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Be prepared for the next great transfer of wealth. Buy physical silver and storable food.
There is a wicked double edge to the emerging-market boom that has so enthralled us for the past decade. The economies of these rising powers are by now big enough to shake the entire world if they come off the rails.
by Ambrose Evans-Pritchard
Telegraph.co.uk
Some feared this might happen in 1998 when Russia defaulted and East Asia’s currency crisis span out of control, a drama precipitated by a rising dollar. Contagion spread to western Europe, causing the pre-euro “convergence play” to snap back violently.
The US hedge fund Long Term Capital Management was caught $100bn (£65bn) short as bond spreads surged in Club Med, and equities plunged. The threat of a chain reaction was serious enough to force emergency rate cuts by the Fed. The crisis abated.
Asia’s economy is a much bigger beast today, and so is the emerging market (EM) universe. These countries now account for half of global investment. Gross fixed-capital formation last year by EM powers in the G20 bloc was $6.7 trillion, 48pc of the total. China alone spent $3.85 trillion, eclipsing America at $2.5 trillion – even with the US shale boom.
Continue Reading at Telegraph.co.uk…