As the optimists’ delusional hopes for a rapid V-shaped recovery evaporate, the advanced world will be at best in a long U-shaped recovery, which in some cases – the eurozone and Japan – may be long enough to stretch into an L-shaped near-depression. Avoiding double dip recession will be difficult.
In such a world, recovery in the stronger emerging markets – the great hope for the global economy – will suffer, because no country is an island economically. Indeed, growth in many emerging-market economies – starting with China – is highly dependent on retrenching advanced economies.
Fasten your seat belts for a very bumpy ride.
Related ETFs: iShares FTSE/Xinhua China 25 Index (ETF) (NYSE:FXI), PowerShares Gold Dagonrg USX China (ETF) (NYSE:PGJ) , Morgan Stanley China A Share Fund, Inc. (NYSE:CAF), iShares MSCI Japan Index (ETF) (NYSE:EWJ)