An intriguing development has escaped most investors’ attention in the anguish over what’s been happening on Wall Street: What’s been happening to the BRICs.

Only a few months ago, Brazil, Russia, India, and China were the center of potential world economic growth. Investors believed the BRICs could continue to thrive even if there was a slowdown in the West.

But that’s over, says the Financial Times’ John Authers, and the BRICs should be a major source of concern for investors. He writes that those economies have obviously not "de-coupled” from the rest of the world, and are not finding ways to grow even if the U.S. and Europe go through a recession.

Authers points out that there is actually quite a drastic re-coupling going on, one clearly shown by comparing the BRIC index to the MCSI World index.

"In relative terms, the BRIC index peaked on Halloween last year,” Authers says. "Since then it has under-performed MSCI’s world index by more than 9 percent.

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Sustained to some degree by high commodity prices, Authers says that Brazil and Russia have "gone distinctly off the boil.” However, downturns in India and China are much more dramatic.

"The Shanghai composite index is almost 40 percent from its top last October, and India’s Sensex index is down 30 percent from its January peak,” Authers notes. "In fact, it’s actually doing worse than the NASDAQ did at the collapse of its tech bubble.”

The bursting of the Shanghai bubble has had less attention than one might expect, even given the Wall Street dramas that continue to unfold. However, calls for deeper concern about China are intensifying.

"We’re still at the stage in which the BRICs have outperformed the developed world by more than 50 percent over the last two years,” Authers says. "That suggests that irrespective of whether we can avoid the nightmare scenario on Wall Street, there could be further to fall if the de-coupling thesis comes under more pressure.”

Authers also points out that BRIC central banks are on a very different course from the Fed. The People's Bank of China tightened banks' reserve requirements again, and the Reserve Bank of India has raised rates repeatedly to deal with growing inflation and has warned recently that the market should not bank on cuts to head off a recent decline in growth.

Add China’s inflation problems and a probable slowing of manufacturing there in order to improve air quality before the Olympic games in August to the above factors, and it’s clear investors have abundant cause for concern.

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