The Return of the Asian Financial Crisis

Oh if IMF were ever called upon to provide support for emerging markets, you can imagine what onerous terms they would be. I hope it doesn't happen but we cannot be too sanguine about this.

The macroeconomic numbers are useless. They can be used to tell any story you want. Investors are fleeing emerging markets even as central bankers and government leaders try to talk courageously that they are alright. What is worrisome is the micro economics. Under the radar too many businesses had been borrowing cheap USD. It was simply too tempting. Also if you did not load up on USD debt your competitors were going ahead. How are you going to play? Now that the USD is rapidly strengthening and interest rates are going up, there could be hell to pay. This whole thing is starting to look like dusting off the old late 90s movie of the Asian financial crisis isn't it? Except that this time it wouldn't just be our neighborhood. It would be across all emerging markets.