Which Emerging Economies Are In Danger of Collapse? → Washingtons Blog
Which Emerging Economies Are In Danger of Collapse? - Washingtons Blog

Friday, October 17, 2008

Which Emerging Economies Are In Danger of Collapse?

Bloomberg has an interesting graph (courtesy of Danske Bank) showing the credit default swap risk of emerging economies:

(Click for sharper image).

On October 15th, Danske explained:
"The global credit crisis is now spreading to the most leveraged economies in the world. Iceland was the first economy to fall victim to the global credit crisis. However, it is not only Iceland that seems to be in need of a helping hand ....


Over the past month credit default swaps spiked in a number of Emerging Markets indicating a significant increase in worries over funding problems on the back of the intensified credit crisis. . . . In the graph [above] we show the 20 countries that have seen the strongest rise in CDS spreads over the past month.


It is striking that most of the countries in the “top 20” are countries that are either running large current account deficits . . . and/or countries that in recent years have had very strong credit growth."
See also this.

Nouriel Roubini agrees that the countries with the most CDS bets being made against them - particularly those with large current account deficits - are in desperate shape, and may need emergency loans from the IMF to stay afloat.

See also this.

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