Are troubles in emerging markets a third leg of the global crisis?

Many commentators, including the Bank of England’s Chief Economist, have suggested that the turmoil in emerging markets (EMs) over the last few months is just the latest phase of the global financial crisis that began in 2008. What’s more, as the full repercussions of this crisis have yet to play out, monetary policy should be kept loose for an extended period too. We have some sympathy for this view. However, we are not as pessimistic on the outlook for emerging markets or global commodity prices, and would probably be more optimistic on the prospects for the “Anglo-Saxon” economies.