Steve, Stitch,
It looks like a long (and I mean LONG) climb out for the Asian economies.
As an anecdotal example, an article in WSJ in the last few days mentioned that PT Astra, the biggest car company in Indonesia, will have to default on their interest payments on their corporate debt of $2B. The primary reason: in 1997, they sold 197,000 vehicles; in 1998, they forecast to sell 22,000 (yes, that's right) vehicles.
Some simple arithmetic: $2B in debt at say 7% means annual debt servicing costs of 140M. Spread over 197,000 cars, that's $710 apiece, not too bad. Spread over 22,000 cars, that's $6,360 per vehicle sold!!
In trying to imagine how this problem would look like from the Asian perspective, I thought of it this way: imagine the impact on the US economy if 50% of the S&P 500 companies see 80-90% of their revenues disappear overnight.....
On the subject of Indonesia's problems, another article in the WSJ mentioned that corruption in Indonesia is now actually harder to check, since the old centralised Soeharto-style corruption has been replaced by unmanaged decentralised corruption. The concept of "free market corruption" as a economic concept is an intriguing thought, I must say <ggg>. |
