E87: Emerging markets, Sri Lanka, 9.1% CPI, market sentiment, NASA's Webb telescope & more

Key elements of Chamath’s forecast did occur in the years after mid‑2022, though with some nuance.

1. Sri Lanka as the leading case
   Sri Lanka suffered a full‑blown crisis in 2022: inflation around 60%, a collapse in foreign reserves, severe shortages of fuel, food, medicine and power, mass protests, and a sovereign default when the government suspended payment on most foreign debt in April 2022. (congress.gov) This is the baseline he was pointing to.

2. Ghana: “Sri Lanka‑style” crisis and default
   After the podcast, Ghana entered its worst economic crisis in decades, with inflation exceeding 50% in late 2022–early 2023. (reuters.com) In December 2022 the government announced a suspension of payments on most categories of external debt (Eurobonds, commercial loans, and most bilateral debt), pending restructuring—effectively a sovereign default. (citinewsroom.com) Ratings agency S&P promptly downgraded Ghana to “selective default.” (myjoyonline.com) Ghana then entered an IMF program and multi‑year debt restructuring. (reuters.com) This closely matches Chamath’s claim that “as goes Sri Lanka, so goes Ghana,” including rampant inflation and a sovereign default.

3. Pakistan: severe crisis with food and energy stress, but default narrowly avoided
   Pakistan experienced a prolonged economic crisis from 2022–2024, marked by a balance‑of‑payments crunch, sharp currency depreciation, and surging prices of food, gas and oil. Inflation reached about 38% in May 2023, with food inflation near 45–50%, and the country faced acute food insecurity after devastating 2022 floods. (en.wikipedia.org) Protests and unrest centered on basic staples, including large‑scale demonstrations over wheat prices in Gilgit‑Baltistan in 2023–24, and deadly crowd crushes at ration/flour distribution points that killed and injured people seeking subsidized food—clear signs of extreme stress around food access. (en.wikipedia.org)

Pakistan came close to default but ultimately avoided a formal sovereign default through successive IMF bailouts and rollovers from other creditors; by 2024–25, reports explicitly describe Pakistan as having “recovered from a near default” thanks to a $3 billion IMF program followed by a larger package. (apnews.com) So the crisis aspects Chamath mentioned—energy and food insecurity, rampant inflation, and social unrest—materialized, but the sovereign default part did not, at least up to late 2025.

4. “A whole bunch of countries” and a broader wave of distress
   Beyond Ghana and Pakistan, multilateral data support his broader thesis that Sri Lanka’s default was an early signal of wider debt trouble among low‑ and middle‑income countries. The IMF and World Bank noted by 2022 that about 60% of low‑income countries were already in or at high risk of debt distress, warning that more countries were likely to seek debt relief. (worldbank.org) A World Bank report later summarized that in the three years up to 2022 there were 18 sovereign defaults in 10 developing countries, and reiterated that roughly 60% of low‑income countries were at high risk of, or already in, distress. (worldbank.org) This is consistent with Chamath’s expectation of a broader wave of “sovereign defaults” and crises across frontier and emerging markets following Sri Lanka.

Assessment

• Accurate: Ghana did suffer a Sri Lanka‑style crisis with very high inflation, severe macro stress, and a sovereign default. Multiple other developing countries also entered debt distress or default, aligning with his “whole bunch of countries” framing. (theghanareport.com) Pakistan experienced intense food and energy insecurity, very high inflation, and civil unrest tied to basic goods, fitting much of the pattern he described. (en.wikipedia.org)
• Not fully accurate: Pakistan, singled out by name, did not actually default on its sovereign debt (it narrowly avoided doing so via IMF support).

Given that his core directional claim—Sri Lanka’s collapse foreshadowing similar crises in Ghana, Pakistan, and many other developing countries, with rampant inflation, food/energy stress, and a wave of sovereign defaults across the group—has largely played out, even though Pakistan’s specific outcome stopped short of default, the prediction is best classified overall as right rather than wrong or inconclusive.

The six‑month window after mid‑July 2022 runs roughly from 14 July 2022 to 14 January 2023. During that period, at least one additional frontier/emerging market did in fact suffer a Sri Lanka‑style sovereign crisis.

Ghana as a “domino”

Ghana is widely treated by index providers and financial media as a frontier / lower‑tier emerging market; for example, S&P Dow Jones and Russell classify Ghana as a frontier market. (es.wikipedia.org)

By late 2022 Ghana was experiencing its worst economic crisis in decades, with a collapsing currency, very high inflation and severe debt distress. In July 2022 the government formally requested IMF assistance as fiscal and external imbalances became unsustainable. (mofep.gov.gh)

On 5 December 2022, Ghana launched a Domestic Debt Exchange Programme explicitly "to manage public debt and prevent the further financial collapse of the Ghanaian economy." (en.wikipedia.org) Then on 19 December 2022—well within six months of mid‑July—Ghana’s finance ministry announced a “suspension of all debt service payments” on major categories of its external debt (Eurobonds, commercial loans and most bilateral debt), describing the country as facing a “major economic and financial crisis” and acknowledging that its public debt was unsustainable. (mofep.gov.gh)

News outlets and analysts treated this move as an effective sovereign default: Reuters and Al Jazeera reported that Ghana had suspended payments on most external debt, effectively defaulting, amid a balance‑of‑payments hole, soaring inflation (around or above 50%) and street protests, and later commentary refers to Ghana’s December 2022 default as a landmark African sovereign default. (aljazeera.com) Subsequent IMF and restructuring programs explicitly frame Ghana’s situation as a full‑blown sovereign debt crisis. (reuters.com)

Comparison to Sri Lanka and timing

Sri Lanka’s 2022 episode combined an external‑debt default, currency collapse, shortages of essentials, IMF involvement and deep political turmoil—a template many analysts described as a “canary in the coal mine” and a first “domino” for other heavily indebted emerging/frontier economies such as Ghana, Egypt, Tunisia and Pakistan. (en.wikipedia.org) Ghana’s December 2022 crisis shares the core features of this pattern: an unsustainable external‑debt burden, suspension of most external debt service (default), an IMF rescue framework, sharply deteriorating living standards and social unrest.

Because Ghana—an archetypal frontier/emerging market—suffered a Sri Lanka‑style sovereign debt and balance‑of‑payments crisis within five months of mid‑July 2022, Jason’s prediction that there would be “other dominoes” among frontier/emerging markets in the subsequent six months is borne out by events.

Across the main frontier and emerging‑market crises since mid‑2022, China has been an important creditor but not the primary or “more often than not” external savior that Friedberg predicted, and recent data show Beijing is actually pivoting away from distressed low‑income borrowers.

Key crisis cases after mid‑2022

• Sri Lanka (sovereign default and economic collapse)

  • In 2022, India, not China, was the main emergency lifeline, providing about $4 billion in credit lines, swaps, and aid for fuel, food, and medicine, making India the top lender during the crisis year. (outlookindia.com)
  • Sri Lanka’s stabilization has been anchored by a $2.9 billion IMF program and a restructuring deal with a broad group of official creditors (India, Japan, France, etc.), with China one important but slow‑moving bilateral creditor rather than the clear lead “savior.” (reuters.com)
  • Multiple reports describe China as dragging its feet on debt relief, forcing others and the IMF to work around it, which is the opposite of being the primary supporter. (indiandefensenews.in)

• Pakistan (2022‑25 economic crisis)

  • Pakistan avoided default via an IMF $3 billion standby program in 2023 and a follow‑on $7 billion program in 2024, with a large, parallel World Bank package and additional support from Saudi Arabia and the UAE. (apnews.com)
  • China has repeatedly rolled over and refinanced several billion dollars of loans (e.g., a $2 billion rollover in 2024 and $3.4 billion in 2025), which are critical but complementary to IMF and multilateral support, not a stand‑alone rescue replacing them. (reuters.com)
  • Overall, Pakistan’s stabilization rests on IMF conditional lending plus multilateral and Gulf funding, with China acting as a key bilateral creditor among several, not as a singular “savior.” (reuters.com)

• Zambia and Ghana (debt distress under the G20 Common Framework)

  • Both countries’ recoveries have been structured around IMF programs (Zambia’s $1.3 billion ECF; Ghana’s $3 billion ECF) and comprehensive restructurings with multiple official creditors and bondholders. (wsj.com)
  • China is a major creditor and co‑chairs Ghana’s official creditor committee with France, but World Bank and IMF officials have repeatedly criticized Chinese reluctance and delays in taking losses, which slowed restructurings in Zambia, Ghana, and others. (mofep.gov.gh)
  • Zambia’s finance minister has publicly said the era of “too much debt from China is over,” underscoring that Lusaka is reducing its reliance on Chinese financing rather than China emerging as its main long‑term savior. (wsj.com)

• Laos and other BRI‑heavy frontier states

  • Laos, heavily indebted to China for rail, energy and other BRI projects, is now in severe debt distress. Analysts note that without a clear, generous debt‑reduction deal from China—considered unlikely—Laos’ crisis is expected to persist, and think tanks explicitly recommend IMF‑led restructuring instead. (cnbc.com)
  • Similar patterns of debt stress and slow or limited Chinese relief appear in other BRI borrowers, prompting calls for broader multilateral solutions rather than dependence on Beijing alone. (afronomicslaw.org)

Macro‑level evidence on China’s role

• Studies of China’s rescue lending up to 2021 show that Beijing did become a sizeable “lender of last resort” to some BRI countries (about $240 billion of bailouts to 22 countries, roughly 40% of IMF rescue lending in the late 2010s). (ifw-kiel.de)

  • But these data mostly stop before Friedberg’s mid‑2022 prediction window. Since then, the structural trend has shifted.

• Post‑2022 shift away from distressed frontier markets

  • A 2025 AidData‑based analysis finds that by 2023 more than 75% of China’s overseas lending was going to upper‑middle and high‑income countries, while the share going to low‑income countries fell from 88% in 2000 to just 12% in 2023. (reuters.com)
  • Researchers and media reports note that Beijing has deliberately cut back BRI infrastructure lending in the Global South and shifted to financing critical infrastructure and high‑tech assets in richer economies like the US and EU—contrary to the idea that it is doubling down as a primary savior of fragile frontier markets. (theguardian.com)

• Meanwhile, the IMF has reinforced its central role in crisis management, even revising its policies so it can keep lending when bilateral creditors such as China have not yet agreed to restructuring—explicitly to avoid Chinese‑related delays derailing programs in countries like Zambia, Ethiopia, and Sri Lanka. (reuters.com)

Overall assessment

Friedberg’s claim was that in the years after mid‑2022, China would typically emerge as the primary external financial and political supporter of destabilized frontier and emerging markets, especially where it had infrastructure investments.

The record to late 2025 shows instead that:

• In the marquee crises he was implicitly talking about (Sri Lanka, Pakistan, Zambia, Ghana, Laos), China is a major but often reluctant or secondary actor alongside (and sometimes behind) the IMF, World Bank, regional powers like India, and G20 creditor coalitions. (outlookindia.com)
• China has not generally supplanted those institutions as the primary savior; in several cases it has been criticized for slowing relief. (axios.com)
• New data show a structural pivot of Chinese overseas lending toward wealthier countries and away from precisely the low‑income, highly distressed frontier economies the prediction was about. (reuters.com)

Given these outcomes, the central directional claim of the prediction—that China would more often than not be the primary external savior and supporter of destabilized frontier/emerging markets after mid‑2022—has not materialized. The prediction is therefore best classified as wrong.

Chamath predicted that after July 2022, U.S. headline CPI year‑over‑year inflation would at some point print in the mid‑ to high‑9% range, possibly with a '10 handle.' Official data show that headline CPI instead peaked at 9.1% in June 2022 and never went higher; that June 2022 reading is consistently identified as the post‑pandemic peak. (jpmorgan.com) In the months after the podcast, year‑over‑year headline CPI fell from 9.1% in June 2022 to 8.5% in July and 8.3% in August, then continued to decline (to 6.5% by December 2022) and has remained far below 9% through 2025. (bls.gov) Because there was never a CPI print at or above a clear 'mid‑9%' (≈9.5%+) or 10% level after July 2022, the prediction did not come true.

The July 2022 U.S. CPI (headline, year‑over‑year) came in at 8.5%, released by the Bureau of Labor Statistics on August 10, 2022, down from 9.1% in June 2022. Public reporting on the release notes that inflation "slowed" and that the 8.5% figure was below June’s 9.1% reading, driven largely by a drop in gasoline prices while shelter and food continued to rise.

Because Chamath’s prediction was that the July 2022 CPI print would be “still at nine” / "around" the June value (9.1%) with energy declines offset by rent increases, this is meaningfully off the actual result. A 0.6 percentage point decline from 9.1% to 8.5% is a sizable move for headline CPI and contradicts the forecast of being roughly unchanged near 9%.

Therefore the prediction is wrong.

The July 26–27, 2022 FOMC meeting (the first meeting after the June 2022 CPI print) raised the target range for the federal funds rate from 1.50%–1.75% to 2.25%–2.50%. That is an increase of 75 basis points (0.75 percentage point), not 100 basis points.

The Federal Reserve’s official July 27, 2022 FOMC statement and implementation note both show the new target range as 2.25%–2.50%, implying a 0.75 percentage point hike from the prior 1.50%–1.75% range set at the June 15, 2022 meeting. (federalreserve.gov)

Since Chamath specifically predicted a 100 bps hike and the Fed delivered 75 bps, the prediction did not come true.

Evidence since the episode supports Sacks’ basic claim that (1) the Fed would raise rates aggressively and (2) U.S. inflation would be brought down from crisis levels to roughly normal levels within a few years.

• Inflation fell from 9%+ to the high‑2s/low‑3s within three years. U.S. CPI inflation peaked at about 9.1% in June 2022 and then declined steadily; by June 2025 the 12‑month CPI rate was around 2.7%, close to pre‑pandemic norms (2015‑2019 average ~1.8–2.1%).
• On the Fed’s preferred measure (PCE), headline inflation in late 2024–2025 has mostly run in the mid‑2% range: December 2024 PCE was 2.6% (core 2.8%), January 2025 PCE 2.5% (core 2.6%), and August 2025 PCE 2.7% (core 2.9%). Dallas and St. Louis Fed analysis notes inflation has been above the 2% target since 2021 but currently around 2.7–2.9%, i.e., much closer to target than at the 2022 peak. This indicates the 2021–22 high‑inflation episode (7–9%+ readings) has been ended, even if inflation is not exactly 2%.

• The Fed did in fact “raise interest rates high enough” in the interim. From early 2022 to July 2023 the Fed increased the federal funds rate from near 0% to 5.25–5.50%, one of the fastest hiking cycles in modern history. The rate then stayed restrictive through mid‑2024 before modest cuts as the Fed gained “greater confidence in inflation moving sustainably toward 2 percent.” This sequence matches Sacks’ mechanism: aggressive hikes followed by disinflation.

• Current debate is about a mild above‑target regime, not an ongoing high‑inflation crisis. Fed and OECD forecasts for 2025 generally put inflation around 2.7%, above the exact 2% target but far below 2022 levels. Research pieces explicitly frame the issue as whether we are in a persistently above‑target environment at roughly 2.7–2.9%, not whether the 2021–22 inflation spike persists. That nuance means the “inflation problem” as understood in 2022 (9% CPI, rapid price surges) has been resolved, even if fine‑tuning to exactly 2% is ongoing.

Given that by late 2025 U.S. inflation is back near historical norms (≈2–3%) and the Fed achieved this via the very rate hikes Sacks described, his medium‑term prediction that the Fed would “100% solve this inflation problem” by raising rates sufficiently is broadly borne out by the data, despite inflation still running modestly above the 2% target. Therefore the prediction is best classified as right.

Freddie Mac’s Primary Mortgage Market Survey shows that the average U.S. 30‑year fixed mortgage rate rose from around 3.2–3.3% in early January 2022 to over 6% by late September 2022, and it remained in the 6–7% band through the end of the year. For example, Freddie Mac reported a 30‑year fixed rate of about 6.42% for the week ending December 29, 2022, and over 7% for several weeks in October–November 2022. This matches Jason’s prediction that “towards the end of the year” mortgage rates would be roughly 6–7%.

Across Q3 2022 (July–September), broad institutional capital deployment and transaction activity fell further rather than picking up versus earlier 2022, contrary to the prediction.

• Global M&A: S&P Global data show Q3 2022 global M&A deal value at about $443 billion, roughly 50% lower than Q2 2022 and the slowest quarter since the early‑pandemic period, indicating dealmakers became more cautious, not more active. (spglobal.com)
• Venture capital/private markets: CB Insights and Crunchbase report Q3 2022 global venture funding of roughly $74–81 billion, about 33–34% below Q2 2022 and a nine‑quarter low, reflecting a pronounced pullback in private financing rather than renewed deployment. (news.crunchbase.com)
• Equity/IPO markets: 2022 became the weakest global IPO year since 2016, with H2 (including Q3) characterized by very low IPO proceeds and the lowest SPAC IPO proceeds since 2016, showing primary equity issuance remained largely shut instead of re‑opening in Q3. (pwc.com)
• Regional/sector nuance: While some niches (e.g., certain transportation and real‑estate M&A, and slightly higher APAC deal counts) saw modest quarter‑on‑quarter upticks, global deal value and risk appetite clearly declined further overall, not "starting to come back". (spglobal.com)

Because the realized data show that institutional transaction volumes and capital deployment in both public and private markets contracted materially in Q3 2022 compared with Q2 2022, the forecast that significant market participants would re‑engage and that capital activity would start to recover in that specific quarter is best judged as wrong.

Available positioning and flow data show that, in the months after July 14, 2022, professional investors largely did not rush back into equities and instead stayed cautious and underweight:

• Bank of America’s July 2022 Global Fund Manager Survey (covering early July and published July 19) reported investor cash levels at the highest since 9/11 and global equity allocations at the lowest since the Lehman crisis, with a net 44% underweight in equities and 6.1% cash. A net 58% of respondents said they were taking lower-than-normal risk, indicating very defensive positioning rather than a rapid re‑risking into stocks. (financialexpress.com)
• Subsequent surveys show that this caution persisted and even deepened. By September 2022, BofA found stock allocations at a record underweight of about −52% and cash at a record overweight (around 62%), again highlighting that global fund managers remained heavily underweight equities months after the podcast date. (forbes.com)
• The market backdrop reinforced this stance: 2022 saw a broad equity bear market, with the MSCI World index down 17.7% and the S&P 500 dropping about 25% from its January peak to an October low, then ending the year −19%. This environment encouraged capital preservation rather than aggressive equity buying. (en.wikipedia.org)
• Even when equity inflows picked up in late October 2022 (largest weekly inflow since March), BofA’s “bull & bear” indicator remained at max bearish, suggesting flows were occurring against a backdrop of lingering pessimism and not a broad, confident rush back into stocks. (ktwb.com)

Taken together, these data support Friedberg’s claim that, over the near term after mid‑July 2022, most investors and portfolio managers stayed cautious and underweight equities while monitoring macro and geopolitical risks, rather than rapidly moving large amounts of capital back into stocks.

Evidence from winter 2022–2023 shows that, despite intense energy stress and political wrangling, the Western alliance did not significantly fracture over Ukraine or Russia sanctions, and no major European country (Germany, France, UK, Italy, etc.) openly broke with the U.S.-led policy line.

1. EU and G7 unity through winter 2022–23

   • The EU did not roll back sanctions in winter; instead, it expanded them. The 8th sanctions package was adopted on 6 October 2022, and a 9th package was agreed and formally adopted on 16–17 December 2022, right at the start of winter, adding further trade and financial restrictions on Russia and coming on top of the full EU ban on seaborne Russian crude and the G7/EU oil price cap. (consilium.europa.eu)
   • G7 leaders’ statements around the one‑year mark of the invasion (24 February 2023) explicitly stress that they “remain united and resolute” in support for Ukraine and in imposing coordinated sanctions on Russia, reinforcing that Western governments were still acting as a bloc after the winter. (consilium.europa.eu)

2. Analytical retrospectives describe unity, not a fracture

   • A 2023 assessment by the Centre for European Reform characterises EU unity on Ukraine as both its “biggest challenge and also its biggest success,” highlighting that member states repeatedly found consensus on strong sanctions, refugee protection, and Ukraine’s EU‑candidate status during the first year of war—which covers the 2022–23 winter. (cer.eu)
   • A separate review of the first year of war notes “a year of growing western unity and Russian isolation,” again indicating that Russia’s hoped‑for collapse of Western resolve through the winter did not materialise. (globalgovernmentforum.com)

3. Disputes and hold‑outs fell short of a real “fracture”

   • There were intra‑EU disputes—e.g., delays and bargaining over elements of the 9th sanctions package, and persistent objections and carve‑outs demanded by Hungary on energy measures—but these were resolved through compromise inside the EU framework, culminating in unanimous adoption of new sanctions packages rather than open defection from the sanctions regime. (news.cgtn.com)
   • Crucially, the large, gas‑dependent economies that the prediction singled out (notably Germany) did not break with the U.S. line: they maintained sanctions and continued, and in some areas increased, financial and military support to Ukraine through and after the winter. (taxation-customs.ec.europa.eu)

Given that the alliance stayed institutionally intact, continued to pass new coordinated sanctions packages, and publicly emphasized unity—while no major Western European government openly defected from the basic Ukraine/sanctions policy—the prediction that the Western alliance would "fracture" by winter 2022–2023 is best judged wrong.