Just recently we saw panic sell-offs in emerging markets on the news of the US Fed taper. The flood of cheap money from the West has been one of the major drivers of asset prices in emerging markets.
So now if the cheap money slows down, investors are worried that it
would have a cascading effect on asset prices, albeit in the opposite
direction.
If Mark Faber aka Dr Doom is to be believed, it is not just the Fed taper that is a matter of worry. One of the major reasons for the fast-faced economic growth in the previous decade was soaring asset prices. As per Faber, emerging markets have lost steam now and are not growing much. Moreover, the Chinese slowdown could have far more adverse repercussions than expected.
An interesting point that strikes us is that the world could be at the beginning of 'a vicious circle to the downside'. The thing is that when times are good, the economic growth enters a virtuous cycle. As it is said, money makes more money. But when the tide turns, the exact opposite tends to happen. So is the world heading towards another major financial crisis? Only time will tell...
If Mark Faber aka Dr Doom is to be believed, it is not just the Fed taper that is a matter of worry. One of the major reasons for the fast-faced economic growth in the previous decade was soaring asset prices. As per Faber, emerging markets have lost steam now and are not growing much. Moreover, the Chinese slowdown could have far more adverse repercussions than expected.
An interesting point that strikes us is that the world could be at the beginning of 'a vicious circle to the downside'. The thing is that when times are good, the economic growth enters a virtuous cycle. As it is said, money makes more money. But when the tide turns, the exact opposite tends to happen. So is the world heading towards another major financial crisis? Only time will tell...
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