The Brics are not decoupling from the global economy, they are crumbling, their stock markets tumbling like dominoes as the woe of Wall Street's bankers infects the world with gloom.

The Pollyannas said that it couldn't happen, that the world was somehow different, that emerging markets were not just saplings but giant oaks - billions of dynamic new consumers would shrug off the burden of uncreditworthy and lazy Yankees and Europeans.

The truth is out, if you believe markets: the Shanghai stock market plunged 7 per cent yesterday, adding to Monday's 5 per cent fall. Trading was suspended in Bombay as the BSE Sensex index dived almost 10percent. At its Tuesday close, the Indian market had lost a fifth of its value since the Sensex peaked on January 8.

Funds are evaporating - market players expect a reduction in foreign investment, the big driver of growth in the Bric economies of Brazil, Russia, India and China. Slower economies mean smaller profits for stock market investors. Meanwhile, the risk honeymoon enjoyed by the Brics - markets in Russia and China surged on regardless during the initial months of the credit crisis - is over. Investors are fleeing high-yielding Asian bonds in search of safety. In London, the long gilt future surged to a record.

On top of the curious notion that emerging markets are special and self-sufficient, even in a world built on trade and interdependency, other fantasies have been erected, including China's immunity to price pressure.

It is now clear that China is infected with inflation, a disease more virulent than the pig virus that sent the price of pork surging last summer. The swine disease has been curbed, but pork is again causing ructions in Chinese households as its price climbs in response to the rising cost of animal feed. The inflationary disease will be exported to Europe and American as more expensive clothes and consumer electronics.

Some economists like to strip out food and fuel - today's big inflation bogeys - from indices of inflation because these items are volatile. However, Stephen Green, of Standard Chartered, points out that food represents 30 to 50 per cent of consumer spending in poorer countries (33 per cent in China), compared with 10 to 15 per cent in the rich world. In other words, food is highly political and will trigger wage unrest in a country already experiencing double-digit pay inflation. Standard Chartered expects China to respond with a mixture of interest-rate rises, lending controls and price controls. It all spells trouble at a time when the wider world has less cash to spend on China's exports of consumer fripperies.

America accounts for only a fifth of China's exports, suggesting that the US credit crisis will have a limited impact. That is illusory, Mr Green argues, because other emerging markets in Asia, Africa and Latin America account for 30 per cent and these economies are still highly dependent on the US engine.

While the US engine stutters, other engines are blowing a gasket. An energy crunch is afflicting South Africa, threatening to derail the economic growth that has helped to keep South Africa from disappearing into the fratricidal conflict so prevalent elsewhere on the continent.

Eskom, the parastatal utility, is struggling to keep the lights on and gave warning this week that it needs consumption cuts of at least a fifth in order to keep the system running.

The problem is underinvestment and a rapid rise in electricity demand - the South African economy has probably been growing faster than was apparent from government indices, evidence of the success of post-apartheid efforts by Eskom to bring light and power to disenfranchised groups.

Unfortunately, it all costs money and Eskom is complaining that a 14per cent price rise is not enough to make investments to deliver the megawatts. The big mining houses will have to cut output, bad news for a country desperate to increase jobs, let alone to maintain employment.

The irony of the emerging markets is that resources, not technology, is becoming their core problem. South Africa's crisis is replicated in the Gulf, where nuclear power is being touted as a solution to electricity supply problems. The United Arab Emirates has oil and gas and South Africa has coal, but their economies are outpacing the supply of fuel.

A tip for top people heading for Davos this week: skip the seminars and head for the slopes, where you will be sure to find inspiration.

Slope-off from Davos talk-in to find the future

Last year Davos pundits agreed that the outlook — for the dollar, inflation and economic growth — was benign, but these are people like you. They don’t live in trailer parks in Arizona and have few useful insights into what a credit crunch really means.

So use spare time at Davos for recreation. Ski, and the mountain air will clear your head. Then ring your PA and call a meeting with your top team, to last no more than an hour, on your return. Agree two revenue-protection measures to be implemented within six months and two big investments, one of them to be achieved by the year end.

Most forecasts are useless and the useful ones are never remembered, but big market upheavals are like tractors that churn up the soil. Soon, it becomes ready for planting.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive