Asia's Debt Crisis: Echoes of Bailouts Past So Far US Is Largely Untouched, but South Korea and Japan Struggle Een There! Done That!

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American economists see a bit of deja vu in Asia's financial crisis.

That's because banking problems behind the noise in the foreign financial markets remind them of home - specifically the three bouts of financial troubles in the 1980s and '90s. The United States weathered those banking crises, and analysts expect Asia to struggle through its present crisis with limited damage.

"There is nothing really new about the situation in Japan and Korea," says Harvard University economist Richard Cooper. "They have a banking system burdened with a lot of nonperforming loans" - loans that are not being serviced with payments of interest or principal. Federal Reserve Chairman Alan Greenspan and other US officials assure stock investors that the American economy is in good shape. So don't panic when Asian markets tumble. They also are working with the International Monetary Fund (IMF) to contain Asia's financial fires. Last Friday, South Korea became the latest nation to ask the IMF for help to restore confidence in its currency and financial system. It got $20 billion quickly. It is expected to need a rescue package exceeding $60 billion. At a summit last week of Asia-Pacific Economic Cooperation leaders in Vancouver that included President Clinton, the government ministers issued a declaration Saturday telling investors to maintain their confidence in the Asian region. So far, all is well in the US. The Dow Jones Industrial Average bounced back last Wednesday above where it stood before the Gray Monday plunge on Oct. 27. Asian currency devaluations have cut import prices for Americans, reducing US inflation. But Japan - which takes 12 percent of American exports - is in trouble. Korea's crisis adds modestly to its plight, hurting exports. And Yamaichi Securities, a big Japanese brokerage house, appears ready to close its doors tomorrow. Japan's revival from an extended slump depends on dealing adequately with bad loans stemming from the collapse in prices of stocks in 1989 and real estate in 1991. Japan's banks, struggling with those loans, are tight-fisted lenders. That slows the recovery. Last Monday, the Nikkei average of 225 leading shares surged almost 8 percent on news that Japan's 10th-largest commercial bank, Hokkaido Takushoku Bank, was being allowed to fail. It was seen as a sign the government is finally tackling the banking problem. In the next few days, the market went up or down depending on whether Prime Minister Ryutaro Hashimoto was reported to be considering using public funds to clean up the bad loan mess, or whether he was denying that possibility. "It tells me that the banking problem is more massive than I thought," says Chen Zhao, an economist at BCA China Analyst, a Montreal publication. South Korea, another major trader with the US, tried last Wednesday to prop up its currency, the won. It tripled to $10 billion a special fund to write off some of the $26 billion in bad loans held by banks. …