Last Tuesday, I was writing about preparing your portfolio for recession. And I mentioned emerging markets, mostly in a negative way. I know Jeremy Grantham has been talking up the relative value of emerging market equities. Nevertheless, I have doubts. Let me tell you why.
Hot money flows and the emerging markets
Let's start with this:
After a debt-fueled boom and a huge influx of hot money due to high interest rates, its currency and banks collapsed under a fleeing of foreign money and huge losses. The government nationalized the banks' debt, only to find the banks were too big to bail. The Icelanders rioted on the streets, a sovereign crisis ensued, and the government was toppled.
That's how I described Iceland back in January 2010. Iceland's economy performed marvelously for a very...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.