A harsh dose of tough love for emerging market economies posted at Bloomberg this weekend, as Dani Rodrik and Arvind Subramanian explain the following to ministers of finance around the world who blame the taper for their troubles:
1. The US had no choice but to stimulate – it’s not like anyone else has been stepping up to the plate. Our demand kept the lights on all over the world.
2. Funny, you didn’t seem to mind globalization last decade, when you were selling bonds to hungry investors 24 hours a day all over the world and bringing in massive corporate spending.
3. You first complained that QE was flooding your country with cheap credit and pushing up your currency, now you complain that vanishing credit is causing your currency to plunge – well, which is it?
4. Don’t act like you weren’t presiding over a rising current account deficit and spending like an NBA first-round draft pick when the dollars were blowing in under the doors and down the chimney. You didn’t have to do that.
5. You’ve had plenty of time to prepare your economies for the ebb-tide, politically you were not up to the task.
This view will a controversial one, to be sure, especially should the ongoing curtailment of stimulus continue to wreak havoc amongst the Fragile Five nations.