"Parade of defaults": the United States and China will come out of the crisis at the expense of all the others


The coronavirus pandemic has become the most serious test for the world economics... The “parade of defaults” of a number of states, which can no longer fulfill their financial obligations, loomed quite realistically. Sooner or later, but the crisis will end, however, everyone will come out of it in different ways. Poor countries will get poorer, and the super-rich richer.


Over the past 2020, the total external debt of all states on the planet has reached a symbolic figure of 365% of world GDP. At the same time, for developing countries, the total debt amounted to 210% of their total GDP. Debts are growing and it is becoming more difficult to service them. Thus, Argentina was the first in Latin America to declare its default in May last year. Its neighbors from Belize, Suriname and Ecuador have similar problems. On the African continent, Zambia has already declared a default, followed by Kenya, Cameroon and Angola. Pakistan is also expected to have problems with debt servicing. Of the closest neighbors of Russia, Ukraine is close to default, which this year must pay creditors more than $ 15 billion and cannot cope without the next tranche from the IMF.

However, the risk of default is not limited to third world countries. For example, quite prosperous Turkey is also on this list. To implement his ambitious plans, President Erdogan demanded a decrease in the key rate from the Turkish Central Bank, so that more cheap money would flow into the economy, and put his close relative to the post of head of the Ministry of Finance. The result was a sharp drop in the national currency and sovereign debt ratings, depletion of reserves and inflation. An additional blow to the Turkish economy was the coronavirus pandemic, which deprived the country of its usual tourism income, as well as an increase in military spending.

The solution to the problem suggests itself: lower the key rate, start printing more money and buy out bad debt obligations by local regulators. This is approximately how they managed to extinguish the fire of the 2008 economic crisis by simply flooding it with money. In 2021, this will make it possible to postpone the “parade of defaults” for an indefinitely long time. However, this will then have to pay dearly with the actual rejection of development.

Currently, the two largest economies in the world, the United States and China, are conducting policies siphoning funds from all the rest of the world. They are uncompromisingly developing their own economies, rapidly increasing the size of the state debt. The United States has an advantage because everyone believes in the dollar and American securities, despite the devaluation and near-zero rate. China is manipulating its GDP data with might and main, inflating it in order to attract additional investment. The presence of two such competing economic locomotives leads to the fact that financial capital flows there, bypassing developing countries, which are left with their own debt problems and growing inflation.

Of course, such international structures as the IMF or the World Bank can come “to the rescue”, but in exchange the debtors will have to carry out such reforms on such onerous terms that their economy will not be able to recover after that. Taken together, all this means that only the superpowers of our time will emerge from the coronavirus pandemic in the best positions, cementing the gap between themselves and all other countries.
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  1. boriz Offline boriz
    boriz (boriz) 8 January 2021 13: 47
    +4
    ... The United States and China are pursuing a policy of siphoning funds from all the rest of the world.

    Robbing small bankrupts will in no way save the position of the United States and China.
    It is not yet entirely clear what economic policy the next US administration will pursue.
    But there are three economies in the world that will try to pull the blanket over themselves. USA, PRC, EU.
    They are linked by huge commodity turnover, established technological chains (from raw materials to the sale of the final product).
    It is they who will try to rob each other (which, in fact, they have been doing for a long time and with enthusiasm). And the details will become clear only after the new US administration begins to take real steps.
    Many of Finintern's actions in the past year have fallen short of the previously accepted model of behavior for global financiers. Therefore, their further actions are not clear now. You can forget about Biden's pre-election economic program. Moreover, even before the elections, he himself said that he would continue trade wars with China. And this contradicts the behavior model of globalists.
    Robbing small bankrupts will do nothing, it's just not worth the candle. Lots of small movements with no obvious result.
    What is happening in the United States is extremely surprising. Each next step is weirder than the last. If you believe your eyes, the DC Maidan means that in the Trump administration, no one knows how to lead large human teams, no one served in the army (work with personnel), no one read Gustave Le Bon. But this is hard to believe. The explosion in Nashville is also surrounded by oddities from beginning to end (moreover, not the fact that the end has already come).
    The final clarity will come somewhere in a month. In the meantime, it seems that the internal showdown in Finintern has not ended.
  2. Jacques sekavar Offline Jacques sekavar
    Jacques sekavar (Jacques Sekavar) 8 January 2021 14: 23
    +3
    Poor countries will get poorer and the super rich richer

    And who benefits from it?
    There are two superpowers in the world, between which the confrontation is growing. The US economy has undergone Donald Trump's "restructuring", which was superimposed by the pandemic. This inevitably leads, if not to recession, then to Minimum growth.
    The PRC was the first to start and end the fight against the massive spread of Covi-19. This gives a head start while all the others are mired in lockdowns.
    In favor of the PRC, etc. deferred demand, double circulation program, NSP, Comprehensive Regional Economic Partnership Agreement with 14 Asia-Pacific countries and other agreements.
    Handicap in time, programs and agreements create conditions not only for growth of 6-7%, which the US and EU can only dream of, but also allow to make an economic breakthrough and break away from the same US and EU by 10-20 percent, which will change the entire geopolitical landscape.
    In addition to everything, the PRC is successfully testing digital renminbi and bdocchain, and will switch to digital currency from day to day, since everything is ready and is only waiting for the go-ahead from the People's Bank of China. This will hit the almighty dollar hard, which accounts for up to 80% of world settlements, with all the ensuing consequences.
  3. Sergey Latyshev Offline Sergey Latyshev
    Sergey Latyshev (Serge) 8 January 2021 17: 19
    -1
    In general, the strong will remain strong, the weak will weaken.
    This is already clear.
    In the Forbes list for the year, the richest are still getting rich, and the common people have already stopped receiving summer food parcels, either in the Russian Federation or in the USA. partially...
  4. Alexzn Offline Alexzn
    Alexzn (Alexander) 9 January 2021 09: 58
    -1
    Just for thought.
    Switzerland has one of the largest debts in the world.
    In 2020, the Swiss economy has grown, the franc has appreciated against almost all currencies.
    With all this, Switzerland's debt rose sharply due to the huge emission of francs.
    If you manage to explain how this can be, you will understand that not all debts are dangerous, and if dangerous, then to varying degrees.
    1. Dear sofa expert. 9 January 2021 21: 53
      +3
      Switzerland has one of the largest debts in the world.

      Oh, what are you talking about?)

      External debt as a percentage of GDP is quite low. He is defining.
      And high - external debt per capita. Well, this is logical. The population of Switzerland - the cat cried.
  5. Obama Barack Offline Obama Barack
    Obama Barack (Obama Barack) 9 January 2021 21: 30
    0
    They will not come out. Neither one nor the other. Stop sowing bullshit.)))
  6. Alexzn Offline Alexzn
    Alexzn (Alexander) 10 January 2021 09: 20
    -1
    Quote: Dear couch expert.
    Switzerland has one of the largest debts in the world.

    Oh, what are you talking about?)

    External debt as a percentage of GDP is quite low. He is defining.
    And high - external debt per capita. Well, this is logical. The population of Switzerland - the cat cried.

    It (external) is really one of the highest in the world, 1,8 trillion dollars. some 270% of GDP and 220 dollars per person ...
    I see no connection between the size of a country and debt.
    This is Switzerland's public debt is small - 40% of GDP, but unlike Russia, where the public debt and external debt are practically the same value for Switzerland, these are two big differences ...
    Look at the external debt of Japan, England, Switzerland and try to understand why it is so high in these countries.
    1. Dear sofa expert. 10 January 2021 20: 37
      +1
      It (external) is really one of the highest in the world, 1,8 trillion dollars. some 270%

      It's some kind of mistake.
      Maybe 180 billion, and accordingly 27%?)
  7. Alexzn Offline Alexzn
    Alexzn (Alexander) 10 January 2021 21: 09
    -1
    Quote: Dear couch expert.
    It (external) is really one of the highest in the world, 1,8 trillion dollars. some 270%

    It's some kind of mistake.
    Maybe 180 billion, and accordingly 27%?)

    No, not a mistake. A country with a reserve currency, by definition, cannot have 27%. Look at England and Japan. And the richest Luxembourg with its banks has 5570% (this is not a mistake) of foreign debt, Cyprus with its offshores has 860%.
    The states, with their one hundred percent, are not in dire straits.
    https://svspb.net/danmark/vneshnij-dolg-stran.php
    1. Dear sofa expert. 10 January 2021 21: 30
      +1
      No, not a mistake. A country with a reserve currency, by definition, cannot have 27%

      Show your source.

      Here's mine: https://de.statista.com/statistik/daten/studie/216761/umfrage/staatsverschuldung-der-schweiz-in-relation-zum-bruttoinlandsprodukt-bip/
  8. Alexzn Offline Alexzn
    Alexzn (Alexander) 11 January 2021 10: 11
    -1
    Quote: Dear sofa expert.
    https://de.statista.com/statistik/daten/studie/216761/umfrage/staatsverschuldung-der-schweiz-in-relation-zum-bruttoinlandsprodukt-bip/

    Your source is correct BUT
    1. GOS debt is indicated, not external
    2.For 2019-2020, the debt increased to 41%
    Now in the Russian news nv RT said that Kyrgyzstan is in debt as in silk, it owes ... 5 billion dollars.
    Not all debts are created equal ...
  9. Alexzn Offline Alexzn
    Alexzn (Alexander) 11 January 2021 10: 19
    -1
    Quote: Dear couch expert.
    No, not a mistake. A country with a reserve currency, by definition, cannot have 27%

    Show your source.

    Here's mine: https://de.statista.com/statistik/daten/studie/216761/umfrage/staatsverschuldung-der-schweiz-in-relation-zum-bruttoinlandsprodukt-bip/

    The fact is that the Swiss franc (yena, pound) is incl. a debt obligation and if your money is reserve, then billions of francs that are stored in banks around the world (including the Central Bank of the Russian Federation) are Switzerland's external debt. Specific, but duty. Huge funds of foreign depositors in banks in Luxembourg, Liechtenstein, Switzerland are also the debt of these countries to foreign depositors.
    British and Japanese foreign debts that are multiples of GDP are also explained by the fact that their pounds and yens are stored in huge amounts all over the world, and these are debts.
  10. stepet Offline stepet
    stepet 27 January 2021 12: 22
    -6
    Over the past 2020, the total external debt of all states on the planet has reached a symbolic figure of 365% of world GDP. At the same time, for developing countries, the total debt amounted to 210% of their total GDP.

    In fact, this is, of course, nonsense.
    The fact is that it is customary to take into account the state (generated in a particular state) GDP. Since it is much more difficult to calculate the national (owned by a particular state) GDP.
    Previously, it did not matter, but now globalization is in the yard. Therefore, a significant part of the GDP generated in this or that state (mainly the third world) does not belong to it. And belongs to foreigners.
    Therefore, the national GDP of the countries of the first and partly of the second worlds, in the age of globalization, is much larger than the recorded (state) one. And there are much fewer third world countries.
    That is why the US national debt in terms of their national GDP is insignificant. Despite the horror stories about the ratio of this debt to the state GDP.
    And therefore, the real debt of the third world countries will be much more than 210%.
    1. isofat Offline isofat
      isofat (isofat) 27 January 2021 16: 02
      0
      stepet, we understand without you that the United States is not going to pay its debts. yes
      1. stepet Offline stepet
        stepet 27 January 2021 16: 24
        -6
        we understand without you that the United States is not going to pay its debts.

        They are just going.
        And they pay regularly.
        They have these debts with Gulkin's nose.
        Very few.
        It is not stressful for them to pay them.