Os Cangaceiros
26th May 2012, 01:09
I recently started reading the aforementioned book, and it's pretty interesting, especially in light of recent events. It's a book by a husband-wife team of journalists who lived and travelled extensively in Asia, in which they essentially argue that the focal point for major developments in the world would become Asia (and not just China).
But I think the most interesting thing about the book is their discussion of the 1997 Asian financial crisis, which they write about extensively throughout. I think it's fascinating to read a book published in the early 2000's about a major financial crisis, in light of recent events in the last four years in the USA and Europe. A couple excerpts:
In the ensuing months, the aftershocks from Thailand's devaluation whipsawed around the region and became what is known as the Asian contagion, toppling corporate empires, shutting down plants, folding companies, and breaking up families...How can it be, as the economist David Hale once said with knowing exaggeration, that "a real-estate crisis in Bangkok set in motion something that has no parallel in human history."
Rubin and Summers at first believed that they were facing an isolated economic slowdown in Thailand alone. They felt that the best medicine was an IMF-led bailout based on fresh funds and tough conditions: austerity, high interest rates, and a repair job on the Thai banking system.
The American-backed IMF policy of harsh measures produced a steady weakening of Thailand's economy. Washington's unwillingness to contribute funds, Japan's failure to contribute for fear of offending Washington, the harsh IMF conditions, the buckling of the banking sector-all of these eroded confidence and the economy itself. The baht [currency of Thailand] fell even lower, as investors scurried to convert their baht into the safe haven of dollars, and this forced central bankers to raise interest rates to bolster their weakening currency. These higher interest rates then bankrupted even healthy businesses, eroded confidence in the baht itself, and sent Thailand's economy into a vicious downward spiral.
But I think the most interesting thing about the book is their discussion of the 1997 Asian financial crisis, which they write about extensively throughout. I think it's fascinating to read a book published in the early 2000's about a major financial crisis, in light of recent events in the last four years in the USA and Europe. A couple excerpts:
In the ensuing months, the aftershocks from Thailand's devaluation whipsawed around the region and became what is known as the Asian contagion, toppling corporate empires, shutting down plants, folding companies, and breaking up families...How can it be, as the economist David Hale once said with knowing exaggeration, that "a real-estate crisis in Bangkok set in motion something that has no parallel in human history."
Rubin and Summers at first believed that they were facing an isolated economic slowdown in Thailand alone. They felt that the best medicine was an IMF-led bailout based on fresh funds and tough conditions: austerity, high interest rates, and a repair job on the Thai banking system.
The American-backed IMF policy of harsh measures produced a steady weakening of Thailand's economy. Washington's unwillingness to contribute funds, Japan's failure to contribute for fear of offending Washington, the harsh IMF conditions, the buckling of the banking sector-all of these eroded confidence and the economy itself. The baht [currency of Thailand] fell even lower, as investors scurried to convert their baht into the safe haven of dollars, and this forced central bankers to raise interest rates to bolster their weakening currency. These higher interest rates then bankrupted even healthy businesses, eroded confidence in the baht itself, and sent Thailand's economy into a vicious downward spiral.