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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 385.42-0.3%Dec 8 4:00 PM EST
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To: elmatador who wrote (7508)7/9/2006 1:52:10 PM
From: Elroy Jetson   of 218272
 
That's how Japan created the Asia Crisis. After their credit bubble collapsed, their banks were insolvent.

Rather than inject new capital into them, they decided to expand their money supply rapidly and lend the newly created money through-out Asia, with a lot of loans going to Thailand.

While some of these loans went into productive uses, most of the loans simply inflated the price of real estate in places like Thailand and created new empty luxury resorts.

The inflow of loans from Japan also pushed up the value of the local currencies, like the Baht, making exports from those nations less economic, and sharply increasing the import of consumer goods from industrialized nations like Japan.

Then this second bubble burst. The value of the Baht and other Asian nations plunged. The loans from Japan could not be repaid so the borrowers went bankrupt with their assets being returned to the Japanese banks. Wealthy Thai real estate developers and factory owners now sold food on the streets of Bangkok to survive.

The flow of "capital", actually money created out of thin air, ravage both the Japanese banks and the Asian borrowers.

The United States and Europe could destroy the Brazilian economy in a similar manner in just a three or four year period. The foreign banks would end up owning many of the productive assets in Brazil, while the Brazilians slide into poverty.
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