of cuts counter the public interest.
“The story about deficit reduction is a smokescreen to cover what is an ideologically motivated attack on the weakest in society,” he told RT.
“The effects will be increasingly felt more widely, particularly among working families.”
Michell stressed that austerity is a deeply flawed economic doctrine.
“The recent mini-boom, partly driven by the housing market, is coming to an end,” he said.
“Austerity will increasingly be a drag on economic activity, leading to falling employment and weakening wage growth.”

Those who insist Austerity is required, never suffer it themselves & nor do their family or friends.
It’s always other – poorer – people
— Tom London (@TomLondon6) March 6, 2016

The British economist said that Osborne’s first round of austerity targeted the sick, the disabled and the unemployed.
“There is no scope for further cuts among these groups so the government is now targeting working families, particularly those who receive benefits and tax relief connected to children numbers,” he said.
Michell predicted further spending cuts will disproportionately affect Britain’s most vulnerable and impoverished, and negative effects to health, well-being and mortality rates will be apparent.

‘Economic policies for the 1%’

Michell’s views were echoed by Director of Policy Research in Macroeconomics at Prime Economics Ann Pettifor, who told RT there are “zero economic grounds” for further austerity in Britain at present.
Pettifor said Osborne’s policies are counter-intuitive because his objective of further shrinking the deficit undercuts his pledge to protect Britain’s elderly from spending cuts.
“This explains why in effect, he has little alternative, but to target families with children,” she said.
“Unprotected mainstream government programs have taken a hit, and so welfare programs for the non-elderly are in effect the residual to try to achieve his economically unwise target for a significant overall budget surplus.”

Osborne can do U-turns but only when it comes to rich!! ..Meanwhile Austerity & BedroomTax are preferred choices!https://t.co/DbEQxuaDkK
— Angus B MacNeil MP (@AngusMacNeilSNP) March 5, 2016

Pettifor argued a combination of weak demand at home and abroad and current levels of inflation negate the need for further spending cuts.
“For the last two quarters nominal GDP has almost ground to a halt – almost unheard of in post-WWII history,” she said.
“Further public spending reductions will reinforce the negative multiplier, and paradoxically increase public debt.”

‘Class warfare’

Left-leaning economist Michael Burke said Osborne’s spending cuts will push the burden of austerity onto Britain’s poorest people.
“The effects will be extremely negative for large families, who are often already among the poorest. It is entirely foolish,” he told RT.
“The entire austerity policy hits those on middle incomes and the poor. Large families will struggle even more. And the Women’s Budget group shows that women bear 74 percent of the burden of all cuts. Osborne’s policy will increase these negative effects.”
Burke argued Osborne’s long-term economic plan has failed.
“If his austerity program worked in the way he claims, the deficit would have been eliminated long before now,” he said.
Burke said Osborne’s austerity policies undermine the public interest, yet have attracted the backing of big business. He predicted the chancellor will continue to “act in the interests of the one percent.”
Geographical location and household composition were crucial factors in determining the impacts of the government’s next round of austerity. Older industrial areas, seaside towns and certain London boroughs will shoulder the brunt, while wealthy areas of South East England will remain almost untouched.
The Sheffield Hallam University study predicted Blackpool and Blackburn will each lose £560 per working-age adult as a result of the post-2015 cuts, Guildford in Surrey will lose £150, Richmond will lose £140, and the Hart district will lose £130.

This piece was reprinted by RINF Alternative News with permission or license.
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Trend Forecaster Gerald Celente Warns: Prepare For The Panic Of 2016: “History Will Remember This”

Earlier this week hedge fund manager Marin Katusa explained that up until the recent stock market hit all the easy money flowing into the energy sector was being exuberantly spent on hookers, blow and fancy toys. Now, as oil prices hover under $40 per barrel, Katusa said more pain is likely coming and oil, along with other asset classes, are going to go “lower for longer.”

In a recent interview with Future Money Trends, trend forecaster Gerald Celente echos Katusa’s concerns. Having accurately predicted the Crash of 2008 nine months ahead of the bottom falling out on a global scale, Celente says another panic is coming this year.

But if you thought 2008 was bad, says Celente, this crash will be so severe it’ll be one for the history books:

…51% of the people in the United States that are employed are earning under $30,000 a year… Less than half the population is considered middle-class in America… the gap between the rich and the poor is as bad as it was at the worst times of the Gilded Age going back over a hundred years.

So, what happens when the Panic of 2016 happens?

The Panic of ’08 helped wipe out the middle class… this is going to eliminate it to a large degree, because they’re deep in debt…

Watch Gerald Celente discuss his trend forecasts for everything from politics and the economy to wealth preservation strategies and entrepreneurship in times of crisis:

Now, what this is going to do… it’s going to knock out the top… and the top survived the other crash because the top are the ones that are totally leveraged out… there’s no more savings anymore… there’s no more savings anymore… it’s only markets because of zero interest rate policy.

The markets have been artificially juiced up… so when this thing comes down it takes the top down… the last time it pulled out the bottom… so this is going to be a top-down crash.

And there’s not going to be anything to pump it back up because they’ve blown all their ammunition…

Visit Future Money Trends for news, strategies for protecting your wealth and more interviews like the one posted here.

Author: Mac Slavo
Website: www.SHTFplan.com
Copyright Information: Copyright SHTFplan and Mac Slavo. This content may be freely reproduced in full or in part in digital form with full attribution to the author and a link to www.shtfplan.com. Please contact us for permission to reproduce this content in other media formats.

US credit card debt balloons to $917B: What it means

While rising debt issuance usually points to a strong economy, danger could be lurking ahead.

Last year, credit card debt in the U.S. surged by approximately $71 billion to $917.7 billion, according to a new study from CardHub.com. The research also found that most of the debt accrued in 2015 came in the fourth quarter, when Americans tacked on more than $52 billion.
"With 7 of the past 10 quarters reflecting year-over-year regression in consumer performance, evidence is mounting to support the notion that credit card users are reverting to pre-downturn bad habits," CardHub CEO Odysseas Papadimitriou said in a statement.

Fourth-quarter credit card debt also grew at its largest pace since the Great Recession, CardHub also said.
"It is something we need to keep an eye on if borrowing continues to grow rapidly," said Scott Hoyt, senior director at Moody's Analytics. He also said the implications of rising credit card debt would be similar to what happened in the recession, "when consumers became overly leveraged."

David Santschi, CEO of TrimTabs Investment Research, said "it's usually a good sign when ... credit card debt is rising" because it usually means consumers are spending more money.
However, Steve Blitz, chief economist at ITG Investment Research, said this increase is "just a signal that there's more people working," adding that consumers are not necessarily taking on more debt.
"The willingness of an individual to increase their leverage is the ultimate vote of confidence in the economy," he said.
The U.S. economy added 2.45 million jobs last year. In 2016, more than 400,000 positions have been created as of February, with the unemployment rate holding at 4.9, its lowest level in nearly eight years.
Nonetheless, wage growth remains stagnant. U.S. workers earned 3 cents less an hour last month.
"The drop in February [wages] was pretty sharp," Santschi said. "The wage situation does not get as much attention as the headline number and the unemployment rate, but it's evidence that the economy is basically flatlining."
U.S. equities are lower for 2016, with the Dow Jones industrial average and the S&P 500 both down more than 2 percent, while the Nasdaq composite has dropped more than 6.5 percent.

Fed’s Dudley sounds warning on US economy

Yale ‘expert’ says 6 months to Economic Crash

Trucker pay has plummeted in the last 30 years, analyst says

Pay for truck operators has failed to keep up with inflation since 1980, effectively slashing truckers’ wages by nearly a third, according to analyst Gordon Klemp, president of the National Transportation Institute.
Klemp, who spoke Feb. 26 on a conference call with investors and reporters, said truckers wages averaged $38,618 annually in 1980. If adjusted to 2015 dollars, that would be over $111,000 a year, Klemp said.

Framing the trucking labor situation: Shortage at what price?

“Labor shortage” can mean different things to different people, whether a supply/demand imbalance at "current market prices" or "at any price" -- the latter ...

Dry van haulers may have been hit the hardest by lack of inflationary wage growth for truckers, Klemp showed, with wages falling more than 9 percent from 1994 to 2015 when comparing Klemp’s NTI Wage Index to the most commonly used measure of inflation, the Consumer Price Index.
Pay for flatbed and reefer haulers has also fallen, with reefer wages falling more than 5 percent since 1994 and flatbed pay falling nearly 4 percent when comparing the NTI Wage Index to CPI inflation.
Klemp also said in his presentation that more and more fleets are turning to guaranteed driver pay packages as a means to improve their driver turnover rates. He also said hourly pay and incentive-based pay — based on safety incentives, usually — are on the upswing.
He also noted that both owner-operator income and company driver pay have climbed since 2013, bucking the overall U.S. trend of declining household income in the same span. The chart below, taken directly from Overdrive‘s own coverage of the long-running disconnect between the driver shortage mantra and driver pay rates, in part based on Klemp’s data, illustrates the recent trends.
nti3

Driver pay to continue to rise, ATA says in report that asserts industry short 50k drivers

Driver pay will likely continue to rise in the coming decade as fleets work to attract new drivers to the industry to fill the gap ...

Obama committed to Pacific trade deal, even as opposition spreads-Rice

By Roberta Rampton
WASHINGTON, March 9 (Reuters) - U.S. President Barack Obama is fully committed to pushing for Congress to ratify the Trans-Pacific Partnership (TPP) deal despite anti-trade sentiment gaining steam on the presidential election campaign trail, National Security Adviser Susan Rice said on Wednesday.
Voter anxiety and anger over international trade and the 12-nation Pacific trade pact have helped propel the campaign of Donald Trump, the Republican front-runner, as well as Senator Bernie Sanders, who is running against Hillary Clinton for the Democratic nomination.
"The president remains fully committed to working to achieve ratification on the U.S. side and encouraging all of our TPP partners to move through their domestic processes to do the same," Rice told Reuters in an interview on Wednesday.
For Obama, the TPP is a legacy issue, and standing firm on the pact reassures other nations with high expectations for the deal. At the same time, it highlights a division with Clinton, a close political ally, who has been grappling with Democratic anxiety about trade on the campaign trail.
Obama's commitment to the trade deal means that it will likely remain a hot campaign issue and exposes Clinton to trade-bashing rhetoric ahead of the Nov. 8 vote to elect Obama's successor.
Sanders has accused Clinton of backing "disastrous" trade policies that moved manufacturing jobs overseas, and questioned the sincerity of her opposition to the TPP since she became a presidential candidate.
Clinton had supported the trade pact when she was secretary of state during Obama's first term, but later said she was worried the deal would not do enough to crack down on currency manipulation or protect consumers from excessively high drug prices.
Sanders' unexpected victory in the Democratic primary in Michigan on Tuesday suggests that his criticism is resonating with some voters, and could spell trouble ahead for Clinton in states such as Ohio, Wisconsin and Pennsylvania.
Trump's anti-free trade rhetoric and promise to slap taxes on cars and parts shipped in from Mexico have also found support among Republican voters, helping him score a big victory in the party' primary in Michigan on Tuesday.
"There have been times - and this is one of them - where anti-trade sentiment has attained some salience in our domestic politics as well as in other countries," Rice said.
"There's been an evolution over the decades in the nature of trade agreements and in the caliber of trade agreements. And I'm not sure that that has fully been absorbed in the public mindset or the political discourse," she said.
Obama has repeatedly said that the TPP will expand markets for U.S. exporters and has high standards on labor and the environment that were not part of the North American Free Trade Agreement with Canada and Mexico.
Rice said policy makers face the challenge of being able to articulate the benefits of TPP and "to not allow the sort of traditional 'old saws' of the critical narrative about trade to go unchallenged, when to a considerable extent they're based on agreements of the past."
Rice made her comments ahead of a summit between Obama and Prime Minister Justin Trudeau of Canada, a nation also wrestling with the merits of the TPP. The economy of Canada, the largest market for U.S. exports, is heavily reliant on open trade with the United States. (Reporting by Roberta Rampton, editing by Tiffany Wu)

Saudi Arabia is looking for $6-8 billion in bank loans to keep its public finances afloat

Many states are expected to increase their borrowing sharply if oil prices stay low Reuters

Cameron: It is 'very much my intention' to run as an MP in 2020 election

telegraph.co.uk/news/uknews/theroyalfamily/12189648/The-Sun-stands-by-Queen-Backs-Brexit-story-as-newspaper-claims-they-knew-more-than-they-published.html …

Venezuela Could Default Tomorrow

FT notes:

Investors worried that Venezuela might fail to repay a $1.5bn bond coming due on Friday have been reassured by the sudden appearance of tonnes of Venezuelan gold worth almost that amount in Switzerland...

There are good reasons for the government of President Nicolás Maduro to avoid defaulting on Venezuela’s debts, and not only because they risk losing their jobs and their liberty in the chaos that would follow.

Were it to default, Venezuela, like its regional neighbour Argentina, would be likely to find itself shut out of international capital markets, possibly for years. It might also, like fellow oil producer Iran, be denied access to the international banking system...

But there are reasons to think Caracas might not pay Friday’s bond after all.

The first is that default seems inevitable, if not on Friday then later this year.

Siobhan Morden of Nomura estimates that, after the Swiss shipment and taking account of recent price rises, Venezuela is left with gold worth about $11.3bn. According to the central bank it also has foreign exchange reserves of $14.6bn (after a withdrawal of $472m last week, also seen by analysts as preparation for Friday’s payment).

But Friday’s is not the only payment coming up. Taken together, the government, state-owned oil company PdVSA, and its affiliates, face repayments this year of $10.5bn. The crunch months are October and November...

On top of that, Ms Morden says, Venezuela must find $35bn to pay for imports and $12bn to cover capital outflows, out of oil revenues of just $20bn.

While the price of the bond maturing on Friday suggests most (though not all) investors are convinced it will be paid, the price of credit default swaps, a type of bond insurance, puts the likelihood of default in the next 12 months at 69 per cent, according to Bloomberg.

The other reason to think default might happen sooner rather than later lies in recent actions by Caracas that suggest it is preparing for the consequences...

One is the creation this month of a state-owned company called Camimpeg, whose name is an acronym for Military Limited Company for the Mineral, Oil and Gas Industries. This company, says Mr Dallen, would allow the military to take over not only the licences for mineral production held by companies such as PdVSA, but also their assets. If it did so, such companies would become valueless overnight, leaving their bondholders with claims on nothing.

PdVSA and its subsidiaries owe about half of the $70bn in outstanding Venezuelan bonds, with the rest owed by the state.

The other development concerns the collapse in 2014 of Portuguese bank Espírito Santo, which formerly processed payments for PdVSA. Since then, PdVSA has switched its business to Citic Bank of China.

“How would the Chinese react if there was a western order to seize Venezuelan accounts?” asks [Russ Dallen of Latinvest, a Venezuelan bond specialist]. “Would they protect their client or play by western rules? It would be a real test.”

China itself is a big creditor of Venezuela, having lent it more than $50bn in recent years. It is being repaid in Venezuelan oil, a currency that has fallen sharply in value.

Even the Swiss gold is no guarantee of payment. The agreement with western banks that led to the shipment was made at the end of last year, when Mr Maduro may still have regarded paying bondholders — and thereby demonstrating economic and financial responsibility — as a vote-winner.

If so, the government’s defeat in December’s parliamentary elections may have disabused him. If default is inevitable, he now may be thinking, why throw $1.5bn away on Friday?

The hope for bondholders is that Mr Maduro may not always make rational decisions.

“The question is,” says Mr Dallen, “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.”