Recently many commentators have distinguished developed markets from emerging markets. The theory goes that developed markets mired down in subprime and other debris of financial engineering. The argument goes that emerging markets with higher reserves will be able to withstand any debt crises. They may be able to withstand a debt crisis that starts in the US. What they will have problems with is a debt crisis that is home grown. The US market is not the only one where too much liquidity reduced the management of risk.

1. According to Allen Greenspan, over 40 countries have experience housing booms. The US market’s growth is not much above the median.

2. The Swedish central bank, Sveriges Riksbank, took the unusual course of naming and shaming two local banks, Swedbank and SEB.

3. Russian banks have recently experience a liquidity crises and new lending in some cases has ceased.

4. Prices of second homes from disparate locations including the Mediterranean, Eastern Europe and Florida have been falling as sales have been flat. Over 80,000 British owners with patchy credit histories will see there interest rates rise.

It’s a global world. The problems in the US are clearer because of greater transparency in the US. The problems in emerging markets will eventually float to the surface and cause many more problems.

William Gamble
EMERGING MARKET STRATEGIES
Suite 1D
1990 Pawtucket Ave
East Providence, RI 02914
Tel: 401-272-8906; Fax:401-272-8139; Cell 401B829-6729
Internet: william@emergingmarketstrategies.com
http://www.emergingmarketstrategies.com/