UNCTAD Report Warns of Coming Blowout of $25 Trillion in Emerging Market Debt
Sept. 24, 2016 (EIRNS)—Choosing to focus on one aspect of the global $1.5 quadrillion speculative bubble, which is bankrupt in its entirety, the United Nations Conference on Trade and Development (UNCTAD) issued its 2016 annual report warning that some $25 trillion in emerging market debt is facing imminent default. That conclusion, although partial, is certainly true.
The UNCTAD report notes that there was a huge influx of capital to developing markets after the 2008 crisis, because quantitative easing and other cheap credit policies in the developed sector created a massive carry trade in search of making a killing abroad. But now,
"alarm bells have been ringing over the explosion of corporate debt levels in emerging economies, which now exceed $25 trillion. Damaging deflationary spirals cannot be ruled out,"
the report says—a euphemism for a global collapse. Much of this emerging debt may soon become non-performing, they warn:
"If the global economy were to slow down more sharply, a significant share of developing-country debt incurred since 2008 could become unpayable and exert considerable pressure on the financial system."
UNCTAD warns of impending capital flight, devaluations, and collapsing asset prices. Last year, capital outflows from emerging markets reached $656 billion, and in the first quarter of 2016 they were already at another $185 billion.