“We are all coupled”: The communication and the IT Revolution have connected the world. But it has not staunched the debate on whether economies are coupled or not. “Decoupling is no myth” wrote the Economist in March. The argument has been that large economies like India, Russia and China are insulated from the financial tremors because of the size of their domestic markets and the inherent conservatism of their regulators. This argument must now be put to bed. The speed with which the financial tsunami has engulfed the currency and stock markets of the non Western countries and put a choke on their rate of economic growth is strong evidence that in this globalised and connected world, we are all inextricably “coupled”.

“We are all fundamentalists” : clearly not in the religious or political sense, but as economic agents. The world is paying a high price for ignoring a fundamental truth. There is no free lunch. The US consumer went on a binge on the back of cheap credit and leverage, forgetting that the bills would have to be paid one day. Similarly the bulls in the oil market who predicted that prices would scale towards $200/barrel ignored the fundamentals of demand and supply. They too must be ruing their cavalier stance. There is an underlying lesson to be learnt from today’s situation. Fundamentals cannot be bucked.

The world will come out of this crisis. It may be a long time happening. But when it does the contours of the future international economic system may well be defined by the above five trends.

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