The problems in the mortgage markets, led by falling home prices and the credit squeeze, have been troubling the U.S. economy since August 2007 and it is only this last week that European and Asian markets reacted so heavily. A few years ago, even when the troubles in the U.S. economy were a matter of discussion and not reality, we would be seeing world markets react instantly. This time they showed months of resistance to all the negative data coming from the U,S,, which is enough proof that the decoupling of emerging and other developed markets from the U.S. is really happening. Of course, at the same time this decoupling is somewhat reversed by the accumulation of cross-country capital and increased financial links between economies. So, although world economies are maturing to sustain their stability despite volatility in the U.S., financial markets are merging ever closer to transfer troubles from one economy to another. Therefore, it would be wrong to imply that the independent economic development of world markets had been exaggerated as evident from their reaction on Monday. This sort of an approach would assume that the globalization of finance and world economic growth means the same thing, but they do not. We are seeing the current situation develop as it is because both these trends are in action.

Today, world economies are interconnected through both finance and production. Since the U.S. still accounts for about 25% of global GDP and is still the largest consumer economy in the world, when consumers in the U.S. cannot finance their consumption through borrowing or when they decide to save more in anticipation of future problems, it directly impacts exporters around the world. Yet this no longer means the end of the world for those export-heavy economies. One of the reasons for this is that emerging economies are governed much better compared to the past, especially at the central bank level. Some of these countries have amassed ample foreign exchange reserves. Today, sovereign debts of most developing economies are priced with lower risk compared to blue-chip American corporations as a result. This is partly what is meant by "world economies doing well.”

The new power brokers in the world are sovereign wealth, hedge and private equity funds, which hold most of the free capital and manage risk with similar methods. When these funds suffer losses in parts of their investments, as in the case with the falling value of American mortgage derivatives, they tend to finance these losses by cutting other, even profitable, parts of their portfolio. Therefore, although emerging markets could be lively and profitable due to healthy growth, flow of capital to these economies decrease when funds reduce overall risk. Even still, in the current case we have not seen a massive exit from developing markets, which would have been the expected reaction in the last decade.

Finally, I think a more interesting discussion that is dominating the world economic forum these days could be stemmed from this PostGlobal question if it were to be rephrased: Is the world really moving toward an economic multi-polar order once again?

I would answer without doubt; Yes, I believe it is.