MIM 513Pacific Rim Economies

Class Three – Collapse in Asia

Collapse in Asia-What do we know?• 1998 IMF had to loan over $100B• Players:

– South Korea, Thailand, Indonesia, Philippines & Malaysia– Brazil & India– World Bank, IMF, Japan & USA

• Currency devaluation and deflation due to overseas borrowing and real estate bubble.

• IMF tactics – Americanize or no $$$• Causes?

– Japan raising rates causing a sell off of other currency– The 5 countries borrowed at low rates to expand– Japan-like strategy of governance in particular industries– Trade deficits

Questions

• Causes?– Japan raising rates causing a sell off of other currency– The 5 countries borrowed at low rates to expand– Japan-like strategy of governance in particular industries– Trade deficits

• What did Wolf, Thurow, Stiglitz, Sachs, & Cooper think?• Regulation or free market?• Dialectic effects?• Emotion or IMF policies?