1.QE and developed economies' central bank policies of easy money have distorted and corrupted the global supply chain.
2.The inevitable outcome was clearly evident in 2013-2015 but effectively ignored by the corporate global supply chain players in an Emerging Market race to capture economic growth.
3.Corporate debt loads are the central problem this time for EM, not just the typical sovereign debt levels which have historically triggered crisis. This has important investment opportunities for investors.
4.This time around it is not about an emerging-market country crisis (i.e. Thailand, Mexico, Argentina, etc.) but rather a global swath of troubled EM countries.
5.The resulting U.S.-dollar-denominated debt and weakening demand, along with shrinking liquidity, has EM's trapped, unless the dollar falls, demand increases, or QT is halted and reversed.
THE SUPPLY CHAIN DISTORTION
Quantitative Easing and the Developed Economies' Central Bank Policies of "Easy Money" distorted & corrupted the global supply chain. The inevitable outcome was clearly obvious in 2013-2015 but effectively ignored in a race to capture economic growth and global market share.
QE brought demand forward and consequentially increased supply,
Cheap central bank money allowed global build-out in production capacity,
Global over-capacity resulted in lost pricing power,
The "hole" from bringing demand forward has created a demand slowdown further aggravating the pricing power,
Countries with negative Current Accounts have had their currencies crushed,
Weak currencies has forced their central banks to increase interest rates,
These shifts are creating a new wave of "Zombie" Corporations who are being forced to increase prices to survive or seek government relief (i.e. Turkey's new "Bad Bank" solution).
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