US default would put familiar faces back in the firing line

A default by the US government would be without precedent and the potential spillovers to emerging markets are unclear. Nonetheless, it seems likely that the same EMs that were hit during the summer sell-off that followed fears of Fed tapering would be hardest hit by the market dislocations that might follow a US default. The reason is not that these EMs are especially exposed to the US but that local policymakers have allowed economic imbalances to build to potentially destabilising levels.