There are a series of problems with this. The biggest is that it just never considers the role of having the most misaligned official exchange rate on the planet in preventing the government from meeting its domestic obligations. That's the crux of the debate we've been having: whether the economic chaos we're facing is caused by actual insolvency, or whether it's caused by the enormous macro distortions introduced by having a 13-to-1 spread between the official and the black-market exchange rates. That's a debate worth having, but you can't have it if you never stop to even acknowledge the fact.



The second problem is that that R&R just take Hausmann and Santos's rhetorical use of the "default" - which was perfectly appropriate in the context they used it - in a literal/legal sense. Legally, of course, there is no domestic default in Venezuela: the republic is still paying its bolivar denominated debt just fine, through financial repression. The de facto haircuts that investors take when the government sells them dollars they'd expected to get for Bs.6.30 for Bs.10 or Bs.50 can't reasonably be called a default, because the government never contracted a legally binding obligation to transact foreign exchange with them at a given price. This is obvious enough, but apparently needs stating nonetheless.



Overall, it's hard to avoid the sense R&R just aren't very familiar with macro-debates about Venezuela...or, if they are, they have a funny way of showing it.