Jump to content
House Price Crash Forum
Sign in to follow this  
interestrateripoff

Emerging Markets Thread

Recommended Posts

http://www.telegraph.co.uk/finance/economics/11898936/World-set-for-emerging-market-mass-default-warns-IMF.html

The International Monetary Fund (IMF) has issued a double warning over higher US interest rates, which it said could trigger a wave of emerging market corporate defaults and panic in financial markets as liquidity evaporates.

The IMF said corporate debts in emerging markets ballooned to $18 trillion (£12 trillion) last year, from $4 trillion in 2004 as companies gorged themselves on cheap debt.

It said the quadrupling in debt had been accompanied by weaker balance sheets, making companies more vulnerable to US rate rises.

"As advanced economies normalise monetary policy, emerging markets should prepare for an increase in corporate failures," the IMF said in a pre-released chapter of its latest Financial Stability Report.

em_debts_3457278b.jpgEmerging market corporate debt has grown to $18bn Photo: International Monetary Fund

It warned that this could create a credit crunch as risks "spill over to the financial sector and generate a vicious cycle as banks curtail lending".

I strongly suspect that if rates at the Fed increase the 1982 debt crises will appear a picnic.

Share this post


Link to post
Share on other sites

This has been written about on here for years yet the imf seem surprised. Low interest rates create bubbles everywhere, and should have been raised years ago. Now is too late. Idiots.

Share this post


Link to post
Share on other sites

http://www.telegraph.co.uk/finance/economics/11898936/World-set-for-emerging-market-mass-default-warns-IMF.html

I strongly suspect that if rates at the Fed increase the 1982 debt crises will appear a picnic.

That's why a lot of people strongly suspect there won't be an interest rise, or if there is it will soon be reversed ending up in negative rates.

Share this post


Link to post
Share on other sites

That's why a lot of people strongly suspect there won't be an interest rise, or if there is it will soon be reversed ending up in negative rates.

The question is who holds the debt, who are indebted and who stand to benefit in the event of a) debts being repaid and B) debtors going bankrupt and there being an asset sale.

If the world economy craters following the US increasing interest rates, but it is European pensioners (say) who don't get their pensions paid, and Wall Street (or the illuminati, or whoever...) get to buy lots of worldwide assets cheaply, even if the US economy has a couple of flat years - is this a good result for the USA (in isolation)?

[i don't necessarily think this, but I do think it is more than an issue of the US being scared to increase interest rates because people in Germany (or, frankly, North Dakota) suffer a bit.]

Share this post


Link to post
Share on other sites

The question is who holds the debt, who are indebted and who stand to benefit in the event of a) debts being repaid and B) debtors going bankrupt and there being an asset sale.

If the world economy craters following the US increasing interest rates, but it is European pensioners (say) who don't get their pensions paid, and Wall Street (or the illuminati, or whoever...) get to buy lots of worldwide assets cheaply, even if the US economy has a couple of flat years - is this a good result for the USA (in isolation)?

[i don't necessarily think this, but I do think it is more than an issue of the US being scared to increase interest rates because people in Germany (or, frankly, North Dakota) suffer a bit.]

Why do you say north dakota? haven't they got full reserve banking?

Share this post


Link to post
Share on other sites

So they won't increase rates because the next time the central bankers meet up at their places like their IMF and their Bank for International Settlements (BIS) etc their emerging market central bank chums will complain to them because the emerging markets took on too much debt.

There would be fewer wide smiles and hand shakes and general back slapping would be off the agenda.

At least they can't claim it was unexpected as the IMF has predicted it already (they could claim it but they'd be lying).

Edited by billybong

Share this post


Link to post
Share on other sites

Why do you say north dakota? haven't they got full reserve banking?

Sorry - North Dakota is a relatively unimportant state, but gets lots of revenue from oil which would reduce if the rest-of-world economy collapsed.

Share this post


Link to post
Share on other sites
The Emerging Market Growth Model Is "Broken"; RIP EM

CitiEM1.png

"Emerging economies’ growth prospects look damaged in several respects. The central fact facing EM is the negative external shock that results from weak global trade growth and the collapse of Chinese import growth. This brings to an irreversible end the period of rapid, investment-led Chinese growth and strong global trade growth which had supplied EM with a once-in-a-generation positive external shock during the years between 2002 and 2013."

Share this post


Link to post
Share on other sites

http://www.telegraph.co.uk/finance/comment/12035075/Why-emerging-markets-will-rise-from-gloom-to-boom.html

Why emerging markets will rise from gloom to boom Our long-term prosperity depends on us trading with and investing in the emerging markets

‘Brazil faces worst recession since the 1930s”. “Chinese growth falls to a three-year low”. The financial press is full of doom-laden headlines about emerging markets (EMs) – which is hardly surprising.

After rallying strongly following the 2008 financial crisis, share indices across Asia, Eastern Europe and South America have spent the past few years largely in the doldrums, reflecting not just slower economic growth, but also the actions of Western central banks.

While Chinese GDP continues to expand at 6.3pc, that’s well below the astonishing 9pc to 10pc average annual growth the People’s Republic chalked up during the Nineties and 2000s. Brazil, meanwhile, is mid-slump, contracting by 4.5pc during the third quarter, we learnt last week, reeling from lower commodity prices and the reversal of a consumer credit boom.

Energy giant Russia is also suffering, not only from sub-$50 oil, down from $70 12 months ago, but also from economic sanctions, in place since mid-2014. Expected to shrink by 3.5pc this year, the Russian economy will register only its second annual contraction since the 1998 default.

Share this post


Link to post
Share on other sites
Will 2017 Be The Year Of The EM Corporate Debt Crisis?

EMDebt.png

"The liquidity picture for EM corporates in 2017 looks less appealing, due to a 38% yoy increase in USD bond maturities (to USD122bn) and lingering uncertainty on commodity prices (an important component of the corporate sectors’ cash flow) and FX (a headwind for domestic-oriented players). A further depletion in cash buffers and reduced appetite for certain portions of the EM corporate universe may lead to increased refinancing stress in 2017."

Share this post


Link to post
Share on other sites

I have often posited the same question 9999.

NB So many positive things happening in EMs - Brazil President prosecuted, Venezuala voting out Socialists, oil bottoming (!?), Chinese internet.

I am very happy ZH et al still pushing EM negative stories.

Share this post


Link to post
Share on other sites

So remind me the last time that the uber gloom merchants on zero hedge were actually right.

ZH has been consistently ahead of events since 2008 which is more can be said for the Bank of England, the Federal Reserve, the OECD etc.

Share this post


Link to post
Share on other sites

Interesting chart of em economies at risk with oil < $40 bbl.

Iraq and Venezuela at the top, of course. But the likes of Nigeria and Saudi Arabia not far behind.

CVmfZowWUAAfmxc.jpg

Share this post


Link to post
Share on other sites

ZH has been consistently ahead of events since 2008 which is more can be said for the Bank of England, the Federal Reserve, the OECD etc.

What a crock of s...

For the last several years:

Buy

Gold

Sell

Property, Shares, Govt Bonds, US $,

And they screamed we are entering hyperinflation for the last 5 years

Exactly where have they been "consistently ahead of events since 2008"?

Share this post


Link to post
Share on other sites

ZH has been consistently ahead of events since 2008 which is more can be said for the Bank of England, the Federal Reserve, the OECD etc.

I get the impression that anyone who had traded off what they read from ZH since 2008 would have missed a huge equity rally and be sitting on a pile of depreciating gold and silver.

Share this post


Link to post
Share on other sites

I get the impression that anyone who had traded off what they read from ZH since 2008 would have missed a huge equity rally and be sitting on a pile of depreciating gold and silver.

As are people that frequent this forum with regard to housing. :)

One day, ZH and this forum will be right.

Share this post


Link to post
Share on other sites

As are people that frequent this forum with regard to housing. :)

One day, ZH and this forum will be right.

Funny.

7 of 13 UK regions <1% pa growth over 10 years - Nationwide.

Share this post


Link to post
Share on other sites

What a crock of s...

For the last several years:

Buy

Gold

Sell

Property, Shares, Govt Bonds, US $,

And they screamed we are entering hyperinflation for the last 5 years

Exactly where have they been "consistently ahead of events since 2008"?

China, commodities, emerging markets. ZH was all over these before anyone else.

We've already experienced a credit hyperinflation. It began in the 1960s but the taps weren't really opened up until the 1980s with Thatcher and Reagan.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   61 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.