Are We On The Verge Of A Massive Emerging Markets Currency Collapse?

Not to bad of an article that says the global currency markets are on the verge of a crash primarily with currencies from the so called "emerging markets".

They point out that many people think a currency collapse will start with the U.S. Dollar.

It seems however that currency speculators as well as banks at all levels will be scrambling away from so called weak money and into other holding tanks.

The cite the U.S. Federal Reserve's QE policy "easing" as a problem and note some recent foreign fluctuations.

long story;

This time, the Federal Reserve has created a truly global problem. A big chunk of the trillions of dollars that it pumped into the financial system over the past several years has flowed into emerging markets. But now that the Fed has decided to begin "the taper", investors see it as a sign to pull the "hot money" out of emerging markets as rapidly as possible. This is causing currencies to collapse and interest rates to soar all over the planet. Argentina, Turkey, South Africa, Ukraine, Chile, Indonesia, Venezuela, India, Brazil, Taiwan and Malaysia are just some of the emerging markets that have been hit hard so far.

In fact, last week, emerging market currencies experienced the biggest decline that we have seen since the financial crisis of 2008. And all of this chaos in emerging markets is seriously spooking Wall Street as well. The Dow has fallen nearly 500 points over the last two trading sessions alone. If the Federal Reserve opts to taper even more in the coming days, this currency crisis could rapidly turn into a complete and total currency collapse.

A lot of Americans have always assumed that the U.S. dollar would be the first currency to collapse when the next great financial crisis happens. But actually, right now just the opposite is happening and it is causing chaos all over the planet.

Are We On The Verge Of A Massive Emerging Markets Currency Collapse?

This may tie into some recent odd reports of bank irregularities like withdrawal limits and denials.

Lots of global influences.

What *ARE* they planning ?

OR, what *ARE* they preparing for ?

reply to post by xuenchen


Interesting information. Things change, they always do, including monetary and financial systems. It's inevitable, we have to understand this. The reason is to accomodate for all of these changing variables: population, emerging markets, changing financial power, etc. etc.

It's just the way it is. We can only hope that whatever changes are made will be conducive to continued progress for the welfare of humanity, as well as the preservation of our planet.

reply to post by xuenchen

OR, what *ARE* they preparing for ?

Don't think their preparing for anything myself which is most of the problem. The mess the Fed has created by printing money hand over fist has effected just about everything in a disastrous way (except of course Wall St, etc.) I think we'll see currencies in countries like Venezuela and Argentina taking a dive first.

That said I'll admit currencies aren't my strong suit so... Just buy gold (not the paper stuff either.)

Wow that just sounds like this to me, we are keeping the market afloat via
artificial means, if we were to stop or even slow down it all falls apart again.

Am i just misunderstanding this? What a strange planet we live on.

bloodreviara
What a strange planet we live on.

Nothing & i repeat nothing makes sense in a greedy world...

There is an article on Marketwatch.com that states the US tapering could cause a bubble burst in the Hong Kong real estate market also. Hong Kong is susceptible due to the fact that their economy is tied to the US dollar. When QE was in affect Hong Kong was flooded with cheap money. Now that the Fed is tapering that cheap money will be going away and the Hong Kong real estate market is could easily flop.

The Article was posted on Jan 26, 2014.

reply to post by xuenchen

They point out that many people think a currency collapse will start with the U.S. Dollar.

I don't know what people you are talking about everyone + dog is waiting on Japan to implode... I'm certain you have heard of Abenomics. After that I guess we would see the British Pound first and only then the Dollar, the Euro is a bit more comp0licated but chances are it could escape crumbling. It will affect everyone, especially in Asia (+ Australia) the big winner could again be China that will be able to some degree to benefit from the firesafe of technology and labels (the recent animosity would even help safeguarding China to be exposed to Japan's doomed future)

In any case at that point the world would probably have entered in a military conflict of sorts or reached some form of consensus to avoid it all in some way. The collapses will be due to creditors losing any trust in getting their money back (this could even lead to a war).

If you like to see the disaster unfolding take a look at the graphs of it, one needs not be a rocket scientist to see that it will end badly (especially if we add other factoids of Japan, like energy and demographics).

Japan Central Bank Balance Sheet

In any case if you see Japan's folds and you live in the US, start running for them hill (you can send caution out of the window and start trading your dollars for bitcoins)...

It is orchestrated as a plan to get you to dump what you hold.
Don't believe it? Countless occurences over time where they picked up what you dumped cheap.
It won't change unless you resist the fear and # them back.

reply to post by bloodreviara


Close. You can find out for yourself about QE. The Federal Reserve, you, me, american taxpayers, have been propping up the global economy since 08.

We have to feed that beast instead the poor humans.

Amazing how we all have been brainwashed into believing "the job creators" need our money before we can get a job.

I can see how an anti-christ can step in and convince the masses he is God.

reply to post by xuenchen


This shouldn't be a shock to anyone and is exactly what all those extolling BRICS nations a few years ago seemed to miss - any nation that undergoes rapid and dramatic economic expansion will inevitably at some point have to undergo a rebalancing of their economies once the bubble bursts.

History shows us this with pretty much every single example. That isn't to say these nations won't recover and then continue to grow again, just that such rapid expansions always leads to this type of problem (which is why it shouldn't be a shock).

It could be painful this time though as a lot of the emerging nations were really the ones driving growth last time round and they won't have cash assets this time to do the same (for example, Chinese firms exposed to over a $ Trillion debt at the moment).

It will recover because at the end of the day, people all over the world are now getting used to increased standards of living and this leads to an expected increase in desires and demands, and therefore a significant increase in the demands of the population. For example, extreme poverty is now down to around 5% of the global population as opposed to the 20% of 20 years ago (extreme poverty being less than a dollar a day).

The markets have been sitting at their highest levels for a significant period of time and were always due a correction on the release of poor economic news somewhere (this time Argentina). That said, crashes can happen for any reason. I remember in 2010 the market crashed around 1,000 points in a day, and all that was due to was a shut-down in computerised trading (I just wish I'd got my trading account set up in time for it!). It recovered, but even in those days it was only around 11,000. I think there is a long way to go before we're talking about a crash.

On the emerging markets, there is now talk of four more emerging countries referred to as the MINT countries (Mexico, Indonesia, Nigeria, and Turkey), so whilst the momentum of the BRIC countries may slow, there are other countries apparently in a good position for economic growth.

In regards to China being able to weather the possible collapse of the currencies in Argentina and Venezuela. The third largest bank in China has reported that they will default on the 31st. However, Beijing has two options, 1. Allow the default and pick up pieces after the dust settles or 2. Bail the bank out and kick the can down the road. Should they allow #1 the banking sector will take a major hit and a loss of confidence with the Chinese people but would recover in a couple of years. Going with option 2 would pull the whole system down in the not too far distant future. Both options are bad options.

In the end China is in worse shape than the US was prior to 08. The wealthy and elite class in China are parking their assets offshore as fast as they can, hint, hint. Once the currencies start to burn, it could lead to a global firestorm.

reply to post by Bassago


I have heard quite the opposite; that they are preparing for an economic collapse and are trying to set something up just in case that scenario happens.

I cannot right now remember where I heard it - I will have to research it again - but there were some reasonably quiet meetings being held and that was the assumption people were making.


Although now that I think about it, I think that possibility of preparation was to prepare for the collapse of the USD as the world reserve currency.

Taking a broad philosophical view of this;

What 'is' money? Obviously money is a symbol of something - it's value lies in the fact that other people accept it for goods and services. In essence, money represents human agreement. If out monetary system is breaking down it means at some level our human agreement about the value of said money is breaking down. This happens because of the abuse of monetary systems by certain individuals for personal gain - even if it is legal doesn't mean it won't leads to periodic breakdowns. Digital currencies like bitcoin are an interesting new development - it may be that they will eventually force the people responsible for this chaos to change their ways - one can only hope.

Financial bubbles are created (or allowed to happen) due to intense greed and short-sighted thinking.

They inevitably burst. The federal reserve's policies have basically destroyed this county's economy multiple times. However, in the past, we had a manufacturing base to pull us back out of it.

This time, we got nothing but a service based economy which naturally collapses when people don't have the money to go out and spend it on services.

We have an insanely large debt bubble which HAS to burst. It's got nowhere to go. Upping the interest rate is the pin that will pop this puppy. Then the carnage begins.

Huge amounts of debt with no way to pay is back will kill any economy.

The Fed doesn’t talk to you or me about these things. It calls Goldman Sachs or JP Morgan. And most of the Wall Street wealth of the last 30 years has been the result of leverage (credit growth). Take away credit and easy monetary policy and a lot of very “wealthy” people suddenly are not so wealthy.

Let me put this in terms of real job growth (created by startups) vs the “job growth” of the last five years.

According to the National Bureau of Economic Research, startups account for nearly all of the US’s net job creation (total job gains minus total job losses). And smaller startups have a very different perspective of debt than larger more established firms.

The reason is quite simple. When a small business owner takes out a loan he or she is usually posting personal assets as collateral (a home, car or some other item). As a result, the debt burden comes with the very real possibility of losing something of great value. And so debt is less likely to be incurred.

This stands in sharp contrast to a larger firm, which can post collateral owned by the business itself (not the owners’ personal assets) and so feels less threatened by leveraging up. Thus, in this manner, QE and other loose monetary policies maintained by the Fed favor those larger firms rather than the real drivers of job creation: smaller firms and startups.

For this reason, the Fed’s policies, no matter what rhetoric the Fed uses, are more in favor of the stock market than the real economy. That is to say, they are more in favor of those firms that can easily access the Fed’s near zero interest rate lending windows than those firms that are most likely to generate jobs: smaller firms and start-ups.

This is why job growth remains anemic while the stock market has rallied to new all-time highs. This is why large investors like Bill Gross have applauded the Fed’s policies at first (when the deleveraging was about to wipe him out in 2008), but then turned against them in the last few years as a political move. This is why QE is so dangerous, because it increases concentration of wealth and eviscerates the middle class.

www.zerohedge.com...

Also, keep in mind that banks are fixing to incur big losses with their derivatives gambling. Note that in late October, our Representatives quietly voted yes to HR 992 to remove the protections that were put in place after 2008 so that the taxpayers wouldn't be on the hook for derivatives losses for big banks. In other words, their removal of this protection is the signal that we're fixing to get screwed badly.

"This bill would effectively gut important financial reforms and put taxpayers potentially on the hook for big banks' risky behavior," Peterson said. "The provision is a modest measure designed to prevent the federal government for bailing out or subsidizing bank activity that is not related to the business of banking."

Peterson also noted that under current law, banks can still perform about 90 percent of the swaps hedges they were able to perform before Dodd-Frank.

"So banks can keep 90 percent in the bank," he said. "But apparently this isn't good enough for some of these big banks, which is why we're here today with H.R. 992."


Read more: thehill.com...
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thehill.com...

Because the financial markets are incestuous messes and are all intertangled together, they'll all go down together. Some of the weaker ones will topple first. But make no mistake, we're going down too.

I cannot help but feel that they will take us into a major war rather than face our wrath when we wake up one day and discover that our money is nothing but paper with a dead president on it.

I trade currency, and from this post title, I'm dumb founded.
Explain what is "Emerging Markets Currency" ?

I dont think such thing exist for currency market.
Its just a local stuff, limited to the country you are on.

As a currency trader, I'm totally shielded and probably will make some profit from your money falling .

reply to post by NullVoid


Can you explain to a retired elderly woman with a little money about this bitcoin. I would love to see alternatives to the current system. At least, maybe I can direct my adult working kids.

I think the collapse started when they took all the silver and gold from people and had free reign to print all the money they wanted.

MOMof3
reply to post by NullVoid

 

Can you explain to a retired elderly woman with a little money about this bitcoin. I would love to see alternatives to the current system. At least, maybe I can direct my adult working kids.

Nahh dont bet too big on BitCoin, if you want to avoid market collapse, go for forex trading, at least its regulated.
Bitcoin on the other hand is forex trading on streoids. The far future is with BitCoin/Litecoin, give it 20 years more before it collapse.

For current situation, learn forex trading as a hobby, at least it show you WHICH currency to cling if the market collapse.

korath
I think the collapse started when they took all the silver and gold from people and had free reign to print all the money they wanted.

They already done it. Learn a bit about your currency history.

In March 1968, the effort to control the private market price of gold was abandoned.

Since its abandoned, the entire world backed/use USD which is backed by US Goverment which backed by Fed which is backed by US banks which is backed by....few guys.

So, as you can see, your gold is pretty much useless, since they already can print all the money they need.

I hope its not a news to you.

pstrron
However, Beijing has two options, 1. Allow the default and pick up pieces after the dust settles or 2. Bail the bank out and kick the can down the road. Should they allow #1 the banking sector will take a major hit and a loss of confidence with the Chinese people but would recover in a couple of years. Going with option 2 would pull the whole system down in the not too far distant future. Both options are bad options.

How is that any different than what the US economy looked like in 2008? In fact as I recall, we went with option 2.