Everybody remembers where they were, when Kennedy was murdered or when OJ led the famous white Bronco chase.  Investment strategists and economists have similar memories of the Thai baht and Russian ruble collapse of 1997-1998.  (Remember Long Term Capital Management?)  Their currency problems morphed into a worrisome systemic risk for the entire financial world.  The collapse of the Turkish lira is causing the same worries today.

Wells Fargo has done some excellent research into this.  Their conclusion that there is no systemic risk this time is reassuring.  It was not surprising that they concluded the euro-zone banks have the greatest exposure to the emerging markets in general, but it is only about 7% of euro-zone assets.

The surprising part of this report was that both Australia and England have higher-than-expected exposure to emerging markets, but it is mostly to countries of developing Asia, which have substantially higher monetary reserves than most other emerging markets.

This, plus the $15 billion loan from Qatar to Turkey to support the lira, strongly suggests that Turkey’s agony will not be contagious.  Like ebola, it can be contained.