Treasury Secretary Geithner thinks so: “The threat of cascading default, bank runs, and catastrophic risk must be taken off the table. Sovereign and banking stresses in Europe are the most serious risk now confronting the world economy. Decisions cannot wait until the crisis gets more severe.”
From the same Telegraph write up:
The International Monetary Fund warned last week that emerging markets face the risk of “sharp reversals” or even a “sudden stop” if there is further spill-over from Europe. This comes at a time when Asia and parts of Latin America are already in the topping phase of a credit boom, one of epic proportions in China where loans have doubled to almost 200pc of GDP over the last five years.
Warning signs have been flashing red for the last three weeks. Shares of China’s top property developer Greentown have crashed by a third this month. The currencies of Indonesia, Brazil, Korea, South Africa, and Hungary have all buckled, and central banks have begun intervening to stop the slide. “A continued flight from risk raises the growing possibility of investor capitulation in emerging markets,” said Neil Mellor from BNY Mellon.
Feeling better now?
UPDATE: And now the IMF is broke.