Major Currencies All Over The World Are In “Complete Meltdown” As The $63 Trillion EM Debt Bubble Implodes
By Michael Snyder
TheEconomicCollapseBlog.com
September 5, 2018
The wait for the next global financial crisis is over. Major currencies all over the planet are in a “death spiral”, many global stock markets are crashing, and economic activity is beginning to decline at a stunning rate in quite a few nations. Over the past 16 years, the emerging market debt bubble has grown from 9 trillion dollars to 63 trillion dollars. Yes, you read that correctly. Now that emerging market debt bubble is imploding, and as a result emerging market currencies all over the globe are in “complete meltdown”. In fact, at least 20 different currencies have fallen by double-digit percentages against the U.S. dollar so far in 2018, and nobody is quite sure what is going to happen next.
You may be tempted to think that this must be a good thing for the United States since the value of the U.S. dollar has been rising, but it is not.
During the “boom years”, trillions of dollars were borrowed by emerging market economies, and a high percentage of those loans were denominated in U.S. dollars. Now that their currencies are crashing, it is going to take much more local currency to service those U.S.-denominated debts, and a whole lot of them are going to start going bad.
That means that many financial institutions here in the United States and over in Europe are going to end up holding enormous piles of bad debt, and the losses could potentially be astronomical.
The dominoes are starting to fall, and even the mainstream media is admitting that what we are facing is really bad. For example, the following comes from a CNBC article entitled “The emerging market crisis is back. And this time it’s serious”…
The crisis has engulfed countries across the globe — from economies in South America, to Turkey, South Africa and some of the bigger economies in Asia, such as India and China. A number of these countries are seeing their currency fall to record levels, high inflation and unemployment, and in some cases, escalating tensions with the United States.
When I say that the world has been on the greatest debt binge in human history since the last financial crisis, I am not exaggerating one bit.
The emerging market debt bubble is now three times larger than it was in 2007, and it is seven times larger than it was in 2002. Here is more from CNBC…
Emerging markets are also heavily plagued by debt and a stronger dollar makes it tougher for them to pay this debt. The latest data from the Institute of International Finance shows that debt in emerging markets including China increased from $9 trillion in 2002 to $21 trillion in 2007 and finally to $63 trillion in 2017.
Of course this bubble was going to burst.
Anyone with half a brain should have been able to see that.
Now we have a full-blown crisis on our hands, and nobody seems to have any idea how to solve it.
The Rest…HERE
