Is the global financial crisis entering a third phase? Phase 1 was when banks in the US, UK and several other major economies required taxpayers to rescue them. Phase 2 was the Eurozone crisis. Will Phase 3 be a financial crises across emerging markets? (see Bloomberg coverage here and Guardian coverage here). In recent weeks, currencies and stocks in emerging markets have been falling. In response, central banks in these economies, most notably in India, South Africa and Turkey, have been forced to increase interest rates. Why is this happening? How bad will it be? What effect will it have on economic growth in developed economies? Will an emerging market crisis strangle economic recovery in the US and UK? How will US monetary authorities respond to this? Will they continue to taper their bond-buying schemes? I have no doubts that all will be revealed in the coming months!
