The Global Meltdown: What To Do Next

What caused the Asian financial crisis? Right after it ignited in Thailand in July, 1997, the Asian economies were seen as the culprit, particularly by Western investors who suffered huge losses in Thailand, Korea, and Indonesia. In a remarkable about-face, many of the world's most sophisticated financial institutions and market pundits who had hailed the Asian economic miracle began complaining about Asian crony capitalism. Never mind that per-capita income soared seven times in Hong Kong and South Korea and 4 1/2 times in Malaysia, Thailand, and Indonesia during the previous 30 years--an unprecedented accomplishment in economic history. Never mind that these countries had followed textbook models of economic development, with balanced budgets, conservative monetary policy, high savings, and market liberalization.

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