description: a financial crisis that started in 1997, affecting various Asian economies by causing currency devaluations and financial collapse.
223 results
by Russell Napier · 19 Jul 2021 · 511pp · 151,359 words
way - a beginner’s guide Part Two: The road to devaluation Part Three: Devaluation and crisis Part Four: The bottom Publishing details Praise for The Asian Financial Crisis 1995–98 A combination of applied and highly practical economics that through reality bridges the gap between policy theory and actual implications and results, but
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book charts the battle between the new financial capitalism and the various other forms of capitalism that existed then and still exist across Asia. The Asian financial crisis was for many a victory for financial capitalism over the various forms of Asian capitalism. This book will explain why in fact there was
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confrontation in 1998 that left them with significantly undervalued exchange rates and benefiting from the new debt-charged consumption growth of the developed world. The Asian financial crisis set the scene for an age of debt in the developed world and this brought crises that have forced developed governments to confront financial capitalism
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that were ultimately unacceptable to both peoples and their political representatives. When the history of the 21st century is written, it will begin with the Asian financial crisis of 1998, which created global financial conditions that created the age of debt and triggered a structural shift to a new form of social capitalism
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understand this and instead a focus on what most investors call ‘the fundamentals’ that led so many people to lose so much money in the Asian financial crisis. These fundamentals are all derived from analysis of the operations, likely profitability and balance sheets of individual companies. The reasoning goes that a company’s
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For all but the exceptional investor, some consideration of macro factors proved to be essential in assessing the future returns from financial assets. In the Asian financial crisis one learned quickly which macro factors counted and which didn’t. Too late for many, the focus shifted from the ‘miracle’ of high economic
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dominant cultural misconception. A key precept behind the Asian economic miracle was a belief that it was founded on something called Asian values. What the Asian financial crisis revealed was that the Asian values foreign investors believed underpinned the Asian economic miracle were very different from the Asian values perceived by Asians themselves
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impact that was having, directly and indirectly, on the outlook for economic growth and financial stability. If I didn’t know it already, the Asian financial crisis taught me that equity investors need to be very aware of what is happening in credit markets and particularly foreign currency borrowing by the local
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negative direct economic, social and political consequences from this age of debt will likely plague the global outlook for at least another generation. How the Asian financial crisis established the foundations for this new age of debt relates to the policy choices of the Asian authorities that were a direct consequence of the
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It was the perfect storm for the financialisaton of the global economy that brought riches to the few and deep uncertainty to the many. The Asian financial crisis taught many lessons to investors, peoples and policy makers who confused a credit bubble with an economic miracle. It is the greatest of ironies that
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of the developed world. How very different societies and financial systems coped with that inflow, and then its outflow, is the story of the Asian financial crisis. When foreign investors allocated capital to Asian equity markets they did not do so based upon the best opportunities for returns; instead they had to
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in there being a contraction in the supply of money below the potential growth rate. The story of how the Asian economic miracle became the Asian financial crisis is how the managed exchange rates forced many Asian countries from monetary and economic feast to famine. The problem for most of Southeast Asia
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the reality of such a huge change in the monetary system for which investors were entirely unprepared. How the Asian economic miracle turned into the Asian financial crisis was primarily related to how those capital flows slowed and then stopped coming. Working for a stockbroking company in Asia from 1995 to 1998, I
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towards the end of 1996. What I could not have foreseen in June 1995 was that those problems would be big enough to create an Asian financial crisis and, through the political responses to that crisis, change the world of finance for a generation. High quality and low valuations: everyday low prices
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basis was something that I never considered. Rather than warn of the dangers of too much debt and financial engineering, the policy reactions to the Asian financial crisis set up the perfect environment for the asset traders and their financiers to ply their trade on an even grander scale. The “whirlpool of
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The huge amounts of foreign currency debt issued by Asian banks and non-financial corporations was the greatest revelation for almost all investors during the Asian financial crisis. That it came as such a shock was remarkable. There was macro data available for foreign investors on the level of foreign currency debt outstanding
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ideals had chosen a mechanism to enact them that continues to act to destroy them. There were key lessons for politicians to learn from the Asian financial crisis, but they were ignored in Europe and the consequence was a series of financial crises that continue to create a dangerous political backlash that
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usually by fixing the price of something, actually create the uncertainty for the investor that repels capital. The administrative measures that were implemented during the Asian financial crisis acted more to repel than attract capital. This was a major problem when the stability of the exchange rates, given the large current account deficits
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also a dangerous one. The unlisted private sector is a key part of the economy and trends in that sector are always important. In the Asian financial crisis, tracking trends in the unlisted corporate sector was particularly important. In the form of capitalism that then existed, particularly in Southeast Asia, the families
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Korea 7 34 Singapore 6 25 India 3 60 China 0 200 Macau 0 1 Vietnam 0 4 Asia’s economic miracle turned into the Asian financial crisis of 1997–98. In that crisis, many people lost large percentages of their wealth and some lost all of it. However, economic growth did
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of Asia Baa3 −72% Almost all investors are trained to look for bargains when share prices fall precipitously. Even at the earliest stages of the Asian financial crisis, precipitous falls had already occurred. It proved to still be a very bad time to buy equities in general, and bank equities in particular. These
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committed to save the shareholders who were made to take the risk, having taken some substantial rewards of the ownership of equity capital. Throughout the Asian financial crisis there were significant amounts of wishful thinking, probably because detailed analysis to establish value was so difficult. Much of what passed for analysis was trying
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be a blessing in disguise as the company did not find itself holding a dangerous inventory of securities with the attendant credit risk when the Asian financial crisis broke out. However, the company always had ambitions to increase its primary issuance business and decided that it would be good for the research
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February 1998, US$230bn of public funds were mobilised to provide capital for the banking system. The Japanese banking crisis was not caused by the Asian financial crisis, but the growing realisation that the banks would also face major losses on their Asian loan books accelerated the country’s own banking crisis.
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of last week represent revulsion in the absence of banking distress. A study of financial history proved to be very useful to investors during the Asian financial crisis. While some investors thought that something like this had never happened before, others picked up their financial history books. Kindelberger’s classic, Manias, Panics &
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the combined wealth of the four richest men in China exceeded the entire market capitalisation of the Chinese A Share Index in January 1998. The Asian financial crisis represented a hiatus in wealth creation in the region and in particular in China. Availability bias meant that investors in 1998 were focused on that
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continues during that period. Between 23 December 1997 and 12 January 1998, the baht, peso, won and ringgit all reached their lows for the Asian financial crisis. The IMF’s arrival had reduced the prospects of a resort to the monetary printing press and default on foreign currency obligations as the likely
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their US dollar liabilities. The ability to persuade or cajole the bankers into such action was one of the most important actions that prevented this Asian financial crisis from spreading to become a global financial crisis. This turning of the tide of these key capital flows met an incoming flood of new
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exchange rate, this allowed South Korea to also export deflation. The social capital system, with its prevalence to overproduction, did not just survive the Asian financial crisis, but was bolstered by the accelerated entry into the global trading regime of China. What we did not know in 1998 was just how China
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politically dangerous the consequences of such adaptation would become. That the social capital system of North Asia did not collapse or significantly reform in the Asian financial crisis has played a crucial role in dampening inflation and depressing interest rates in the rest of the world. The result was that the other form
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that adaptation produced social changes and financial fragilities that would one day be dangerously exposed. There have been a series of deflationary episodes post the Asian financial crisis which have brought the developed world to the edge of financial collapse and resulted in very material losses for equity investors. Outside of the United
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is delayed due to the flirtation with monetary profligacy and the institutional inertia of implementing the correct legislation. It is a key lesson from the Asian financial crisis for portfolio investors that exchange rates can stabilise in a crisis long before equity prices. I had written in January 1998 that the Asian exchange
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prospect of a run to banknotes from deposits, but often the sums guaranteed are small and local business owners are not reassured. When the Asian financial crisis erupted only South Korea and the Philippines had comprehensive bank deposit guarantee schemes in place. Had there been greater confidence in the deposit as a
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ring, sometimes for years, after the price of equities had bottomed. That markets are amoral is often forgotten and, as we have discovered since the Asian financial crisis, a fact that has major political ramifications. One hundred years after Fashoda 28 July 1998, Regional The scramble for Africa bewildered everyone, from the humblest
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bankers would work. Global policy makers, fearing a global financial collapse, would now act aggressively to reflate the global economy as the ramifications from the Asian financial crisis were increasingly threatening the stability of their own financial systems. Mr Schmidt goes to Singapore 7 August 1998, Global In spite of their high rhetoric
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7 arrived, but of course it did arrive and once again credit flowed freely throughout Asia. Credit officers received some very potent signals during the Asian financial crisis that they were not to forget. That the IMF, supported by developed world governments, could help to reduce their losses in offshore foreign currency lending
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LTCM, but more importantly the interest rate cuts that followed soon after, changed the world. The new financial architecture, which was the legacy of the Asian financial crisis, meant that cheap credit would be abundant as Asia’s booming foreign exchange reserves and lower export prices depressed developed world inflation and interest rates
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That debt boom was a direct consequence of choices made by politicians in response to, and in the aftermath of, the Asian financial crisis. Asia’s massive accumulation of foreign currency reserves The Asian financial crisis built the foundations for the age of debt in myriad ways. Most importantly, it convinced emerging market policy makers, particularly
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level of US$21bn. Reserves had grown strongly since the devaluation and, much to many people’s surprise, had continued to rise through the Asian financial crisis; but evidently the buffer to protect China from a collapse that could subject the country to external diktat was considered too low. From the end
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Cambodia 1 19 Pakistan 1 13 Sri Lanka 2 7 The growth in the foreign reserves of Asia ex China from the end of the Asian financial crisis to the end of 2019 has been US$3,205bn. While Japan has led that rise in reserves, the emerging markets of Asia have
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the initial investment, the vast bulk of it relates to the exchange rate intervention that has been the cornerstone of Asian economic policy after the Asian financial crisis. It was those policy choices, made unilaterally and without the agreement of any of those countries’ trading and business partners, that fuelled the age
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again. The mental scarring among central bankers runs deep and it manifests itself as a fear of deflation from whatever source it comes. From the Asian financial crisis onwards, the world’s central banks, led by the US Federal Reserve, fought a battle to prevent deflation. That much of that deflation came
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more favourable conditions to promote financial engineering and to establish the age of debt. That the new financial architecture created from the fires of the Asian financial crisis led to the age of debt is clear if we look at the counterfactual. What would have happened had Asia, including China, moved to
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to all. Progress was not in a straight line and not overnight, but gradually fewer states pursued mercantilist policies. The key legacy of the Asian financial crisis is that Asian nations did consider that the wealth of their nations could only be secured by the mercantilist policy perhaps still best summed up
by Kenneth Rogoff · 27 Feb 2025 · 330pp · 127,791 words
though China had held on to its fixed exchange rate, the country had experienced a raft of bankruptcies from the late 1980s up to the Asian financial crisis, particularly after China unified its exchange rate regime in 1994, stripping out trade subsidies and controls that had propped up some firms. Although the IMF
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’s Bank of China entitled “Management of Short-Term Capital Movements and Capital Account Liberalization.” The topic might not sound terribly sexy, but after the Asian financial crisis of 1997–1998, which brought Thailand, Indonesia, and Korea to their knees, understanding international capital flows was a very big deal to Asian policymakers. In
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first stint at the IMF. Crockett’s questions were very diplomatic and included many compliments on how China had managed to navigate the 1997–1998 Asian financial crisis and maintain such consistent, strong growth for so many years. Zhu spoke excellent English but mostly answered through a translator, no doubt to be completely
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rocket fuel that helped propel Vladimir Putin to power. Other epoch-defining fixed exchange rate crises include the 1994 Mexican peso crisis, the 1997–1998 Asian financial crisis (which hit Thailand, Indonesia, and Korea among others), the 1999 Brazilian crisis, and the 2002 Argentine crisis. In the European debt crisis of 2010–2012
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get out despite the controls. Evidently that was wrong. In 1999, I engaged in a debate/discussion with George Soros on the lessons from the Asian financial crisis, hosted by the London School of Economics; the audience consisted of faculty and students, as well as a couple of other prominent financiers and researchers
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would say “yes” or “mostly.” Instead, Soros grimaced and shook his head from side to side. There is much more to be said about the Asian financial crisis (or as the Asian countries call it, “the IMF crisis”), but for our purposes it is enough to know that exchange rates were at the
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, the Hong Kong dollar can be taken down by a sufficiently intense attack. But the first few waves of speculators will get slaughtered.” During the Asian financial crisis, the Hong Kong dollar did in fact come under attack, which forced the Hong Kong Monetary Authority, Hong Kong’s central bank, to raise interest
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the dollar. For now, Beijing evidently believes that Hong Kong is still far more useful to China if it keeps the dollar peg. After the Asian financial crisis of 1997–1998, fixed exchange rate regimes, notably including Russia’s and Brazil’s, continued to collapse. Russia’s economy in the 1990s was in
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U.S. Dollar Spot Exchange Rate” (series: DEXTHUS), FRED (Federal Reserve Bank of St. Louis). 3. Bijan Aghevli, “Asian Crisis: Causes and Remedies,” in The Asian Financial Crisis: Origins, Implications, and Solutions, ed. William Hunter, George Kaufman, and Thomas Krueger (Boston: Springer US, 1999): 157–166. 4. Currency conversions and per capita GDP
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. IMF Independent Evaluation Office, The IMF and Recent Capital Account Crises: Indonesia, Korea, Brazil (Washington, D.C.: International Monetary Fund, 2003). 7. The 1997–1998 Asian financial crisis occurred well before my time at the IMF. 8. Exchange rates (series: DEXMAUS and FXRATEPHA618NUPN), FRED (Federal Reserve Bank of St. Louis). 9. Western press
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financial crisis (2002), 118, 148–52 hyperinflation in, 127, 183 World Economic Outlook Press Conference, 151 artificial intelligence, 259–60, 261 Asian Development Bank, 66 Asian financial crisis (1997–1998), 74, 118, 134–44, 156 Australia, 169, 322 n.9 Austria, 50, 299 n.6 Aziz, Zeti Akhta (Governor, Central Bank of Malaysia
by Quinn Slobodian · 16 Mar 2018 · 451pp · 142,662 words
. The policies associated with neoliberalism had been challenged—at least rhetorically—for two decades. An early expression of doubt came from Joseph Stiglitz after the Asian financial crisis of 1997.9 World Bank chief economist from 1997 to 2000 and winner of the Nobel Memorial Prize in Economics, Stiglitz became a vocal critic
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Aron, Raymond, 78 Art, of GATT and WTO buildings, 240, 281, 282, 283, 284 Ashbrook, John M., 169 Asia, 42, 64, 126, 147, 152, 197; Asian Financial Crisis, 3 Atavism, 202, 286; social justice as, 281 Atlantic City, New Jersey, 35 Atlantic Community, 156, 184 Attlee, Clement, 139 Augustine, Saint, 268 Austerity, 25
by Louisa Lim · 19 Apr 2022
warily into their new reality. The immediate post-handover period was, politically speaking, staid and reassuring, a period of apparent stasis broken only by the Asian financial crisis and the SARS outbreak. It was only later that it would prove to be a mirage of calm, and that the cost of inaction would
by Byrne Hobart and Tobias Huber · 29 Oct 2024 · 292pp · 106,826 words
, even when the economy underlying them gets better. The Korean won, for example, has never reached the level at which it traded before the 1997 Asian financial crisis. Many countries that go through a financial crisis have to reboot their monetary system entirely. Brazil’s real, introduced in 1994, was initially valued at
by Mervyn King · 3 Mar 2016 · 464pp · 139,088 words
large holdings of dollars as insurance in case their banking system ran short of foreign currency, as happened to Korea and other countries in the Asian financial crisis of the 1990s. In most of the advanced economies of the West, it was the desire to spend that gained the upper hand, as reflected
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for the evolution of the European Union need to reflect that fact. Such issues are a microcosm of broader challenges to the global order. The Asian financial crisis of the 1990s, when Thailand, South Korea and Indonesia borrowed tens of billions of dollars from western countries through the IMF to support their banks
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–15, 117–19, 250–1, 254–5; pawnbroker for all seasons (PFAS) approach, 270–81, 288, 368 Ardant, Henri, 219 Arrow, Kenneth, 79–80, 295 Asian financial crisis (1990s), 28, 349, 350 Asian Infrastructure Investment Bank, 349–50 Australia, 74, 259, 275, 348 Austria, 340, 341 Austro-Hungarian Empire, 216 Bagehot, Walter, 212
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, 48, 183–5, 291, 312, 322–3, 335–6, 337 International Monetary Fund (IMF), 25, 190–1, 216, 229, 230, 339, 340, 352, 353; and Asian financial crisis (1990s), 349, 350–1; and Bretton Woods system, 21; membership of, 188, 212, 214–15; and sovereign debt restructuring, 346–7; and troika in European
by Andrew W. Lo · 3 Apr 2017 · 733pp · 179,391 words
to take advantage of the opportunities detected by those models.28 These key adaptations kept LTCM extremely profitable well into 1997, the year of the Asian financial crisis. It seemed that not even a financial crisis that wracked a continent could give this juggernaut a bad year. You probably remember what happened next
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–293, 362 Aristotle, 16–17 Armstrong, Neil, 12–13 Arthur, W. Brian, 218 artificial intelligence, 4, 101, 131–133, 181, 182 artificial selection, 142–143 Asian financial crisis (1997), 241 asset allocation, 249, 253, 255, 282 asset-backed securities (ABSs), 298 Asteroidea, 192 auditory pathway, 80–81 auditory thalamus, 81 Austin, J. L
by Mitch Feierstein · 2 Feb 2012 · 393pp · 115,263 words
has acted like some senior court advisor to the Emperor of Planet Ponzi. The 1987 stock market crash, my liege? I’ll pump in liquidity. Asian financial crisis, sire? I’ll flood the place with dollars. A major hedge fund, LTCM, has gone bust, your majesty? I’ll organize a bailout. Dotcom bubble
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too much debt and bet the proceeds with too little thought for what might happen if things didn’t turn out as expected. When the Asian financial crisis was followed by a Russian one, LTCM found that its ‘safe’ bets had turned sour on a colossal scale. Given the scale of leverage at
by Martin Wolf · 24 Nov 2015 · 524pp · 143,993 words
is just one, albeit particularly important, sign of these fundamentally hopeful developments. Yet much has also gone wrong. During the 1990s, and particularly during the Asian financial crisis of 1997–98, I became concerned that the liberalization of the 1980s and 1990s had brought forth a monster: a financial sector able to devour
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would recover. This used to happen in the nineteenth century. It has happened, more recently, in small open economies, such as Hong Kong after the Asian financial crisis and the Baltic states after the crises that began in in 2007. This is, in effect, the old gold-standard mechanism. If, however, the authorities
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, notably the Latin American debt crisis of the 1980s, the ‘Tequila crisis’ in Mexico and then other Latin American countries in the mid-1990s, the Asian financial crisis of 1997–98, and the crises in Russia (1998), Brazil (1998–99) and Argentina (2000–01). But emerging countries suffered far fewer banking crises in
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process, they have assumed a currency mismatch: foreign-currency debt against domestic-currency assets. These borrowers are speculating on their domestic currencies. Students of the Asian financial crisis of 1997–98 will find this disturbingly familiar. Once funding conditions turn, such trades may become lethal. As the Fed proceeds with tightening, the dollar
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bond yields more than index-linked yields, as one would expect. So what explains the periods noted above? July 1997 marked the beginning of the Asian financial crisis, the last and most significant of a succession of large financial crises in emerging economies. August 2007 marked the beginning of the global financial crisis
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decade after the Asian crisis, peaking shortly before the global financial crisis (see Figure 32). Growth of the Global Imbalances Between 1996, just before the Asian financial crisis, and 2006, these imbalances increased roughly five times relative to world output. Three categories of large net capital exporters emerged: China and emerging Asia; ageing
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the Global Imbalances To understand how the global imbalances emerged, let us start with what drove the countries that shifted into surplus. Immediately after the Asian financial crisis of 1997–98, investment fell by about 10 per cent of gross domestic product in the crisis-hit countries – Indonesia, Malaysia, the Philippines, South Korea
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– for an asset abroad. The second was pursuit of export-led economic growth – the most successful of all development strategies.23 The outcome of the Asian financial crisis was to increase the incentive to pursue this strategy, particularly by the Asians themselves. The third was supporting a high-investment, high-profit, high-savings
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reasons why demand in the high-income countries had to be supported by aggressive monetary policy and an ultimately unsustainable credit boom, particularly after the Asian financial crisis and the collapse of the stock-market bubble of the late-1990s. The argument for secular stagnation made by Lawrence Summers is that demand has
by Philippe Legrain · 22 Apr 2014 · 497pp · 150,205 words
predicted ten of the last three recessions. It often fails to warn (or warns too late) about big crises: the IMF missed the 1997–8 Asian financial crisis; the IMF, ECB and the European Commission were all blindsided by the current financial crisis and its eurozone offshoot. Even when risks are correctly identified
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by Lonely Planet
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