Friday, March 28, 2014

Emerging economies have to fix their own problems

The agonizing reappraisal of emerging economies by investors started with the Federal Reserve’s taper talk last May and June. Emerging-market officials never thanked the Fed for creating all those inflows of easy money, but now they blame the U.S. central bank for outflows. To be sure, the human tendency is to blame outsiders for self-inflicted woes.

The Fed, however, shows no intention of bailing these countries out. In 2011, Chairman Ben S. Bernanke said, “It’s really up to emerging markets to find appropriate tools to balance their own growth.” And in response to the current emerging-market crisis, Fed Chair Janet Yellen told Congress in February that those problems didn’t currently pose a threat to the U.S. recovery, signaling no change in the Fed’s tapering policy.