Nobody would have thought it as the beginning of a long crash in the world economy. The US investment banker Lehman Brother’s fall on 15th of September 2008, has now been conceived as the starting of the biggest economic crisis in economic history after the Great Depression of the 1930s.

In the last five years, it was the advanced economies that were in trouble to correct their financial system from failure and the economy from recession. Government sponsored bailouts, fiscal stimulus –all have exhausted the already ageing matured economies of the west.

So far, the emerging world were credibly standing out from the epicenter of the crisis, ridiculing regulatory gaps in the west responsible for the crisis. But during the recent weeks, they are also equally caught in the heat wave, unable to escape from the withdrawal effects of the US Federal Reserve’s unconventional monetary policy. If somebody fears the ghost of Lehman, it is the emerging markets now.

The continuing crisis has entered a new stage with the currency crisis in the emerging markets. In many countries, including India, where the economy is going through a critical development phase, the crisis has produced a sudden stop. Financial institutions are weak, inflation is rising, fiscal discipline is low, corporate revenues are shrinking. Slow down has produced NPAs and the next responsibility of central banks is to correct the slow down distorted balance sheets of commercial banks.

What the recent currency crisis in emerging markets has brought to the world is that the crisis triggered after the collapse of Lehman, is just continuing. Five years after, the world is increasingly coming into terms with the tragic importance of the incident. The worst is that we are yet to reach at the end point of the miseries inflicted by Lehman’s demise.

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