Today’s article is what we’ve discussed before: as BOJ mops up $200 bil of global liquidity, investors are forced to pay back those loans, thus taking them out of the stock markets, causing a sell-off. This exacerbated last week’s sell-off in emerging markets. They say this will get worse.

Excerpt:
“There’s more potential bad news, though. A sharp decline in US stocks and bonds may begin to shake foreign investors, who hold over US$6 trillion worth of these assets. Foreign capital flight from the US, which has probably already begun, could prompt the devaluation of the dollar and a prolonged period of global economic weakness. With liquidity fast tightening in the world’s largest economies, emerging market assets could well be poised for their worst performance in more than a decade. ”

Again, I’m glad I got out of the stock market. The only way that foreign stocks can go up, is if they can move from export-dependent growth to stimulating internal demand. If you own any stocks or mutual funds, please make sure you have a reason in your mind to hold it. Don’t keep it just because your financial advisor said stocks only go up, or that Asia is the next hot region.

For example, in China, over 50% of bank loans are not paid back. Their housing bubble dwarfs ours, as we discussed a few weeks ago. They are dependent on exporting to the US, Europe, and other countries which can buy from them only because they get money from exporting to the US. Know thy regions…