rrman, George, others -
Would anyone care to opine on the long-term consequences of the Asian crisis? There is a boatload of trouble here. The Japanese bubble burst 8 years ago and the effects are still intensifying. Some economists had opioned last year that Japan was only halfway through a 15 year trough. Now the whole region is embroiled in a debt bubble to which Japan is heavily exposed. Can the mess be cleaned up? Will it take 15 years? Japanese banks may have been able to carry bad loans on the books all these years, but I don't think this will swing for countries that owe debt overseas. Is it even possible to restructure the debt so as to accomodate Japanese banks which are exposed?
From the article on the ACU I posted earlier:
biz.yahoo.com
"Hashimoto's ruling Liberal Democratic Party (LDP) was on Tuesday reported to be considering proposing the creation of an Asian currency unit (ACU) and the future issue of ACU-denominated bonds.
The LDP's foreign affairs subcommittee agreed at a meeting on Tuesday that it would discuss steps to encourage Japanese individuals to invest in yen-denominated bonds issued by Asian nations, Japanese media reported.
Such steps would raise the possibility of using some of Japan's 1,200 trillion yen ($9.09 trillion) worth of individual savings deposits to help stabilise Asia's financial markets, which have been rocked in recent weeks by uncertainty over Indonesia's commitment to reforms proposed by the International Monetary Fund (IMF)."
It really sounds to me like they are in deep and are going to try and work out a solution (settle the crisis) by selling the idea of the Asian Currency Unit. Currencies will be linked to the yen, and everyone will raise cash by issuing yen denominated bonds. What this will amount to, in effect, is the selling of "futures" in the New Asian Currency, the New Asian Economy.
Desparate measures, desparate times. But the LDP probably sees some long term benefits for Japan in such a solution, essentially tying much of Asia to the Japanese economy, bringing them closer into the Japanese sphere. Who knows, might be a great thing for the whole world.
Debt will probably be a dirty word in Asia 25 years from now. So may the concept of dependence upon foreigners, particularly Westerners. Having gone through this, Asia may ultimately emerge much stronger, more unified. But once again, how long? Comments, anyone? |
