Asian Financial Crisis Essay Research Paper The — страница 3

Looking back, however, it is now understood that contagion was inevitable because of the interdependency of the Asian markets and the weaknesses in the Japanese economic system and financial structure (Goldstein, Lee, Wade, Woodall). The fact that the disease was not contained within Asia is a reflection of the globalization of the world financial systems and the flaws in the Japanese economy. The possibility of global a impact was evident around October 1997, when the Hong Kong stock market collapse sent shock waves through New York, London, and Japanese exchanges. Concrete evidence that the crisis had become global appeared in spring of 1998, when falling demand in Asia quickly caused a collapse in world commodity prices (Wood S2). Looking back, the Asian financial crisis was a

case study in global economic interdependence. The disease that spread throughout Thailand and the rest of Southeast Asia could not be quarantined within the affected Asian economies. While some say that a financially sound and economically strong Japan could have better absorbed the shocks and withheld the impact to Asia, the collapse of the Russian economy and the reverberations through US and European markets make a much stronger case for the inevitable situation that became a global crisis. We live in an era not only of super power states, but also super-empowered individuals, who can move their influence and capital across borders almost instantly. The economy of the future must be prepared to deal with these gigantic capital flows and the destabilizing effect they can have

on international macroeconomics. In addition to the need for global financial infrastructure, the Asian crisis can serve as a reminder that it is impossible to separate politics from economics. Secure financial systems can reduce the problems of corruption and “crony capitalism”, but they are unlikely to remove political influences from financial decision-making. The Asian financial crisis taught the global economy a lesson: careful analysis of creditworthiness is essential and in the future, both direct investors and lenders must conduct more careful assessment, and demand greater accountability.