Emerging Markets Collapsing

India’s biggest two-day stock market slide since 2009, surging bond yields and a plunge in the rupee to a record low are pressuring officials for fresh steps to stem capital outflows and support the economy, one reason behind the 10% tax on gold. Then there is the analysis of China conducted by the Economist that showed the GDP growth was not really there with a $1 trillion hole.

ECM 1985 - 1994

This is part of the shift in capital flows that appears to be underway. If we look at what took place when the ECM turned in 1987.8, the capital outflow was from the USA so we saw the crash here. The capital shifted and then poured into Japan and that created the Bubble Top in 1989.95.

This time, the crash appears to be in emerging markets and this is sending the capital flows into the US. When this turns down in 2015.75, then we will see a significant collapse in capital formation once again. Politicians are clueless and their policies are more like strip-mining. They are destroying the economy right down to the foundation and fail to grasp that they keep raising taxes to support unfunded liabilities for state workers. This is destroying the productive sector of the economy to fund the sector that produces nothing to increase the national wealth.