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Crisis, reform and recovery

The Asian financial crisis of 1997-98 shook the foundations of the global economy and what began as a localised currency crisis soon engulfed the entire Asian region. This book explores what went wrong and how did the Asian economies long considered 'miracles' respond, among other things. The combined effects of growing unemployment, rising inflation, and the absence of a meaningful social safety-net system, pushed large numbers of displaced workers and their families into poverty. Resolving Thailand's notorious non-performing loans problem will depend on the fortunes of the country's real economy, and on the success of Thai Asset Management Corporation (TAMC). Under International Monetary Fund's (IMF) oversight, the Indonesian government has also taken steps to deal with the massive debt problem. After Indonesian Debt Restructuring Agency's (INDRA) failure, the Indonesian government passed the Company Bankruptcy and Debt Restructuring and/or Rehabilitation Act to facilitate reorganization of illiquid, but financially viable companies. Economic reforms in Korea were started by Kim Dae-Jung. the partial convertibility of the Renminbi (RMB), not being heavy burdened with short-term debt liabilities, and rapid foreign trade explains China's remarkable immunity to the "Asian flu". The proposed sovereign debt restructuring mechanism (SDRM) (modeled on corporate bankruptcy law) would allow countries to seek legal protection from creditors that stand in the way of restructuring, and in exchange debtors would have to negotiate with their creditors in good faith.

Editors: Michael Holmes and Knut Roder

The financial crisis that erupted on both sides of the Atlantic in 2007–8 initially seemed to offer new political and economic opportunities to the left. As financial institutions collapsed, traditional left-wing issues were apparently back on the agenda. There was the prospect of a return to a more regulated economy, there was widespread state intervention to try to salvage failing banks, and it led to increased scrutiny of the wages and bonuses at the upper end of the scale. However, instead of being a trigger for a resurgence of the left, and despite a surge of support for new parties like SYRIZA and Podemos, in many European countries left-wing parties have suffered electoral defeat. At the same time, the crisis has led to austerity programmes being implemented across Europe, causing further erosion of the welfare state and pushing many into poverty. This timely book examines this crucial period for the left in Europe from a number of perspectives and addresses key questions including: How did political parties from the left respond to the crisis both programmatically and politically? What does the crisis mean for the relationship between the left and European integration? What does the crisis mean for socialism as an economic, political and social project? This collection focuses on a comparison between ten EU member states, and considers a range of different party families of the left, from social democracy through green left to radical left.

Latvian cross-ideological consensus on the future of the EU. As a result, three central arguments will be presented in the context of the financial crisis and the left. First, Latvian politics saw a self-induced relabelling of some parties from ethnic issues to social democratic ones. Second, some social democratic politicians and their policies were incorporated into government. Third, economic social democracy became a part of catch-all programmes of Latvian political parties. For the purposes of this chapter, Latvia's left could be grouped as

in The European left and the financial crisis
Why China survived the financial crisis

The Asian financial crisis 5 The domino that did not fall: why China survived the financial crisis When the financial crisis unexpectedly hit the high-performing East and Southeast Asian economies in mid-1997, it was widely believed that the People’s Republic of China (PRC) would be the next domino to fall. China’s extensive intra-regional trade and investment linkages with the rest of Asia, and the fact that the Chinese economy suffers from many of the same debilitating structural problems that long plagued (and ultimately did incalculable damage) to the

in The Asian financial crisis
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Crisis, reform and recovery

The Asian financial crisis 4 Korea: crisis, reform and recovery We don’t know whether we would go bankrupt tomorrow or the day after tomorrow. I can’t sleep since I was briefed. I am totally flabbergasted . . . This is the bottom. It’s a matter of one month, no, even one day. I just can’t understand how the situation came to this (President-elect Kim Dae-Jung, December 23, 1997).1 In the 1950s, Korea was among the poorest countries in the world, with a per capita income of under US$100. In per capita terms, this placed the country below Haiti, Ethiopia, Peru

in The Asian financial crisis
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The evolving international financial architecture

The Asian financial crisis 6 Beyond the Asian crisis: the evolving international financial architecture We face a world of crisis. If Hong Kong, with its sound fundamentals and prudent financial management, can be brought to the brink of systemic breakdown by aggressive cross-border speculation, then something must be wrong with the world financial order (Joseph Yam, chief executive of the Hong Kong Monetary Authority, January 5, 1999).1 Shortly after the Mexican peso crisis, the G-7 countries launched an effort to strengthen the international financial system

in The Asian financial crisis
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Crisis, reform and recovery

The Asian financial crisis 2 Thailand: crisis, reform and recovery During the period of economic growth, we were too complacent. In good times we forgot many important truths and neglected many important tasks; we opened up our economy, but our stated plans to pursue discipline were not followed up; we attracted massive flows of cheap foreign capital, which we did not always spend or invest with enough prudence . . . we did not examine the fundamentals of our politics and governance or tackle issues such as bureaucratic inefficiency, lack of transparency and lack

in The Asian financial crisis
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Post-crisis Asia – economic recovery, September 11, 2001 and the challenges ahead

The Asian financial crisis 7 Conclusion: post-crisis Asia – economic recovery, September 11, 2001 and the challenges ahead To the extent that Asia is recovering, no one can claim the credit. The amazing thing to me – if you leave Indonesia out – is how similar the performances are, regardless of the policies. Korea took the IMF’s advice and it’s bouncing back. Thailand took the IMF’s advice and it’s starting to come back. Malaysia defied the IMF and did everything the IMF told it not to – it’s coming back fast. Everybody’s contemplating success for their

in The Asian financial crisis
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Issues, debates and an overview of the crisis

Introduction: issues, debates and overview 1 Introduction: issues, debates and an overview of the crisis In his celebrated Manias, Panics and Crashes, Charles Kindleberger (1978) predicted a historical average of at least one financial crisis per decade. Yet, in Gerard Caprio’s (1997, 79) memorable phrase, the 1990s have been a period of boom in busts. A financial crisis every twenty-four months – beginning in 1992–93 with the speculative attacks against several currencies in the Exchange Rate Mechanism (ERM) of the European Monetary System, followed by the

in The Asian financial crisis
The demise of PASOK and the rise of SYRIZA

Introduction This chapter examines the Greek left through the deep financial crisis from 2008. The crisis in Greece was one of the deepest in the EU and led to arguably the strongest political earthquake in Greek history. The outcome of this political, economic and social crisis brought a radical left party, SYRIZA, from the margins of the political system to government, while consigning the social democrats of PASOK (Panhellenic Socialist Movement) to a catastrophic defeat. The chapter begins with a brief historical

in The European left and the financial crisis