Analysts worry that with little foreign capital coming in, the government's fiscal spending machine won't be powerful enough to generate the growth that the country desperately needs to keep people at work. The government still faces huge problems in both its banking sector and state-owned enterprises. When recovery comes, it will come more to Hong Kong, Taiwan, South Korea and China than to Southeast Asia. They have a quandary there. It will be difficult to ever see previous growth rates coming back.
Investors are also worried about the huge swings and volatility of recent months.
We've seen overshooting on both sides. That suggests these markets are not efficient. They are not pricing in the right things. The markets have become so distorted that we don't even know what the fundamentals are any more. Moreover, the world's central banks have soundly defeated the hedge funds and the proprietary desks of the big commercial and investment banks.