Facing a Liquidity Tsunami in Emerging Markets?
Can there be too much of a good thing? Or maybe the “good thing” was not good in the first place. In April 2012, at the White House on her first visit to the United States since her election in 2010, Brazilian president Dilma Rousseff scolded advanced capitalist economies for unleashing a ‘tsunami de liquidez’,a ‘liquidity tsunami’, onto the developing world. The expression liquidity tsunami suggests that the sheer scale and volume of financial capital flows to developing and emerging markets had become an issue. It indicates that these quantities were overwhelming and could trigger devastating damages.