Leading the global selloff last week were the emerging markets. A strong dollar (meaning weak other currencies) will actually prove helpful in some ways, making emerging market products cheaper. But, generally, the situation in emerging markets has deteriorated.
Mostly, bad economic policy is the culprit. This is exactly the same culprit that has produced economic stagnation in the developed world. Too much government hubris.
Venezuela and Argentina are the poster children for bad government policy and their economies are collapsing -- a well deserved outcome. Brazil, Turkey, and Russia are weakening as well from pretty much the same problem -- too much government.
No economy has ever prospered with too much government. There are no examples of sustained economic growth in world history that were not "free market" examples -- even China owes its growth in the last thirty years to an unleashing of free market forces.
Inevitably, politicians enter the picture with the idea that they know better than the market what consumers should be consuming and at what price. This hubris extends to every aspect of the market place. Minimum wage laws and the "Affordable Care" Act are examples of how government deliberately tries to distort free market outcomes, because they think know best. The result - economic hardship for the poor and the middle class. But, success for the politicians until reality sets in.
This seems to be a natural historical tendency. Free markets deliver economic growth and high living standards. The average citizen prospers. But, the elites can't stand this, because they want power. So, they begin to attack free markets. This is where much of the extreme rhetoric on inequality of income and environmentalism comes from.
The Eurozone is now trying to dial back their extreme environmental laws with the belated recognition that their economies are stuck in the mud and will stay there with the current regulatory regime. The US has not come to that realization yet, but it will in time.
Meanwhile, emerging markets are getting hammered. But, they are very cheap by historical standards and I remain optimistic that emerging markets are a better bet than the developed world -- at least for now. Even their politicians will be forced to face reality and return to free market policies if they are to have any hope of improved economic performance.