The Turkish Lira rout is having a much bigger effect on European equities than here. The Eurostoxx 50 is getting lit on fire now, off by 1.8%. Gains are being evenly distributed amongst the cucked state of Europe, some more evenly than others.
Why is this happening? Major flight to safety in Germany and Switzerland, divergence in Italy.
Paul Krugman is on Twitter doing his best to gin up some panic over EM.
Are we gonna party like it's 1997? Stuff is happening in emerging markets, with at least a whiff of an old-style currency/financial crisis. Turkey is in impressive free fall 1/ pic.twitter.com/zryjB1LBy8
— Paul Krugman (@paulkrugman) May 23, 2018
Argentina also looking not too good, despite sharp increases in interest rates. And behind the immediate headlines, there's been a big increase in corporate debt in emerging markets over the past decade, much of it in foreign currencies, esp dollars 2/
— Paul Krugman (@paulkrugman) May 23, 2018
So it's become at least possible to envision a classic 1997-8 style self-reinforcing crisis: emerging market currency falls, causing corporate debt to blow up, causing stress on the economy, causing further fall in the currency 3/
— Paul Krugman (@paulkrugman) May 23, 2018
So are we seeing the start of another global financial crisis? Probably not — but I've been saying that there was no hint of such a crisis on the horizon, and I can't say that anymore. Something slightly scary this way comes 5/
— Paul Krugman (@paulkrugman) May 23, 2018
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Hmmmmm….I was starting to get excited about a crises until I read this. The Krugster is a fade every time.
I’m sure everything will turn out just fine.