To: Jeff Jordan who wrote (27789 ) 12/12/1997 8:35:00 PM From: Glenn D. Rudolph Respond to
SOUTHEAST ASIA: WHAT COMES AFTER A BAILOUT?
Futures World News - December 12, 1997 08:56
FINANCIAL ECONOMY STOCK CURRENCY GRAIN V%FWN P%FWN
By Jim Wiesemeyer, FWN Senior Editor
--South Korea testing economic powers' patience --Dec. 18 presidential election in So. Korea seen
delaying country's adherence to IMF-demanded reforms --Key Asian countries either at or nearing recession
Washington-Dec. 12-FWN--AS FORMER PRESIDENT RONALD Reagan used to say: Panic is an emotion, not a policy.
It's now clear that Southeast Asian nations-- especially South Korea, Japan and Indonesia--must implement sound economic and finance policies, and stick with them. Unless that happens and continues, policy doesn't have a fighting chance against investor panic.
Recent events could lead one to ask, "What comes after a bailout?" Especially for a country like South Korea, which garnered an International Monetary Fund (IMF)-led $57 billion bailout package, only to have some analysts now suggest the bailout should be at least three digits--$100 billion.
It doesn't stop there. Consider these developments:
-- While Japan has several sectors in crisis, South Korea's entire country needs revamping. That's as unlikely as getting U.S. congressional Democrats to get along with House Speaker Newt Gingrich.
-- Asia makes up around a third of the world's economy. So what's the outlook? Many analysts now expect at least three of the Asian nations (Japan, South Korea and Thailand) to slip into recession, if they are not already there.
-- Two of the three candidates running in South Korea's presidential elections on Dec. 18 have previously stated they may renegotiate the IMF bailout package. But today the leading candidate, Kim Dae Jung, released a letter to IMF Director Michel Camdessus, in which he supported the IMF's bailout package, including its conditions of economic reform.
Last week, Kim said that if elected president he would renegotiate the package, especially the IMF position that Korea maintain the GDP growth rate at 2.5% or lower. In today's letter, however, Kim said his "position has not changed."
So much for truth in government/officials. Now Kim is saying, "If I win the presidential elections...I will try my best to improve the Korean economy through introducing the necessary structural reforms."
-- Worldwide investor confidence in Southeast Asia is certainly waning. For all sorts of reasons, but largely because the declawed Asian tigers have either not followed what they agreed to in getting IMF bailout funds, or they have given the world mixed signals (Japan falls into this category). Meanwhile, Standard & Poor's and Moody's Investment Service keep cutting ratings on South Korea's currency and sovereign debt. End of Part 1
