Will emerging markets be the source of the next crisis?

After a long period of “blue sky” when any sign of a dark cloud was removed by the extremely low central bank interest rates and by investors’ frantic exhilaration (irrational, some would venture to say), emerging markets have started to become a serious cause for concern. Firstly, the overall macroeconomic landscape is about to turn sour as the Fed did a U-turn. Faced with the highest inflation rate in 31 years, its belief that we are merely going through a transitory high inflation is about to be dispelled. The last policy-setting FOMC meeting earlier this month that foresaw a tapering of treasury purchases by USD15Bn a month seems now irrelevant. The Fed’s vice-chair was recently suggesting that the next meeting might provide for a faster than announced withdrawal. Under the scheme announced at the beginning of the month, the withdrawal should have been completed by

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