In this week's Off The Cuff podcast, Chris and Wolf Richter discuss:
- Commodity Carnage
- Not just due to a strong dollar
- Argentina Is Faltering
- Its currency is collapsing (yet again)
- More Trouble In Turkey
- Threatening the EU banks who loaned it billions
- The Real Threat
- Asia is where the real damage will occur
Recorded last week, Wolf Ricther explains why the real Emerging Market contagion risk lies not in Turkey, or Venezuela or Argentina or Brasil — but in Asia:
There's Asia without China, and then there's China. And there's particular Asia without China and Japan. And Asia without China and Japan has over $2 trillion in dollar-denominated debt. That's the region where we had the Asia financial crisis happen in the '90s.
And then there's China. They've had enormous credit growth, and some of the credit growth led to all kinds of misallocation of capital. That money is gone now, but the debt sticks around. They have a shaky shadow banking system and peer-to-peer lending right now is collapsing in China. So they have a host of issues that the Chinese authorities are grappling with right now.
And, of course, they're controlling everything in China. The four largest banks are state owned, the Central Bank is under control of the government, the largest companies are state-owned.
by twintown