For six+ years, all nations binged on 0% poverty capital under the assumption that currencies are "stable". An illusion of solvency sponsored by inbound liquidity, Madoff style. Now liquidity is reversing and currencies are under extreme pressure, requiring record amounts of ongoing currency intervention to keep them from collapsing and then default...
WSJ: Oct. 7, 2015
Global Central Banks (ex-U.S.) Are Selling Treasuries At Fastest Pace On Record
"Sales by China, Russia, Brazil and Taiwan are the latest sign of an emerging-markets slowdown that is threatening to spill over into the U.S. economy. Previously, all four were large purchasers of U.S. debt."
Outflows from Emerging Markets are now manifesting in outflows from the U.S. The Yuan devaluation kicked off a global currency debasement now manifesting in a critical drop in global currency reserves. No country can defend its currency indefinitely.
The first derivative effect is on currencies and currency reserves. The second derivative is on debt markets. Without inbound flows many countries are inevitably insolvent.
License to print money: The U.S., Japan, Swiss, UK, Australia, Canada, to limited extent Euro Area - aka. developed nations under heavy deflation - can print money to buy their debt, as they have been for years now. Most other countries can't print money without having a currency collapse. All of which puts the non-printers at most immediate risk: e.g. Indonesia, Malaysia, South Africa, Brazil, Saudi etc...Once one goes, they will all go, an event that will make 2008 seem like a picnic...
BBG: August 20, 2015
Countries Most At Risk of Devaluation aka. "Default"
