The list depicted are the countries who are entering into economic recession due to the global crisis…Iceland is first hit…15 membered Euro countries announced on 15th officially with Germany and Italy are first to enter into recession…
Ukraine, Pakistan and Argentina are proving to be almost as vulnerable as Iceland. They borrowed money without real collateral to back those loans. And the industries responsible for making the payments are collapsing…
Emerging Market Opportunities?
Having just accepted aid from the IMF, Hungary barely avoided sliding into national bankruptcy. And only a $15.9 billion IMF rescue package – bolstered by billions more from the European Union and the World Bank – prevented it from happening.
Analysts at Morgan Stanley estimate that capital flows to emerging economies could fall to $550 billion in 2009 from around $750 billion in 2007 and 2008. Such a sharp drop would hit economies that rely heavily on foreign finance: more than 80 developing countries are likely to run current-account deficits of more than 5% of GDP this year.
Countries do go bankrupt. Iceland is not the first (and will not be the last). Russia was declared bankrupt in 1998, Argentina in 2001 and Germany has a history of going more than once…
The problem is national bankruptcy would probably lead to massive inflation. This is demonstrated by the central bank of Iceland, which increased its prime rate by six points to 18 percent last week. Venezuela, where inflation is also high, is now offering 20 percent to stimulate interest in its government bonds.
And Argentina – having seized some US$29 Billion in private pension funds – has bond offerings yielding upwards of 30%! It’s worth noting; however, that the last time bond yields were this big in Argentina was in the aftermath of an epic bond default in 2001.
In the coming months, you’ll see more and more countries offering these huge double-digit bond yields. Most of these bonds will be coming from emerging markets that are already in trouble due to stifled capital flow.
David Newsman, Market Analyst
That’s because these hitherto privately managed companies have suddenly (and dangerously) acquired a major new stockholder – the United States government.
“I’m from the government…and I’m here to help you.”
Understand that when we say “the government” we mean bureaucrats, public employees and political appointees, who for the most part couldn’t make it in the private sector. If you enjoy standing in line at the Department of Motor Vehicles, you’ll love this new fascist business model.
Americans are now being asked to pretend that these political appointees suddenly are endowed with more business acumen and wisdom than the managers of the businesses that they are “bailing out.”
The massive bailouts supposedly justified by the current economic crisis have made them experts. And with the billions in taxpayers’ cash come the strings, if not the chains.
But the real threat to private America enterprise, (aside from the stupidity of some of its own mangers), comes from unprincipled politicians in the U.S. Congress.
As I recently wrote: “The federal government’s plans to spend trillions propping up banks large and small, along with recent bailouts, as well as guarantees, to support the auto industry, business loans, money markets and bank lending, represents the most sweeping government intrusion into the nation’s business and financial markets since the Great Depression (1928-1942) – and perhaps ever in history.”
Political Power Play: One step closer to absolute power
There is every proof that the antics of the likes of Senator Chris (“Sweet Heart Mortgage Deals”) Dodd (D-CT) and Rep. Barney Frank (D-MA) seriously contributed to the housing mortgage collapse, as these worthies led the parade for abundant Freddie Mac and Fannie May backing for billions in questionable mortgages.
Now these same politicians are leading demands in Congress for micro-management and restrictions on the recipients of federal bailout funds. They want to control executive pay at banks, curb meeting expenses considered to be too luxurious, and who knows what else.
Granted, these modest demands are all for the protection of the taxpayer, but where does it end? When will private enterprises no longer be obligated to follow government mandates? At what point does the disastrously inefficient artifice of state yield control back to the market?
David Brooks put his finger squarely on the crux of the matter: “But the larger principle is over the nature of America’s political system. Is this country going to slide into progressive corporatism, a merger of corporate and federal power that will inevitably stifle competition, empower corporate and federal bureaucrats and protect entrenched interests? Or is the U.S. going to stick with its historic model: Helping workers weather the storms of a dynamic economy, but preserving the dynamism that is the core of the country’s success.”
BOB BAUMAN, Legal Counsel