Uncle ED (Eurodollar) and the Fed
Michael T. Snyder posted an excellent missive: Guess What Happened The Last Time The U.S. Dollar Skyrocketed In Value Like This?
"Unfortunately, most Americans have absolutely no idea how important all of this is. In recent years, growing economies all over the world have borrowed gigantic piles of very cheap U.S. dollars. But now they are faced with the prospect of repaying those debts and making interest payments using much more expensive U.S. dollars.
In the early '80s, a bullish U.S. dollar contributed to the Latin American debt crisis, and also impacted the Asian Tiger crisis in the late '90s. Emerging markets typically have higher growth, but carry much higher risk to investors. When the economies are doing well, foreign investors will lend money to emerging market countries by purchasing their bonds."
The Nattering one mused...
Another nice piece, you get it. I'm not worried about the Greeks, LA County has twice the GDP than the Greeks... I'm more perturbed over what COULD be a byproduct of "the flows" (something my would be Fed Chairman Salmo Trutta knows a wee bit about) from this self reinforcing eurodollar hegemony loop somehow causing major domestic hyperinflation (and I don't mean the run of the mill 12% being advertised as 2%, i.e. why deflation is the central bankers worst enemy).
My hope (which is like wishing in one hand and... in the other, see what you get first) is that before anything "hyper" rears its ugly head, it can somehow be accounted for and "sterilized" or neutralized. With fingers crossed, and knowing the Fed is painted into a zero corner, with no bullets left and the serious cross fire is just starting... TBD.
Further musing... We will be Nattering very soon, regarding "the flows" in what we refer to as Uncle ED (the Eurodollar market).
Just the tip of the EM dollar debt... It is estimated that by mid-2014, $3.1 trillion has been lent to emerging markets since the end of the financial crisis, according to the Bank for International Settlements' quarterly review for December 2014. That more than doubles the estimated value of U.S. subprime mortgages in the beginning of 2007.
"Unfortunately, most Americans have absolutely no idea how important all of this is. In recent years, growing economies all over the world have borrowed gigantic piles of very cheap U.S. dollars. But now they are faced with the prospect of repaying those debts and making interest payments using much more expensive U.S. dollars.
In the early '80s, a bullish U.S. dollar contributed to the Latin American debt crisis, and also impacted the Asian Tiger crisis in the late '90s. Emerging markets typically have higher growth, but carry much higher risk to investors. When the economies are doing well, foreign investors will lend money to emerging market countries by purchasing their bonds."
The Nattering one mused...
Another nice piece, you get it. I'm not worried about the Greeks, LA County has twice the GDP than the Greeks... I'm more perturbed over what COULD be a byproduct of "the flows" (something my would be Fed Chairman Salmo Trutta knows a wee bit about) from this self reinforcing eurodollar hegemony loop somehow causing major domestic hyperinflation (and I don't mean the run of the mill 12% being advertised as 2%, i.e. why deflation is the central bankers worst enemy).
My hope (which is like wishing in one hand and... in the other, see what you get first) is that before anything "hyper" rears its ugly head, it can somehow be accounted for and "sterilized" or neutralized. With fingers crossed, and knowing the Fed is painted into a zero corner, with no bullets left and the serious cross fire is just starting... TBD.
Further musing... We will be Nattering very soon, regarding "the flows" in what we refer to as Uncle ED (the Eurodollar market).
Just the tip of the EM dollar debt... It is estimated that by mid-2014, $3.1 trillion has been lent to emerging markets since the end of the financial crisis, according to the Bank for International Settlements' quarterly review for December 2014. That more than doubles the estimated value of U.S. subprime mortgages in the beginning of 2007.
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