Press Moving Toward Understanding Emerging Market Crisis
I’m glad to see the WSJ and now the FT moving beyond the kill ’em all and let God sort ’em out approach to emerging markets. How a country behaves matters very much. Some have controlled spending and operated some discipline in not debasing their currency to a great extent. Others have gone on spending, borrowing and printing sprees. In the long-run, the former are much more poised to avoid a crisis than the latter. And, of course, let’s keep in mind that two of the biggest ‘havens’ — the U.S. and Japan — are behaving nearly as badly as the bad actors in the third world, and depending on reputation and habit to avoid our own crises in the developed world.
“However, most analysts believe the last week’s sell-off in emerging markets currencies was triggered chiefly by country-specific problems – in Argentina, Ukraine and Turkey – and by fears of a slowdown in China.
Jack Lew, the US Treasury secretary, signalled that he regards the problem as bad policy in specific countries. “I will say that we’re seeing a lot of differentiation in the marketplace and we’re seeing the countries that have taken tough actions and managed well are having a different experience,” he said on Wednesday.”