As concerns over America's economy began to spread in 2007, many investors decided to look overseas for protection. In order to hedge themselves against a possible economic slowdown in the U.S., traders poured money into emerging markets such as India and China, but some are starting to question just how safe these markets will be this year.

Last year, when it looked like the U.S. economy was going to get hit with a weak dollar and nasty housing market, it made sense to look to different markets for protection, but now some are fearing that the problems that are plaguing America will reach a point where they will pull down foreign economies also.

What we have seen in 2008 is a pretty substantial downtrend in some of last year's favorite safe havens. Markets such as Korea, Thailand, Turkey and Brazil have all been hit in the first half of January and are down over 8 percent.

Two of last year's hottest markets, China and India, have so far managed to perform OK in 2008, but you have to wonder just how long they will be immune to the global pullback. In the last six months of 2007, China and India's stock indexes saw growth of 37.7 and 38.5 percent respectively. So far the start of the year has been kind to both countries, with India fading by only 2.1 percent and China actually showing gains of 0.6 percent.

Morgan Stanley (NYSE: MS) has come out and predicted that America is destined to head into, at best, a mild recession, and that Europe and Japan will also experience some market slowdown this year.

Right now there are two theories that are being tossed around. One camp seems to think that emerging markets are going to be able to "decouple" from the U.S. economy. Basically this means that emerging economies can separate themselves from the rest of the world and therefore protect themselves from global weakness. The other camp thinks that there is no way emerging markets will be able to decouple from the rest of the world.

The decoupling theory sounds nice, but I have to wonder in today's world if this is really feasible. Last year, investors from developed countries invested pretty heavily into the emerging markets, so the two have now become more forged than they would have been had last year's spike in investments not occurred.

Citigroup (NYSE: C) had previously anticipated that Latin American markets would see gains of 25 percent or greater. But with the current economic situation being the way it is, Citigroup now estimates Latin America could possibly end the year in the red.

With the gains we witnessed last year, it would be silly to think that these emerging markets are not in danger of coming back down along with developed markets.

What are your thoughts? Do you view emerging markets to continue to be a safe place for investors, or have the good times already run their course?