The collapse of a Venezuelan bank owned by R. Allen Stanford, the Texas financier accused of fraud, is raising concern that the run on its deposits could spread to other banks, threatening the nation's economy. President Hugo Chávez blamed his political enemies for rumors about mass withdrawals, and urged depositors not to pull their savings from domestic banks.
While Chávez may succeed in restoring confidence, the concerns underscore the problems facing the quasi-dictator. Chávez's ability to fund welfare programs and other subsidies at the core of his popularity is undercut by plunging oil prices. Increasingly, residents of Venezuela say they believe Mr. Chávez will have to devalue the "strong bolivar" currency he introduced last year. Price controls meant to contain 30% inflation have led to food shortages. Just last weekend, Chávez dispatched troops to force rice makers to boost production.
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