Troubles in emerging markets would have been an appropriate topic for this post. Emerging markets were sexy not too long ago. I invested heavily in emerging markets long before the troubles popped up there. I reduced my holdings in emerging market mutual funds over time, but still I have substantial amount of capital locked up in emerging market mutual funds.

It appears that it is going to take many months, if not years, before emerging markets finally get back their groove. Among all emerging markets, Russia and Latin America look really bad compared to India and China. Historically Latin America is more vulnerable to external financial conditions. Ecuador was already defaulted. Argentina and Venezuela face their own internal challenges. Brazil is doing relatively well. But, key problem for all emerging markets is the heavy outflow of foreign investments.

Many emerging markets borrowed heavily when the capital was freely available and the banks were doling out the money. Now, the situation is changed dramatically. As we all know, the banks all over the world are begging for money from their respective governments just to survive. Foreign investors are pulling the money from emerging markets either to meet their obligations in their home country or because of the fear of unknown. Local investors in emerging markets stopped or reduced their investments because of local unemployment and housing collapse.

Low oil prices also hurt countries like Russia. Lower commodity prices hurt markets like Latin America and China. Although the commodity prices are turning higher recently because of $300 million infusion by Fed, that trend may not sustain. Many economists in emerging markets believed that their economy is decoupled from problems in U.S. Current global recession proved their theory wrong. Decoupling theory gave false hopes to emerging markets. When the reality hit, emerging markets went down fast and furious.

The World Bank estimates that in 2009, 104 of 129 developing countries will have current account surpluses inadequate to cover private debt coming due. For these countries, total financing needs are expected to amount to more than US$1.4 trillion during the year. If the situation in Latin America, Russia or China worsens, this number may be revised upwards.

When the emerging markets recover, it may not come back with vengeance, but the profits are going to be decent mainly because of the prices have gone down so low. If you are already invested in emerging markets, this is not the time to bail out. However, if you plan to invest in emerging markets, wait for some more time to see if the foreign investors’ cash is going back to the emerging markets. Foreign Direct Investment (FDI) is the major catalyst for these markets. If FDI cash inflow improves, that would signal the turning point in emerging markets.

I am sure there are literally thousands of people dreaming to become a venture capitalist (VC). Most of the VCs mint money. They have money machine in their offices that print money at their wish, right? Mohanjit Jolly says “yeah, right!”.

Mohanjit is the executive director of DFJ (Draper Fisher Jurvetson) India. He got educated in MIT and UCLA. He was the managing director of Garage Tech Ventures. Now, he is managing DFJ’s portfolio companies in India. He explains the challenges and difficulties one has to face in the VC world in his article in VCcircle.com. If you are even thinking about becoming a VC, this is a must read. Sometimes, it’s better to get a reality check before you enter the dream box, especially from the guy that has already gone thru the similar path. Most VCs seem to be very secretive. They try to guard their working methods. Mohanjit is refreshingly different.

A small village in Gujarat State, India is conducting a religious ritual in which 3,000 priests have begun chanting hymns to invoke divine intervention to fix the global financial crisis.

Bizarre, isn’t it? This ritual was started 15 days ago. Priests are sitting around 109 sacrificial fires and chanting hymns to appease goddess Meldi, urging her to restore prosperity.

Well, if this succeeds, we can ask our new secretary of state Hillary to conduct similar rituals to restore world peace.

Indian ritual is expected to last 2 years. The global crisis will end well before Indian priests’ two-year time frame whether these guys perform the rituals or not.