FREE ESSAY ON FINANCIAL CRISIS IN ASIA

FINANCIAL CRISIS IN ASIA

Have you ever been in a situation where you were low cash and in debt? Well, I know I
have. I remember one time when
I had used up all of my money for the month, and owed, at the same time, my sister ten
dollars. Boy, that was pure hell. You can't
buy anything, and you feel like you have no control over anything. Well, imagine an
entire continent in a financial rut. That is what
is currently going on in Asia. This dilemma is known as the Asian Financial Crisis.
Now, what exactly is the Asian Financial Crisis? Well, it is the current imbalance of
Asia's economy. While some areas are
doing great, most areas are poor and economically unstable . Currency value has gone down
drastically, the stock market is at an
all time low, and people all over the continent are fearing for their futures. 
The United Nations definitely should get involved in this crisis. They should have been
more involved in international
loaning, which would have helped, if not prevented the debt Asia is in now. They also
should have made sure that the currency
rate stayed stable the second the stock market began to drop. Perhaps, if the UN was more
involved in Asia's economic affairs this
crisis would not be in this state of mishap.
(There were many things that caused the Asian Financial Crisis. One of them would have to
be overseas borrowing. It is
very important to understand that if the country is borrowing from the rest of the earth
its foreign debt will grow over time. Thus,
flows (items on income and cash flow statements) translate into changes in stocks
(balance sheet items, like family fortune, the
stock of capital, government debt, and net foreign debt). So, in the end, Asian countries
borrowed too much, and were careful too
little. Companies in the worst-hit countries, South Korea, Indonesia and Thailand,
borrowed boundless sums of money as their
economies boomed. T Even worse, they borrowed much of it in US dollars because interest
rates were much lower than on their
own currencies. The exchange rates of local currencies were pegged against the dollar, so
they had no fears about having to earn
money in local currency to pay back loans in dollars.hey didn't realize at the time what
a mess they were getting themselves into.
Another thing to keep in mind when you try to figure out what caused the crisis was the
fact the Asian economic
strategy was very unorganized. See, their economy was based on trust, not organization
and rules. The people who bought and
borrowed and sold and lent were all "friends". That meant they could trust that their
"friend" would not disobey disserve them. It
meant that they could trust what was going on around them was right. It meant that they
didn't have to have special rules and
laws to make sure that their customers acted morally. So, think about what happened when
the old manager died, and some new
guy came in--Uh oh. Chaos alert! ) website: http://1208.921.80/hotasia.htm AND website:
http://www.worldcom.nl/ni/issues/asia.htm AND 
(All these things I just told you about triggered the stock market to flop. People, when
they get scared the market is
about to drop, flea and quickly sell all of their stock. So, when people started to
finally realize that what was going on was bad, they
made it even worse by selling their stock causing the stock market to plunge even lower.
So, all in all, a lot of not so good things
were going around Asia and caused financial chaos in the Asian countries. 
Although the crisis was and is a continental issue, it effected each country differently.
If the UN were to interfere with
this issue, they would need to understand the problem from all different angles. Each
country needs a certain from of help.)
website: http://208.240.92.80/adjustmt.htm
(One of the countries that was greatly effected by the crisis was Japan. Until the
nineties, the Japanese economy had
been expanding rapidly and was doing unusually well. Then, all of a sudden, in 1990,
there was a substantial drop in the stock
market, and in real estate. 
In various ways Japan is both the cause and the soltion of the crisis on hand here.
Especially because Japan remains
the economic locomotive of the region. It ihas by far the largest economy. It was until
recently a 4 trillion dollar economy. That is
just mammoth compared to any other power. So the rest of the region suffers as a result
of Japan is not maturing . 
Japan really hasn't been developing at any sort of a rate in the past 10 years. It's had
times when it's got up to 3% but
generally it's sloped back. Now it's in a difficult possition, in effect of the rapid
recession, with growth down to 0.5% or 1.0%. 
Japan's stock and bond markets are artificially held up - even though prices have come
down - by the government
through the government buying its own bonds, so people's savings are invested in the
government's own corruption. It also buys
the stock markets so that those savings are invested in companies that don't make any
profits and haven't for years. That means
that a lot of money that's saved by the Japanese public, usually through the post office,
disappears into the pockets of companies
and local government and other areas which are bankrupt corporations of the state. 
Also, they bank debts which have built up by loaning both to Asia and the rest of the
world over years. Japanese banks
have lent this money randomly. They did not make any obvious effort to make sure the
money eventually got returned to them.)
website: http://www.megastories.com/seasia/japan/japan.htm
The reason for that is that they haven't supplied any of the necessary reforms to turn
Japan around. Perhaps here the
UN could help the Jappanise government create these reforms. They could buy the
government stocks, instead of the actual
government so it would not have to be artifically help up. Perhaps after the UN gives the
stockmarket that little push it needs, real
investors will start buying the bonds and stocks. This will get the stockmarket of Japan
back on track again. 
(Another country to look at is Hong Kong. Hong has stayed- while everyone else has
devalued - in a situation where it
cannot support its currency rate against the US dollar. So, the peope of Hong Kong end up
not being able to pay for all their daily
needs for the price of things have zoomed. As the Chinese economy is shrinking so
extravagantly that it's destroying itself, all
possibilities for trade and investment in and out of China, (which are primary for Hong
Kong) are dismissed.
The economic problems that Hong Kong are currently dealing with are obviously associated
to the Asian financial crisis
because the breakdown of expansion across the region has left Hong Kong on its own. Hong
Kong is deteriorating as an economy.
) website: http://www.megastories.com/seasia/hongkong/hongkong2.htm
The solution to Hong Kongs main problem is obvious. Fix China!! China is the main reason,
in my opinion, that Hong
Kong is having these problems. They are loosing all sights of trade and such with the two
countries, and that is pretty much what
the economy of Hong Kong depends on. So, as soon as the UN helps China, Hong Kong will be
well on its way to recovery.
(Now, you need ot keep close in mind that the countries of Asia are not the only ones
being effected by this terrifing
crisis. there are massive layoffs are occurring in the US, as a result of tthe Asian
financial crisis. People all over are seeing
the ugly face of the Asian financil crisis. Here is an exserpt from a website and e-zine
that helps people in the US find jobs:
"Well, wouldn't you know it. I started this series a few weeks ago, telling you how great
the job market is, then the Asian Financial
Crisis rears its ugly head. Despite the shortage of technical workers and a robust US
economy, spotty to massive layoffs are
occurring in vulnerable industries. Semiconductor, computer and manufacturing companies
are among the most affected. Some
forecasters say that the worst is yet to come. Before you accept a job, you'd be wise to
find out if the company is in one of the
vulnerable industries!" This is just one more effect of this disastrous crisis.)
website:
http://jobsearchtech.miningco.com/library/weekly/aa070698.htm?terms=asian+financial+crisis+AND+new&COB=home
(Now we've seen actual countries and the state they are in, but we shouldn't forget how
the people of Asia feel about
what is going on. Believe me, they are not interested in what is going on. No, they are
worried. Worried beyond belief. Including the
US people, they are fearing that the crisis will effect the US stock market. I read an
article the other day where a reporter was
interviewing some university students in Asia. They spoke about there fears of not being
able to continue there education and not
being able to find work after graduating. Now is that a way to live? In fear of loosing
everything you live for because the
government could not take control over the economy well enough? I don't think so! It is
time to do something about it! ) "Will
Asia Hurt U.S. Investors?" by Michael Griffis, Dateline: 11/17/97 
(There are many views on what exactly to do about it. Secretary of State, Madeline
Albright, has her opinion on the
matter. The financial crisis, she said, is not something that is just specific to Asia
where it began but is a global financial problem
and has to be dealt with not just by the United States but by the other industrialized
countries working with other countries in the
world. She said the steps for recovery are not just American but suitable to free market
economies moving into the 21st Century.
Other people have different types of ideas....the decision of Prime Minister Mahatir
Mohamad to fire and then arrest his Deputy
Prime Minister, who also served as his Finance Minister, is another desperate way of
trying to solve this crisis. Robert E. Rubin,
announced that "In the face of this challenge, our first too is clear: to help stabilize
the immediate crisis." Yet, what most find so
unclear is how to actually perform that task, and that is what needs to be done as soon
as possible. Well, looking back, we see that
there are countries that were deeply effected, and countries that weren't that badly
effected by the crisis. We learned that Some of
the causes for the crisis were too much over seas borrowing, the stock market and
unorganization. We have successfully thought
up different ways to solve the problem. But, what if the United Nations had gotten
involved? What would have been different then?)
website: http://www.ft.com/asia/
Well, I definitely think the UN should have gotten involved. Perhaps the International
Bank for Reconstruction and 
Development (AKA the word bank) and the International Monetary Fund (the IMF) could have
stepped in.After all, the World Bank
is there to provide some leadership in international economic thinking, and we should
have been doing better than others. They
should have been there when the first signs of economic failure were shown and they
should have made sure the currency rate
stayed steady. Then they should have guided the Asian countries on how to increase their
GNP. They would have to increase their
value of work and the value and quantity of their goods. Maybe even enough actually be
worth the price it ended up costing
because of inflation and the rise currency rate. 
Or perhaps they should have paid more attention to international borrowing. They should
of made sure these countries
only borrowed so much. They should have took more of an interest in the economic affairs
of these countries, and made it a point
to make them stop borrowing more than they can pay back in a matter of, oh lets say, 5
years (at the rate they were going at the
time.). Perhaps, then, we would, will and could have a stable economy in Asia, the
largest continent in the world.