Other observations, more for MENA, is the perverse effect of Mark to Market. Gillian Tett in the Financial Times touches on this. Pity the early criticisms regarding exacerbated volatility were not taken with greater seriousness. Regardless, it is an extraordinary situation where you have a Financial Times columnist writing seriously, for the US, We should aspire to the emerging models, but then American finances have come to resemble in disturbing ways an Argentina (if I may be somewhat hyperbolic, as of course the US has stronger fundamentals, but perhaps less hyperbolically, the UK in the 1960s-1970s).

Among many quotable phrases:

If domestic banks run out of money, emerging markets long ago discovered the cure: swallow your pride and accept foreign money instead. This is now happening in reverse, as the great investment banks of the US and Europe accept large “rescue” investments from sovereign wealth funds, mostly based in the emerging world.

Which leads to this: I am moderately amused at all the panic over sovereign wealth funds. When one's financial system is near historical meltdown, whinging on about transparency of holdings, or hinting at steps to make such investments subject to more "security" oversight (politicised as that is, as Dubai Ports World showed) is astoundingly stupid. Above all when the attractiveness of your assets is questionable. Ironically by the same law maker, criticism of such idiocy. Of course Mr. Buffet said is as well recently, in his shareholders' letter, sadly American profligacy has created a massive hangover (after a massive party of course).

Strange times, but then to return to Authers & Emerging Markets models as an inspiration to the US, who would have thought merely 7 years ago that a financial writer would write in all seriousness:

Foreign exchange analysts are anxiously looking for signs that the US can attract foreign direct investment. This – rather than “hot” portfolio flows that can leave quickly – will underpin the dollar and arrest it from its current freefall. Emerging markets learnt this as they recovered from the 1990s.

Americans will, I predict, put the Ibn Bush Presidency down as the Administration that well nigh ruined American power.

Meanwhile, money one of the bond markets not suffering a lock up is the emerging markets - risky as emerging debt it, it has a refreshing clarity to it now. I share with some amusement a key obs:

The great unwinding of structured finance vehicles into illiquid markets has affected mainly developed market debt, while emerging markets have been relatively unscathed. Sovereign bonds were not packaged into CDOs and other fancy creations in anything like the quantities of high-yielding corporate bonds – because, ironically, they were seen as too risky.

Known unknowns.