Per Bloomberg:
Hunger and Blackouts Are Just the Start of an Emerging Economy Crisis
Turmoil triggered by rising food and energy prices is already gripping countries like Sri Lanka, Egypt, Tunisia and Peru. It risks turning into a broader debt debacle and yet another threat to the world economy’s fragile recovery from the pandemic.
https://www.bloomberg.com/news/features/2022-04-20/rising-fo…
The pseudonymous Tyler Durden points out that persistently sanguine global investors will wake up as Fed rate hikes, pandemic debts, and soaring inflation trigger social unrest. “If the dominos fall, then investors will care.”
https://www.zerohedge.com/markets/are-soaring-food-inflation…
I have been closing out or reducing some of my more volatile positions to “placeholder” status in my port. Despite an urge to convert everything to cash, I keep telling myself that well-capitalized companies in my core ETFs are a hedge against inflation, or are supposed to be.
However, even as inflation reduces the buying power of cash, I somehow suspect that debt destruction and disinflation may suddenly return if unbearable debt burdens force a cascade of emerging market defaults. European and western banks holding foreign sovereign debt might spread contagion through losses of cash flow and adverse balance sheet impact of “mark-to-market” writedowns.