Now some analysts, like Gavyn Davies, remain relatively sanguine, pointing out the the emerging markets crisis of the later 1990s produced only short-term disruption in advanced economies. That considerably underplays the dodged bullet of the LTCM bailout. But more important, as reader Scott has stressed, emerging markets were just over 30% of global GDP then versus roughly 50% now. It’s hard to imagine that if half of the world’s economies are in mild to severe distress that the rest of the world will get off scot free.Naked Capitalism
Monday, February 3, 2014
Yves Smith — Emerging Markets Contagion Starting to Hit Eurozone
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3 comments:
Smaller US fiscal and trade deficits are hitting the world hard. Perhaps countries need to consider providing their own deficit spending?
The opposite is what Krugman and all the other goofs prescribe. It's going to be blamed on taper, despite the fact that rates remain at zero and all these countries could continue to borrow in dollars at very low rates. Maybe the slow down in investment is the problem. Investment slows when there is insufficient demand. What a mess.
Investment slows when there is insufficient demand. What a mess.
Yep. This is starting to look bad. Austerity in the developed world continues to taking its toll.
Ryan we are running about 40B behind last fiscal year on topline govt spending (consumption and xfers...) so you see wal-mart (big offshore sourcing) taking a hit so these external flows of dollars are being reduced...
so like goog says the big two in Argentina are beef and wheat so you have perhaps the Chinese buying the beef with USDs they get from from walmart sales and now the walmart business is down so they cant buy as much beef so the Argentine USD based liabilites that depended on that flow from the beef trade cant be paid so now you see stress in the Argentine system as there are probably defaults and liquidations starting down there...
Watch the Fed will probably step in with temporary $USD loans eventually and stop this cold..
rsp,
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