Monitor | So much for talk about a shift in financial power to the East
As moves in Asian stocks, bonds and currencies over the last few weeks demonstrate, it's what happens in the United States that really matters
Over the last few years there has been a lot of talk about a shift eastwards in the world's economic centre of gravity and the emergence of China as an engine of global growth.
But as the abrupt sell-off in Asian stocks, bonds and currencies over the last few weeks demonstrates, when it comes to the interface between financial markets and the real economy, it's what happens in the United States, not China, that most affects what goes on in the rest of Asia.
As expectations have grown that the US Federal Reserve will begin to taper, or wind down, its programme of quantitative easing, US bond yields have risen, and investors have begun to reassess the riskiness of Asian markets.
Attention has focused on the economies most dependent on foreign capital. That means India, where the current account deficit - the country's overdraft with the rest of the world - is now higher than the level which precipitated 1991's balance of payments crisis, and Indonesia, where the current account deficit has grown to proportions last seen in 1996, just before the Asian currency crisis.
Spooked investors have rushed for the exits, and both countries have seen a steep fall in their currencies over recent weeks, and a sharp rise in borrowing costs. For Asian corporate borrowers with leveraged balance sheets, warn analysts at Morgan Stanley, the coming months "will feel like a recession".