JIM ROGER : Interest Rates around the world are going higher
The interest rates around the world are going higher. If the US
considers further tapering, then, I think, global markets will
eventually have to suffer. If you take this whole ocean of liquidity out
of the financial markets, somebody is going to suffer. When the US
starts tapering, the less developed markets will suffer first.
The
flows into emerging markets will come under pressure. Whether the
Federal Reserve is going to taper for second time or third time, the
markets around the world are going to suffer.
- JIM ROGER Feb 2014
The Market Tanks!
By Briton Ryle | Wednesday,
February 5th, 2014
Something has changed in the market.
If you've been watching the recent sell-off in stocks, you know what I'm talking about. This change will have serious
consequences.
In 2013, debt didn't matter. Governments around the world were encouraged to take on debt to push cash money into the
system.
Growing imbalances were also a good thing. If the American consumer would only spend more — via loans or
credit cards or whatever means possible — we'd get that virtuous cycle of spending, hiring, and wage inflation cooking.
Monetary expansion would save us. If the Fed (and other central banks) could just get enough money into the system,
again, we'd get that recovery in spending, hiring, and wages.
So long as the Fed was pumping money into the system, all of these things held true. Nothing mattered, and stock
prices went higher and higher.
But the Fed started dialing back how much money it pumped every month... and that's changed everything.
Warren Buffett once said that when the tide goes out, you find out who's been swimming naked. Great quote.
Now that the QE tide is going out, we can see just that...
Emerging markets like Turkey, Argentina, Brazil, and Russia. The S&P 500. Treasury yields. The housing recovery. U.S.
manufacturing.
Investors now see each a lot differently than they did a month ago. For the first time since the European debt
problem reared its head, the stock market — and global economy — looks downright dangerous.
Emerging Market Crisis
Emerging markets like Turkey are in crisis mode. Hot foreign
money, urged on by the Fed, has been fleeing Turkey all
year as the QE carry trade reverses. A "carry trade" is where an
institutional investor borrows cheaply in one currency and then buys
higher-yielding
assets of another country.
All through the '90s, the big carry trade was to borrow yen from Japan (because Japanese rates were so low) and then
buy U.S. stocks. Investors made a fortune.
And it's easy money because it's borrowed. They call it "hot money" because like a hot potato, it can change hands
quickly.
The IMF says as much as $470 billion of hot money is
directly linked to the Fed's QE bond purchases. That money is
coming out of emerging markets now. You can see it in the collapse of
these currencies, and you can see it in Treasury bond prices, which have
launched in the last few weeks.
Last week, Turkey raised interest rates from 7.75% to 12% to slow down the hot money stampede. That move helped
support the Turkish lira — for about 6 hours. And the plunge renewed.
Now, Turkey needs to borrow around $200 billion this year, according to Barclays. The rates it may have to pay could
be crippling.
South Africa raised interest rates last week. So did India.
Russia is reportedly spending $400 million a day to defend its currency. It will ultimately fail.
And Then There's China
China has grown by investing. That is, the government has extended credit to build factories, empty cities, and so
forth. Last year, it added $5 trillion worth of factories and other fixed investments. Investment as a share of GDP is now 48%.
Worse, private debt in China stands at 180% of GDP, according to the IMF. And Morgan Stanley says 45% of that debt
has to be refinanced in the next 12 months. That's around $6.7 trillion.
You see what's happening here, right?
Growth in emerging markets is slowing. They are raising interest rates to fight currency problems. They also have to
refinance a lot of debt, but at higher rates.
The Fed is pulling back on stimulus. Other central banks are raising interest rates. So where exactly is money to
refinance debt going to come from? And what happens if they don't get it?
We've seen firsthand what happens when people stop paying their loans. Banks fail; economies tank. If it happens in
emerging markets, it will eventually come to the U.S.
It's kinda bad out there right now. Kinda scary. But we have to ask ourselves — how will the Fed respond
to this threat?
土耳其政治危机已经慢慢地占据了各国报纸的头条。金融市场只卖出土耳其资产，“一点儿也不担心”土耳其政治危机对全球系统性的影响。
如果土耳其政府在危机演化成街头暴乱之前可以有效地化解危机，金融市场这样“悠然自得”的行为合情合理。
土耳其总理Erdogan的政府是民选伊斯兰教政府，一直以来治国策略得当，使土耳其成为东西方交流的一座桥梁。总理Erdogan三届任期期间，土耳其成功躲过欧债危机的冲击，显著提高了当地人们的生活水平，并有效控制了军队对政治的干预。
因此，难怪，土耳其被视为艰难转型中东的一座灯塔。
现在，总理Erdogan不仅仅面临着宗教势力的压力，还面临着来自社会运动的压力。
现在土耳其政府深受腐败丑闻困扰，数位部长辞职。甚至，Erdogan的总理之职都摇摇欲坠，他的盟友中已经出现了“要求他引咎辞职”的声音。
国内政治不稳定，再加上对外国资本严重依赖，两个因素合力重创土耳其。股市猛
跌，国债和公司债之间的风险利差骤增，货币大幅走弱。这一切都符合人们政治危机严重影响经济的想法，政治危机不仅仅会降低经济增长率，还可能冲击国外投资、加速资本出逃，致使短期资本流入受挫、国家外汇储备耗竭。
与其它国家市场的波澜不惊相比，土耳其市场一片“狼藉”，其他市场的异常平静是由于大家期望土耳其政府可以安全化解危机。
土耳其需要快速恢复国内政治的话语权，以避免土耳其混乱不安的政治局势影响到其它国家。
为了迅速消除国内危机，他不能太多地指责外部势力干涉、司法偏见，而是应该采取更多措施遏制腐败，当然，他还要妥善应对别人对自己的指责和控告、抑制在盟友面前理所应得的傲慢情绪，同时，还需要加强央行的独立性，以使其更好地应对政治危机带来的经济影响。
如果Erdogan没有有效化解危机，土耳其危机的影响可能会蔓延到其它国家，因为投资者也在思量下面三个问题：土耳其危机对金融机构的影响、对全球总需求的冲击、对新兴市场资产信心的损害。
