Fears of a new global crash as debts and dollar's value rise
As Greece puts the finishing touches to its latest round of cuts, some economists are increasingly alarmed about the signals from the world economy
...As Janet Yellen's Federal Reserve prepares to raise interest rates, boosting the value of the dollar, while the plunging price of crude puts intense pressure on the finances of oil-exporting countries, there are growing fears of a new debt crisis in the making.
Ann Pettifor of Prime Economics, who foreshadowed the credit crunch in her 2003 book The Coming First World Debt Crisis, says: "We're going to have another financial crisis. Brazil's already in great trouble with the strength of the dollar; I dread to think what's happening in South Africa; then there's Malaysia. We're back to where we were, and that for me is really frightening."
Since the aftershocks of the global financial crisis of 2008 died away, the world's policymakers have spent countless hours rewriting the banking rulebook and rethinking monetary policy. But next to nothing has been done about the question of what to do about countries that can't repay their debts, or how to stop them getting into trouble in the first place.
...And while the debate rages, developing countries have been taking advantage of rock-bottom interest rates and the cheap money created by quantitative easing to stack up billions in new debt.
Using recently released World Bank data, the Jubilee Debt Campaign calculates that in 2013 alone the latest period for which figures are available borrowing by developing countries was up 40% to $17.3bn.
Brazil's economy is likely to be seriously tested as the greenback rises; Turkey, Malaysia and Chile have large dollar-denominated debts and sliding currencies; and a string of African countries face sharp rises in debt repayments. Ghana and Zambia have already had to turn to the IMF to ask for help. It's as if, as Pettifor warns, "absolutely nothing has changed since the crisis".
More:
http://www.theguardian.com/business/2015/mar/28/rising-dollar-debt-fears-global-economic-crash
