Friday, February 21, 2020

Nouriel Roubini Warns: Argentina is On the Road to 'Total Default': Will It Cause Contagion?


Economist Nouriel Roubini is issuing a warning that the "risk of total default is increasing” for Argentina.

"The country does not have a coherent economic plan to convince creditors to accept a swap offer with significant debt reduction in net present value terms," he says.

According to Roubini, the danger is even greater if President Alberto Fern├índez remains in power by defeating former President Mauricio Macri in the upcoming election this fall.

Here's the big problem. Roubini believes an Argentine default could trigger a domino-type crisis.

"The contagion effect could lead to a more general process of capital flight from emerging markets, which could cause a crisis in highly indebted countries such as Turkey, Venezuela, Pakistan and Lebanon, and complicate the situation of countries such as India, South Africa, China, Brazil, Mexico and Ecuador," says Roubini.

Of course, global banksters could head off the crisis by funneling more money to Argentina via the International Monetary Fund and the World Bank but the banksters were slow to do this during the Greek crisis and Argentine funding has the potential to add to global price inflation which is starting to climb as reflected in the price of gold which is already at new all-time highs in terms of the euro and the Japanese yen.

It is not going to be pretty regardless of how it plays out.

-RW


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