Submitted by Hardscrabble Farmer
The idea that a centrally controlled system is advantageous is ludicrous in the extreme. Read the following passage as an example of why you should never place all of your eggs in one basket-
“Bloomberg Economics created a list of the countries most exposed to the fallout from the Ukraine conflict. Turkey, Egypt, Vietnam, the Philippines, and Poland are ranked some of the highest at-risk.”
The very idea that the turmoil of a Eurasian country should somehow have a negative impact on countries as diverse as the list above is ridiculous.
Resiliency, self-sufficiency and independence offer the greatest insulation against most exigencies. Building a system so tightly interdependent that entire blocks of far flung countries should suffer because of situations they have no control or influence over is either moronic or deliberate.
Are Soaring Food Inflation And Rolling Blackouts The Start Of Next Emerging Market Meltdown?
A combination of shocks is rippling through emerging market economies and has sparked soaring food and energy inflation, power blackouts, and social unrest. Countries with the weakest balance sheets and high debt loads appear to be sliding first into turmoil. This could be the beginning innings of an emerging market crisis last seen in the 1990s when socio-economic distress toppled governments, according to Bloomberg.
Already, skyrocketing food and energy prices have caused turmoil in Sri Lanka, Peru, Egypt, and Tunisia. The chaos could broaden as some emerging market countries, heavily saturated with debt, could be shocked by higher debt-servicing costs as the Federal Reserve embarks on an aggressive tightening campaign. This couldn’t have come at the worst time for these developing nations, as many had large capital outflows and borrowed vast amounts of money during COVID. Now they’re being hit by food and energy shock due to the Ukraine conflict.
An example of this toxic cocktail that could easily topple a country is Sri Lanka has already been pushed to the brink of default. The South Asian island nation’s foreign exchange reserves have collapsed, and food and fuel shortages, plus high inflation, have sparked unrest.
Bloomberg Economics shows a handful of other emerging economies at risk of crisis because of high debt and soaring yields. Notably, Ethiopia, El Salvador, Tunisia, Pakistan, and Ghana rank are the most at-risk because surging bond yields create higher default risk.
The Washington-based lender, International Monetary Fund, raised concerns in a recent report titled “Emerging-Market Banks’ Government Debt Holdings Pose Financial Stability Risks,” which warned government defaults like what happened to Russia in 1998 and Argentina in 2001-02 could be imminent across emerging market economies.
The report warned of a possible return of a “doom loop”:
A sharp tightening of global financial conditions—resulting in higher interest rates and weaker currencies on the back of monetary policy normalization in advanced economies and intensifying geopolitical tensions caused by the war in Ukraine—could undermine investor confidence in the ability of emerging-market governments to repay debts. A domestic shock, such as an unexpected economic slowdown, could have the same effect.
Bloomberg provides a set of gauges that shows emerging market risks are rising.
Bloomberg Economics created a list of the countries most exposed to the fallout from the Ukraine conflict. Turkey, Egypt, Vietnam, the Philippines, and Poland are ranked some of the highest at-risk.
Ziad Daoud, Bloomberg Economics’ chief EM economist, said if an emerging market crisis were to develop, it might spread well beyond its origin.
“In a cascade of emerging-market credit events, the negative impact of the whole could be larger than the sum of the parts,” Daoud said.
The former Goldman Sachs economist who coined the term BRICs, Jim O’Neill, said the current economic climate is the most uncertain since the early 1980s.
“If we get the inflation risk persisting and central banks have to tighten policy, for certain emerging markets it will be a disaster,” O’Neill warned.
So far, turmoil is brewing in places where investors don’t pay too much attention. However, the crisis could broaden as the Fed hikes and pandemic debts become unpayable as soaring inflation triggers social unrest. If the dominos fall, then investors will care.
It is my sincere desire to provide readers of this site with the best unbiased information available, and a forum where it can be discussed openly, as our Founders intended. But it is not easy nor inexpensive to do so, especially when those who wish to prevent us from making the truth known, attack us without mercy on all fronts on a daily basis. So each time you visit the site, I would ask that you consider the value that you receive and have received from The Burning Platform and the community of which you are a vital part. I can't do it all alone, and I need your help and support to keep it alive. Please consider contributing an amount commensurate to the value that you receive from this site and community, or even by becoming a sustaining supporter through periodic contributions. [Burning Platform LLC - PO Box 1520 Kulpsville, PA 19443] or Paypal
-----------------------------------------------------
To donate via Stripe, click here.
-----------------------------------------------------
Use promo code ILMF2, and save up to 66% on all MyPillow purchases. (The Burning Platform benefits when you use this promo code.)
Don’t jump over explaining it to the misinformed:
Globalization was sold to us as “less borders, therefore more competition, resulting in [permanently] bigger choice and lower prices.”
But it actually is implemented as “more centralization, which means less competition and ultimately monopolies.”
Why do you hate “the free market”?
“less borders” == “more centralization”
Good point, I should have written “less economic borders”
The more globally integrated and inter-dependent we become, the closer we get to terminal complexity.
If you want to see how the water, electricity, and gas situation plays out in real time keep your eyes on southern Utah, southern Nevada, and Northern Arizona. Lake Powell is at its lowest level since it was commissioned and if the water level drops another 35 feet, it will drop below the inlets for the hydroelectric power generators. No more electricity means no more water either as the water must be pumped to customers. And, no electricity also means no more natural gas as Dominion has electrified all of its gas compression as part of its ESG program.
And the sinking Lake Powell water level is going into summer, and upstream Wyoming reservoir has already delivered as much water to Lake Powell as it can afford, so barring some weather miracle it is inevitable these three regions will see worst case scenario. But what will be interesting – and a raw view into how our country now works – will be how the entirety of this region is sacrificed and the dwindling available resources diverted to keep the lights and air conditioning of the Las Vegas strip running 24/7/365 because – you know who owns Las Vegas. Not only that, but downstream on the Colorado River California will demand its cantaloupe and honeydew and we can’t have Orange and San Diego counties drain their swimming pools. Very interesting state versus state dynamics brewing.
If food exports are intentionally being cut off as part of some plan, watch for something to happen next in Thailand. They are the biggest rice exporter in SE Asia and supply rice to 500 million people in that region. Indonesia would be biggest casualty and we would likely see an Islamic revolution there should famine hit.
We are on tenterhooks here. If history is any guide Thailand, the only country in SE Asia never colonized, will pull up the drawbridge and become even more insular. Thailand has 400 years of experience in fending off stronger countries and today has an excellent diplomatic service capable of treading the fine line between bigger powers.
In 2019 tourist arrivals from China, India and Russia totaled 14.5 million and this will be protected. However the pressure from the USA is relentless via the embassy, US Aid and the National Endowment for Democracy, all CIA operations. The first ever CIA coup took place here in 1948, giving them control of the heroin trade from the Golden Triangle. They are a permanent thorn in our side.
We have policies that many readers of TBP would envy; little immigration and no citizenship for just about everybody, the hurdles to achieve that are insurmountable for Caucasians. I am here on a lifetime tourist visa which cost me about US$20,000 in 2004.
As a net food exporter famine is no threat but we are a net energy importer. China is our biggest trading partner as it is for most ASEAN countries. If push comes to shove, given the huge influence of the Chinese diaspora here, there is no doubt which way the country will lean.
Whole world is on tenterhooks thanks mainly to unstable and co-opted USA. Give me everything, or give me death.
And there we are. Malaysia must have cut palm oil exports, so Indonesia bans its exports. Dominoes are falling…
https://www.zerohedge.com/commodities/indonesia-bans-edible-oil-export-sparks-mayhem-global-food-crisis-ahead
Nationalism, My country my people first. Trump tapped into this idea. It’s an easy sell. I think that most Americans are nationalist, some are to ignorant or brain washed to realize it.
I have a sense that as the country unravels from with in there will be a new ground swell of nationalism in this country. Unfortunately the people need to see and feel what it means to be a globalist. Hope it’s not to late.
Well, we’ve got a poster named ICE-9 and Rickards also uses the analogy, but Herr Vonnegut had so much to say about exactly what we’re seeing now. The man was a genius writer and also so seemingly prescient it beggars belief.
I’ll see your “Cat’s Cradle” and raise you some “Galapagos:”
The story takes place one million years into the future. It is told by the spirit of a construction worker who was beheaded in a work accident. Instead of going through “Blue Tunnel” to the afterlife, he decides to stick around and see how the whole Humanity thing turns out. These Big Brains of humans are the true antagonists of the story.
Only a true master can write condense millennia of Human malevolence into a single paragraph all while setting a tone of nonchalance:
Yup, we, and we alone (in the whole Cosmos as far as we know) do these things as worse. We also use the same Big Brains for writing symphonies and novels and plays that transcend all the suffering we feel and cause. Vonnegut understood this dichotomy, this tension, of course, but generally his cynicism won out. Maybe only in “Bluebeard” (possibly my favorite novel of his) did the beauty win out over atrocity, but that is the subject of another post.
Anyway, what brought this whole thing to mind was HSF’s statement:
Vonnegut hit this point as well:
And:
Bret Weinstein has a rubric about things that are “literally false, but metaphorically true.” A good example is “there is no such thing as an unloaded gun.” This is literally false of course, but it serves us well to believe it. I disagree somewhat about the nature of “literal,” capital “T” Truth, but also, there is a huge part missing in his notion: Manifested Truth. Things people believe and that belief, practiced en masse, MAKES it true. The most glaring and obvious example of this is Money. Just money as a concept. When enough people believe a thing, even such an ephemeral thing as a “dollar” for instance, has value, then it has value.
Any other examples of absurd thing people believe in this 21st century, class?
I guess to wrap this up, I can only say that I have become something of fatalist of late. I, like all the other Big Brained, squishy, sentient Meatsacks tend to believe I am right about things.
At current, I see utter collapse, both entirely like and entirely unlike so many episodes in history.
I also see no possible way we will suffer such a collapse.
So, having covered all my bases, let me state unequivocally that I am certain to be entirely wrong in my predictions.
In closing, Vonnegut once more:
So there.
Nice analysis.
But, perhaps you are overthinking it. Take another look at the Bloom(((berg))) list. Who is not on that list? AMERICA!! We are absolutely at no risk from the Russkie-Ukie war. None. Nada. Does this not bring you comfort?
Yes. We are completely safe. We have the Dollar.
Thank Goodness!
The dollah is extremely strong today against world currencies and the Russian ruble has gained back it’s strength. I’d rather be holding USDs today than most currencies.
And the award for missing the point goes to….
If you like Cat’s Cradle, you will also like the lesser known novel JR by William Gaddis. Published in 1975 this black comedy is prophetic regarding how America and its system of fraudulent business has evolved. A work of genius.
“Building a system so tightly interdependent that entire blocks of far flung countries should suffer because of situations they have no control or influence over is either moronic or deliberate.”
neither. it is more cost-effective in the short and medium term, which is all anyone cares about. remember perot? he said this would happen, but america voted him down. and here we are.
Why did nobody warn us?
Oh, right.