Fed taper: What global investors want to tell emerging markets

Dear Emerging Markets,

We (global investors) have been thinking about this for some time now, and we believe now is finally the time to say it.

We’re sorry, but we don’t love you anymore.

To be sure, we’ve tried hard to support you over these past few years, primarily through showering you with money received from the US’ quantitative easing programme.

Oh, you complained in the beginning, but sure enough, you began to enjoy the money. You got more money than your, ahem, vital economic statistics deserved, but we were generous.

Yet, in all this time, you did little to improve yourselves. In fact, some of you just let yourselves go with abandon.

Of course we’re superficial and fickle. You should have figured that about us by now. While we were looking for someone to use that money to take us on some exotic, risky yet rewarding adventures, you hoovered all that money and simply piled on pounds of financial problems.

So no, we won’t cry for you Argentina, because your did little to whip the economy into shape when you had the chance. Once, you were the dominatrix, and we would have poured money into anything you desired.  But now, rising inflation, low foreign exchange reserves and a tumbling currency indicate just how little faith we have in you gaining the upper hand in this relationship  again.

And no, you can’t shimmy your way out of this mess, Turkey, after letting political woes overwhelm the economy. Just as some of our former partners  had daddy issues, you have government issues. Jeez, get a grip on it, will you?

And no more beach parties with you, Thailand, because you’ve been living beyond your means for too long. In fact, your bank statement shows you’ve been borrowing too many dollars lately. Plus, you have repeated inner conflicts, such as anti-government protests, which are getting tiring for us to sit through every time.

As for the BRICS (Brazil, Russia, India and China), well, what can we say? You all seemed such solid candidates for long-term partnerships. But that notion seems to be crumbling away now. Most of you have fallen victim to your own, self-created demons.

At least two of you are turning into economic basket cases, and you can take the entire blame for that. We’ve nagged you to undergo some ‘tough love’ therapy (open state-dominated sectors, increase investments in infrastructure, fight inflation, etc.) for your own good  in the past few years, but you have refused to listen.

And, frankly, we’re just getting a little sick of all the tantrums you throw every time we threaten to walk out the door. This time, we’re sorry to say, it’s for real. We are really out the door.

We also think it’s best if you hear it from us: We’re most likely getting back together with our ex, the US. Over the past few years, our former object of affection has undergone a marvelous transformation.

Do you know that a few years ago, the US started working out hard to reduce its excess fat (read debt) , and now it’s looking fitter and more fabulous than  the rest of  you combined?

More importantly, our  money will  get tighter through the year, as the US Federal Reserve embarks on its ‘tapering’ plan. We can’t afford to throw money at nerve-wracking economic adventures in faraway lands anymore, when an ex (now seemingly cured of excess spending habits) with improving  financial prospects beckons.

The fact is, we can’t wait to get back to the US. 

Please don’t take this too personally. Nothing has changed — except our expectations. We shared some great times, but now it’s time to part ways.

We sincerely hope that you find someone who will love you again.

Take care. Maybe our  paths will cross again one day.

Yours lovingly but not in love anymore,

Global Investors

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