Emerging Markets and Deflation

It is not hard to imagine what that shock might be,” writes the Telegraph columnist, who says the credit bubble in emerging markets has been punctured. “It is already before us as Turkey, India and South Africa all slam on the brakes, forced to defend their currencies as global liquidity drains away. Emerging markets are now half the global economy, so we are in uncharted waters. Roughly $4 trillion of foreign funds swept into emerging markets after the Lehman crisis, much of it by then `momentum money’ late to the party. 

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