Carmen Reinhart talks about how emerging economies might soon face a financial crisis. The blame this time goes to China. These emerging economies borrowed money from China. However, China itself is experiencing an economic slowdown. China's huge influence on the world economy has left everyone affected. The debt owed to China seems insignificant and small. However, Reinhart argues despite the debt reported is moderate from a historical view, there is probably a huge underestimate because there is a lot of debt that is not reported. One example was set on Thailand's central bank reporting a thirty-three billion dollar reserve, but they actually only had one billion left in the bank if they were to pay off their unaccounted debt. This article was short to start with and Carmen Reinhart didn't go into a huge rant like David Stockman would do. The idea of the unreported debt was simple and emphasized upon the entire article. However she does not explain why unreported debt exists, or how it is formed in the first place. Do countries just keep their mouth shut as they say they only owe a dollar instead a grand? This main question remains as Reinhart did not support her statement with as much facts and figures as David Stockman did. There was no mention how bad was the actual debt. She describes it as "moderate". If Stockman were to write this article out, I think he would definitely argue the same point, except actually throw in some extra numbers as evidence and argue the world will soon collapse after it.
No comments:
Post a Comment