From World Socialist Web Site - February 1
Whatever the immediate outcome of the turbulence sweeping through the financial systems of so-called “emerging market” economies, it represents a turning point in the global economy as a whole. The roots of the crisis lie in policies of “quantitative easing”—the pumping of trillions of dollars into the world financial system by the US Federal Reserve and other central banks—initiated in response to the 2008 breakdown that was sparked by the collapse of US investment bank Lehman Brothers.
Much of this money flowed into “emerging markets,” seeking higher profits as share prices in these countries boomed and the rates of return on other financial assets rose. But now the bubble has started to deflate and volatile capital is rushing for the exits, sending currency exchange rates plunging.
A series of central banks, including in South Africa, India, Brazil and Turkey, have raised interest rates significantly. But these actions have so far failed to stem the outflow.