Left Turn in the Emerging Markets
There’s a new cynical perception among international investors that Brazil is becoming Argentina and Argentina is becoming Venezuela. But these investors are starting to boycott all the so-called emerging markets, since nearly all them are moving to the left, abandoning free-market principles, reverting to the bad old days of higher spending and taxing, inflating the money supply, accumulating large trade deficits, and letting their currencies go to hell in a hand basket.
In other words, the emerging-market investment paradigm, or the BRIC model, may be over.
Toward the end of last week, the U.S. stock market sold off nearly 500 points. Much of the blame has been placed on the collapse of the emerging-market currencies. Correct. The emerging-market tail was wagging the U.S. stock market dog.
Read my full column here.