The biggest news story in the emerging markets this week -- the voting down of Hank Paulson's $700 billion plan to save the U.S. credit markets, and the resulting worldwide stock sell-off -- isn't nearly the most interesting. That honor falls to the ongoing saga of the Somali pirates.

While we've been following that story for some time, the pirates finally got the attention of the U.S. Navy and the mainstream media (or MSM, for those of you who are hip to the acronym) when they captured a container ship loaded with 33 Ukrainian tanks and other weapons that may or may not have been headed to Sudan. The New York Times has some fascinating quotes from the pirates’ spokesman (yes, the pirates have a spokesman), and it turns out -- surprise, surprise -- they're just in it for the money.

What's the relevant investing lesson here? Well, when it comes to the emerging markets, more and more investors are starting to look out onto the frontier -- to countries such as Cambodia, Nigeria, and the Democratic Republic of the Congo -- in search of the truly mind-blowing returns. These countries face significant challenges to their ongoing economic development, and some even have pirates and warlords who threaten property rights and the rule of law. So when you find a company, such as Millicom International Cellular (NASDAQ:MICC), that counts Africa among its growth catalysts, remember to remain skeptical and discount at rates that reflect the very real risks in this part of the world.

Plus, we were looking for any reason to work in the pirate story here.

Speaking of risks
If the Somali pirates weren't enough to give you a fright (keep that costume in mind), Bloomberg reported this story last week: "Venezuela, Russia to Form Global Energy 'Colossus.'" Fabulous. If there's one thing better than letting one dictator try to manipulate world energy markets, it's letting two dictators try to manipulate world energy markets.

For the record, while we encourage all Americans to start putting more emerging-market exposure in their portfolio, Russia is one country we're staying away from right now at Global Gains. That's because if the Russian government has made anything clear, it's that they get to dictate how business is done in Russia. That means you should be highly skeptical of how much you -- as an outside shareholder -- will participate in the profits of Russian firms such as Mechel (NYSE:MTL), VimpelCom (NYSE:VIP), and Mobile Telesystems (NYSE:MBT).

But back to the BIG news ...
Yes, the bailout plan failed this week, and while you can read all about what this means for the U.S. here, here, and here (and here and here), the question we're focused on is: What does this mean for the emerging markets?

With the spread of globalization, one of the popular economic theories out there is that of decoupling. It states that while the entire world used to rise and fall with what was going on in the U.S. economy, the U.S. today plays a smaller role in the global economic system, and countries in Asia or Latin America can grow even as the U.S. is mired in recession. Thus, as we tell our members at Motley Fool Global Gains, it's more important than ever to be internationally diversified in your portfolio.

What we saw this week was that many emerging-market investors aren't willing to bet on the decoupling theory holding up amid a massive U.S. financial crisis. Following the “no” vote on the bailout, stock markets in countries as diverse as China, Ireland, and India all dropped substantially. They've recovered as the U.S. markets have somewhat stabilized, but what's clear is that, faced with crisis, no one quite knows how the global economy will cope.

This has prompted economists, government officials, and central bankers around the world to advocate for a 21st-century Bretton Woods-type conference to hash out new rules for a rapidly changing global economy. Something along these lines is probably necessary. There is more money moving around the world than ever before, and advances in banking technology mean that it's moving faster than ever before. Put those two traits together, and we're looking at a system that not only has the potential to help us reach higher economic highs, but -- as we're finding out today when capital flees to safety -- can also push us to lower and lower economic lows.

Finally, what's happened to our moral high ground?
In case the plethora of headlines about our financial crises has overwhelmed you and you missed it, on Sept. 19 the SEC prohibited short selling in financial stocks -- a list that included "financials" such as Ford (NYSE:F), General Motors (NYSE:GM), and General Electric (NYSE:GE). This was done to protect our market from unnecessary volatility.

Yet that move contrasts with the move China's Securities Regulatory Commission made a week later to finally approve short selling in their markets. Yes, China waited a long time to allow shorting in its markets so as to avoid a panic-inducing drop in stock prices, but we live in strange times when the world's largest free market bans shorting at the same time as a government-directed economy finally gives investors the freedom to do it.

Tim and Nate are Motley Fool Global Gains analysts. You can see all of the team's research and stock recommendations by becoming a guest member free for 30 days. The Fool's disclosure policy thanks you for reading this week's update on the emerging markets.