The main problem for the Thai Baht is that it was fixed to the dollar. This seems like a good idea, especially in the short term, but when you think about it a bit, you’ll see that when an imbalance occurs, instead of the market moving slowly in tiny increments, the adjustment is a crisis. This is basically what happened. Instead of the baht devaluing slowly over time, slowing the economy over a period of years, the pain all came at once in a matter of days.
This is exactly why China must start to loosen it’s currency controls now. If an imbalance were to occur, it could be a global disaster.
Globalization can be taken in a number of ways. Such as, the underlying issue of American companies growing due to globalization. Also, there is some degree of diversification that can be had though purchase of foreign securities. To what degree would be dependent on what securities were purchased, yes? A Taiwan semiconductor company could be tied closely to our tech market but a Brazilian construction company wouldn’t necessarily be so closely tied. Of course the easy play would be the Country ETF as a basket. This would more closely tie to our markets as contagion often occurs.
Some countries are more risky than others and their equities will be more volatile but offer more potential. There is far more potential in China than Germany, but Germany is more stable. So risk and reward are once again at issue and the choice is how much risk do you want to take?
Have you ever seen the British Question Hour? They put Tony Blair in front of the house of commons and they ask him questions on TV. He usually has a binder full of notes with him and he has to respond right there, right then. No where to hide, no where to run. They are on a regularly scheduled basis so there’s no avoiding them. The house of commons often boo’s, sometimes applauds, both the questions and the answers. Quite entertaining even if the politics isn’t directly applicable to anyone in the US for the most part. That might provide some improvement in the current situation. Entertainment at least.