WHAT IS the hottest global market so far in 2012? How about socialist Venezuela — where stocks rose 99 percent between Jan. 1 and this week. That might seem like an improbable surge in a country wracked by double-digit inflation, shortages of water, power and staple foods, and a dearth of investment — not to mention one of the world’s highest murder rates. But Venezuela’s markets are being moved by a strange but powerful force: the absence of reliable information about the health of President Hugo Chavez — and the growing speculation that his condition is rapidly deteriorating.
According to Russell M. Dallen Jr, a banker who produces a newsletter on Venezuela, a rumor that a prominent journalist had tweeted the news of Mr. Chavez’s death caused Venezuelan bond prices to spike by as much as 5 percent Friday. The rumor was false, and Mr. Chavez proved he was alive with a phone call to state television on Monday from Cuba. Yet it is Mr. Chavez who has created the feverish climate, by refusing to tell his people the truth about the cancer he has been battling, even as he insists he will be a candidate for a new six-year presidential term in elections scheduled for October.
In the vacuum created by the regime, speculation and reports based on unnamed sources are flourishing. The journalist who was the subject of last week’s rumor, Nelson Bocaranda, has reported that the cancer has spread to other organs and that treatment has been ineffective. That has helped propel Venezuelan markets, which are hoping for an end to Mr. Chavez’s disastrous mismanagement of the country. There is a good alternative: a well-organized opposition has nominated a popular state governor, Henrique Capriles Radonski, to compete in the presidential election; he has promised to rebuild democratic institutions.
Yet Venezuela is threatened with much worse outcomes. Mr. Bocaranda reported last week that Venezuelan and Cuban generals met in Cuba to decide on what to do if Mr. Chavez is unable to remain in office or compete in the election — and that a military coup was one option under discussion. Though unconfirmed, that all-too-plausible possibility underlines the urgency for Venezuela’s neighbors — and an inert Obama administration — to focus on the possibility that the country may be headed for a political breakdown and to do what they can to prevent it. As a start, they should encourage Mr. Chavez to disclose his condition.