Bloombergon Sunday, Jan. 30 cited a 28-page report entitled The Financial Crisis of 2015: An Avoidable Historyby Barrie Wilkinson, a London-based partner at consulting firm Oliver Wyman.
The report describes a scenario--spanned 2013 to 2015--when Western QE-induced inflation brings down China, creating a debt crisis in the commodity sector--inclusive of resource-dependent countries as well as commodity producers--which eventually plunge the world into another recession, and a new world order by 2015.
"...the dramatic rises in commodities prices resulting from loose Western monetary policies eventually caused rampant inflation in China. China was forced to raise interest rates and appreciate its currency to bring inflation under control."
Well, I think we are pretty much there already.
"Once the Chinese economy began to slow, investors quickly realized that the demand for commodities was unsustainable. Combined with the massive oversupply that had built up during the boom, this led to a collapse of commodities prices."
Although I see this as low probability, I can't totally dismiss it. That is why global markets always sold off whenever there was news about China.
"Having borrowed to finance expensive development projects, the commodities-rich countries in Latin America and Africa and some of the world’s leading mining companies were suddenly the focus of a new debt crisis."
Click to enlarge
No comments:
Post a Comment