Financial Crisis, Spreading and Containment: From Asia to Argentina

Author: (American) De Sardan
Publisher:
Publish Date: 2006-12-01
Features: This book provides a comprehensive and highly pertinent new description of the financial crisis that began with the collapse of the Thai baht in 1997 and shook East Asia and other parts of the world. By reviewing the experiences of the Asian "five crisis countries"—Indonesia, Malaysia, South Korea, the Philippines, and Thailand—during the crisis, Padma Desai argues that the region's rapid and somewhat reckless opening of capital flows was pushed forward by staunch advocates in the developed "center" regions of the global economy, including officials and private individuals. The crisis then erupted in these "peripheral" economies, with the Russian ruble teetering on the brink and Brazil ultimately not spared. This unjust center-periphery relationship also extended to the policy measures taken by crisis-stricken countries with the assistance of the International Monetary Fund, which exacerbated the economic downturn caused by panic-driven short-term capital outflows. Financial Crisis, Contagion, and Containment employs a comparative perspective, meticulously examining the origins and responses to the crisis by analyzing the experiences of countries in the region, from the most vibrant to the least vibrant. Why was the United States able to respond relatively successfully to the ups and downs of the economy? Why did Japan fall into policy "inertia"? Why was the European Central Bank unable to control inflation or achieve stable growth? How can emerging markets avoid market chaos caused by the free flow of speculative private capital from developed center regions? The book contains little technical content but offers profound and notable insights. Its timely appearance is particularly relevant, as Argentina's ongoing crisis has once again sparked debates about risk avoidance and response strategies for financial crises in emerging market economies.
This book provides a comprehensive and highly pertinent new description of the financial crisis that began with the collapse of the Thai baht in 1997 and shook East Asia and other parts of the world. By reviewing the experiences of the Asian "five crisis countries"—Indonesia, Malaysia, South Korea, the Philippines, and Thailand—during the crisis, Padma Desai argues that the region's rapid and somewhat reckless opening of capital flows was pushed forward by staunch advocates in the developed "center" regions of the global economy, including officials and private individuals. The crisis then erupted in these "peripheral" economies, with the Russian ruble teetering on the brink and Brazil ultimately not spared. This unjust center-periphery relationship also extended to the policy measures taken by crisis-stricken countries with the assistance of the International Monetary Fund, which exacerbated the economic downturn caused by panic-driven short-term capital outflows. Financial Crisis, Contagion, and Containment employs a comparative perspective, meticulously examining the origins and responses to the crisis by analyzing the experiences of countries in the region, from the most vibrant to the least vibrant. Why was the United States able to respond relatively successfully to the ups and downs of the economy? Why did Japan fall into policy "inertia"? Why was the European Central Bank unable to control inflation or achieve stable growth? How can emerging markets avoid market chaos caused by the free flow of speculative private capital from developed center regions? The book contains little technical content but offers profound and notable insights. Its timely appearance is particularly relevant, as Argentina's ongoing crisis has once again sparked debates about risk avoidance and response strategies for financial crises in emerging market economies.