The East Asian Financial Crisis

Abstract

The Asian financial meltdown, when it reached front-page proportions in late 1997, was rightly called the most serious of any we have had since the 1930s. A mountain of paper assets—estimated at more than a trillion dollars—was swept aside. Subsequently there was substantial recovery in some of the region's markets and investors sorted out specific strengths and weaknesses, differentiating among national economies . There have also been new frights caused by basic weaknesses in China and Japan. This paper considers the East Asian financial crisis as reflecting two familiar patterns. The first is the crisis tendencies of unregulated capitalist markets in which speculative excess is part of the very nature of the system. The second is the way such crises are the opportunity for stronger capitalists to profit from the problems of those unable to withstand the downturn.

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