Filed under: Economics
Zachary Karabell has a good take in the Wall Street Journal:
The old centers—New York, London, Frankfurt, Tokyo—fear risk in parts of the world they deem emerging and underplay the risks in the offices next to them. They view the Dubais, the Shanghais and the Rios with suspicion and with errant conviction that their models are built on foundations of sand, ready to collapse, when it was their own foundations that have proved to be weak. Judging from the misguided reaction to Dubai’s challenges, the past year hasn’t changed those attitudes. That should make us worried, very worried, but not about Dubai.
It does seem like the back-and-forth sloshes of money towards and away from emerging economies reflect a lingering discomfort and unfamiliarity on the part of old elites in long-developed nations as to whether these countries are “for real”, a cycle of infatuation and panicked disappointment. Developing nations are strongly advised to consider capital controls to keep that hot money from moving too fast in either direction.
4 Comments so far
Leave a comment