FYI: Alphaville is not known for being optimistic. But compared to a new note from HSBC's senior economic adviser Stephen King, we're positively Panglossian.
Titled like a lost Kirkegaard tract, in “Hope, Fear and Reality” King explains why the global financial system is still fragile, ten years after the events of the great financial crisis.
Balance of Payments, a red flag
Ah yes, the bellwether of many a market meltdown. Balance of payments crises — which arise when a country depends on the continuous import of capital, and then said capital decides to export itself all at once in a panic — have been Ground Zero for a host of currency collapses, and recessions. Particularly when a country borrows in a foreign currency, often dollars.
From the Asian flu of '97, to the Russian default of '98, to the Eurozone crisis of '09, many nations, both emerging and developed, have been caught in the stampede of “the electronic herd” — a name given by Paul Blustein for short-term capital circling around the global financial system.
Regards,
Ted
https://ftalphaville.ft.com/2018/11/21/1542778200000/Existence-is-fragile/
