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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (21051)	8/11/2007 2:21:11 PM
From: elmatador	Respond to of 218083

Elmat conspiracy theory: Liquidity crisis engendered by Asians to remind the west the meltdown that happened exactly ten years ago. Just joking. The Asian Financial Crisis 10 Years Later: Time to Reaffirm Economic Freedom by Anthony B. Kim Backgrounder #2054 This summer marks the 10th anniversary of the 1997 Asian financial crisis. The 1997 crisis triggered extensive economic and political unrest in emerging Asian markets, sending many countries from Thailand to South Korea into recession. At the time, one common interpretation was that the crisis debunked the "Asian Miracle." Capitalism and globalization were repudiated and blamed for the bursting of currency and property bubbles and the resultant difficulties. The 10 years since the crisis have shown that this interpretation was exaggerated. The countries that were most affected by the crisis have been recovering by embracing the free market and globalization. Asia is once again the most dynamic region in the global economy. In hindsight, the 1997 crisis was nothing more than a regional recession, a transitory setback that spurred more openness and transparency. Continuing economic recovery will depend critically on further strengthening of the institutional framework of the regional economy. Advancing economic freedom is the way forward, not only to reduce vulnerability to future crises, but also to establish the institutional infrastructure essential for dynamic and sustainable economic growth. It is in America's interest to pursue policies that encourage such progress in these countries. Indeed, it should be a strategic, integral part of U.S. foreign policy in Asia. Asia's economic environment has changed dramatically in the past 10 years. Most noticeably, China has catapulted itself onto the global stage by flexing its economic and political muscles. In this new environment in which some fear that American economic and trade leadership in Asia is fading, Washington should seize the opportunity to reinforce its vision of economic freedom and prosperity in the region. The 1997 Crisis and Subsequent Recovery The Asian financial crisis began in Thailand in July 1997 and then spread to neighboring countries, including Malaysia, Indonesia, and South Korea. In general, a period of financial turmoil in foreign exchange markets eroded investor confidence, triggering sharp drops in currency values. Rapid and sharp capital outflows resulted in further currency devaluations, stock market crashes, soaring inflation, and a severe economic recession. A number of complex factors appear to have contributed to the financial crisis. Most diagnoses center around a combination of factors, including overreliance on short-term foreign capital, excessive investment in real estate, inadequate financial supervision, and politically motivated credit allocations that resulted in a massive non-performing loan problem.[1] Whether measured in terms of output, investment, or jobs, the crisis caused considerable economic distress in the affected countries. Nervous investors moved over $100 billion out of the region in 1997-1998--about 5 percent of the region's annual gross domestic product (GDP). In a matter of months, the number of unemployed workers increased by over 800,000 in Indonesia, 1.5 million in Thailand, and about 1.35 million in South Korea. As currency values plummeted, people's effective wages also dropped. By the end of 1998, real wages had dropped by 12.5 percent in South Korea and by 6 percent in Thailand.[2] The impact of the financial crisis went beyond the economic landscape. While Thailand and South Korea went through peaceful changes in their governments, other countries experienced political upheavals after the economic dislocation. However, as painful as it was, the crisis has also given affected countries the incentives and political momentum needed to make their economic systems more open and transparent. Over the past decade, these countries have attempted to repair the structural defects that led to the crisis. Unlike previous economic crises in Mexico and Latin America, the Asian crisis was not caused by excessive government spending or unmanageable public debt, but instead was mainly rooted in the private sector.[3] To their credit, most Asian governments have taken steps to address their problems by reforming financial sectors, improving transparency of regulations, strengthening corporate governance, and opening their markets to more competition. In addition, they have continued to promote their economic advantages by embracing foreign trade and seizing opportunities to integrate themselves into the global trading system. (See Chart 1.) Their overall total trade with the world has increased despite some slowdowns.