Southeast Asia and Global Financial Crises SHIJIA WU Econ 5430

Outline Introduction Asian economic miracle Asian and Southeast financial crisis Hong Kong's financial crisis Thailand’s financial crisis Global Financial crisis Conclusion

Introduction Financial Crises The financial crisis of 2007–2008, also known as the global financial crisis and the 2008 financial crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s.

Asian economic Mircale Four Asian Tigers. The Four Asian Tigers or Asian Dragons are the highly developed economies of Hong Kong, Singapore, South Korea and Taiwan. These regions were the first newly industrialized countries. They are known because they had very high growth rates (they became rich very fast) and fast industrialization between the early 1960s and 1990s. 

Asian and Southeast Asian financial crisis The Asian financial crisis was a period of financial crisis that gripped much of East Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion.

Asian and Southeast Asian financial Crisis The Crisis most affected countries: Indonesia, South Korea, Thailand, Lao, Philippines and Malaysia. The Crisis less affected countries: India, Singapore, Taiwan and Vietnam.

Hong Kong's financial crisis Hong Kong's stock index falls 10.4% after it raises bank lending rates to 300% to fend off speculative attacks on the Hong Kong dollar. The plunge on the Hong Kong Stock Exchange wipes $29.3 billion off the value of stock shares. Asia's largest private investment bank, the Hong Kong-based Peregrine Investments, files for liquidation. The company is left badly exposed from its loan investments in Indonesia. Stock Market become volatile. In October the Hang Seng Index dropped 23%.

Thailand’s financial crisis From 1985 to 1996, Thailand's economy grew at an average of over 9% per year, the highest economic growth rate of any country at the time. Inflation was kept reasonably low within a range of 3.4–5.7%. On 14 May and 15 May 1997, the Thai baht was hit by massive speculative attacks. On 30 June 1997, Prime Minister Chavalit Yongchaiyudh said that he would not devalue the baht. However, Thailand lacked the foreign reserves to support the USD–Baht currency peg, and the Thai government was eventually forced to float the Baht, on 2 July 1997, allowing the value of the Baht to be set by the currency market. This caused a chain reaction of events, eventually culminating into a region-wide crisis.

Global Financial Crisis The 2008 financial crisis was the worst economic disaster since the Great Depression of 1929. It occurred despite aggressive efforts by the Federal Reserve and Treasury Department to prevent the U.S. banking system from collapsing. It led to the Great Recession. That's when housing prices fell 31.8 percent, more than during the Depression. Two years after the recession ended, unemployment was still above 9 percent.

Conclusion Compare the Southeast financial crisis with the Global financial crisis 1. The cause of the two crisis are different 2. Causing the consequence of the financial crisis market are different 3. The direct cause of the two crisis and root cause are different 4. The financial crisis has shrunk the assets of the injured country are same 5. The financial crisis has brought the social order of the injured country into chaos. 6. The financial crisis made the state power no longer stable.