{"id":34366,"date":"2018-05-19T11:30:10","date_gmt":"2018-05-19T16:30:10","guid":{"rendered":"http:\/\/olduvai.ca\/?p=34366"},"modified":"2018-05-19T11:30:10","modified_gmt":"2018-05-19T16:30:10","slug":"emerging-market-debt-defaults-on-the-horizon","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=34366","title":{"rendered":"Emerging Market Debt Defaults on the Horizon?"},"content":{"rendered":"
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Emerging Market Debt Defaults on the Horizon?<\/a>\"\"<\/a><\/h3>\n<\/div>\n
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QUESTION:<\/strong> Mr. Armstrong; You said that the emerging markets are a huge problem that will lead to a Sovereign Debt Default. Can you elaborate on that statement?<\/p>\n

Thank you for your insight<\/p>\n

VU<\/p>\n

ANSWER:<\/strong> The emerging markets are in far worse shape today than\u00a0they were even back in\u00a02008. They have issued heaps of dollar-denominated\u00a0debt to sell particularly to US pension funds seeking higher yield. Some of the buyers have been state-run\u00a0pension funds. The outstanding Emerging Market debt has exploded\u00a0by 50%.\u00a0The majority of the increase in emerging market indebtedness has been in local currency, which was more than\u00a0$48.5 trillion<\/b>\u00a0as of the end of 2016 from around\u00a0$43 trillion<\/b>\u00a0in 2015 and is pressing\u00a0$50 trillion<\/strong> for 2017.<\/p>\n

We passed $200 trillion in global sovereign debt back in 2016. All of these dollar bears that yell about the USA at $20 trillion, ignore where the world stands at and the fact the USA is still the only economy holding everything up. Both the Emerging Market and EU countries have used the cheap interest rates to just pile on more debt \u2013 not reform. This is why central banks have lost all capability of manipulating interest rates to direct the economy. All of those theories are entirely dependent\u00a0upon DEMAND<\/strong> management. They may, in theory, be able to manage the\u00a0\u201cdemand\u201d of the consumer, but they have zero influence over government spending. They lower rates to stimulate private demand and simply underwrite government debt.<\/p>\n

The world comes unglued ONL<\/strong>Y with a dollar rally \u2013 not a decline. A drop in the dollar would be cheered by governments who would then issue even more debt. A dollar rally will cause the Sovereign Debt Crisis \u2013 not a dollar decline. Emerging Market defaults are once again on the timeline. They are economically in far worse shape today than they were in 2008. As interest rates rise, they will blow their budget out and they do NOT<\/strong> have the economies to support the debt repayments (excluding\u00a0China).<\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Emerging Market Debt Defaults on the Horizon? QUESTION: Mr. Armstrong; You said that the emerging markets are a huge problem that will lead to a Sovereign Debt Default. Can you elaborate on that statement? Thank you for your insight VU ANSWER: The emerging markets are in far worse shape today than\u00a0they were even back in\u00a02008. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5496,195,6847,1732,431,5479,839],"class_list":["post-34366","post","type-post","status-publish","format-standard","hentry","category-economics","tag-armstrong-economics","tag-debt","tag-debt-default","tag-emerging-markets","tag-interest-rates","tag-martin-armstrong","tag-us-dollar"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/34366","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=34366"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/34366\/revisions"}],"predecessor-version":[{"id":34367,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/34366\/revisions\/34367"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=34366"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=34366"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=34366"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}