The ride on the risk asset markets is about to get a lot bumpier again. Get used to this - recurrent bouts of volatility and periodic resurgence of fears surrounding the structural problems of debt and deficit will stay with us for years. Fixing these problems may take a decade.
But amid the recurrent bouts of risk-on/risk-off, investors have a unique opportunity to focus on attractively-valued assets for long-term capital appreciation, particularly those leveraging the big trends in Asia ex-Japan.
Market confidence has been rattled this time by events in Cyprus, where the government had proposed a levy on bank deposits as part of a bailout plan. This has triggered fears of contagion to the rest of the euro zone through fragile banking systems in Spain and Italy. And this comes at a time of ongoing concerns about the possibility of Italians rejecting austerity amid political gridlock. Then, there is the feared impact of the programmed government spending cuts in the United States, the so-called "sequester".
These diverse headlines have a common thread. The West continues to struggle with the problems of debt and deficit, both private and public - legacies of excesses built up over the past one to two decades.
And while there are many opportunities in the "super-cycle trends" in Asia ex-Japan, we should be under no illusion that we can decouple from the West. We are all "beasts of beta" - captives of global volatility, connected by interdependent economies and capital markets. Contagion comes through capital flows which dry up when there are crises and fear.
But the good news is the West is healing. And this will allow Asia to continue to access the capital required for the great transformations, such as urbanisation. Media headlines will naturally focus on the unfinished business in the West - the unfinished struggle with dysfunction. But the real news is there has been progress in redressing the problems of debt and deficit.
The surge in housing foreclosures in the US over past years is good news. Yes, it has inflicted pain on the unsustainably indebted. But this is a market-clearing mechanism. As a result, US house prices have been recovering, housing starts have surged and this is likely to flow over to business investment.
Meanwhile, hydraulic fracturing and horizontal drilling technologies have made accessible vast amounts of shale oil and gas, raising the possibility of US energy self-sufficiency eventually. And before that, there are already benefits in investments and jobs in the energy industry.