Asian Contagion: The Causes and Consequences of a Financial Crisis

Asian Contagion: The Causes and Consequences of a Financial Crisis

Asian Contagion: The Causes and Consequences of a Financial Crisis

Asian Contagion: The Causes and Consequences of a Financial Crisis


For this volume, Karl D. Jackson has commissioned a group of leading experts on business and economic policymaking in Asia, in an effort to provide the most up-to-date overview available on the Asian downturn.


For me, this book is the tale of two rivers: New River in Fort Lauderdale, Florida, in the 1950s and the Chao Phraya in Bangkok in the mid-1990s. On January 8, 1994, I had spent the day exploring the ruins of Ayuthaya, the former capital city of Thailand fifty miles north of modern Bangkok. I was returning to bustling Bangkok by air conditioned boat along the Chao Phraya on that sunny Saturday, when I first sensed the advent of what would become known as the Asian financial collapse of 1997-1998.

I had grown up in Fort Lauderdale in the mid-1950s. At that time, white stone bridges were still connected to vacant residential plots that had become mangrove swamps again after the collapse of the real estate boom of the 1920s. the white bridges along the canals of "the Venice of America" were monuments to the real estate developers who had gone bust because they had planned luxurious residential developments for a marketplace that would not catch up with their dreams for another thirty years.

Two things impressed me during that afternoon boat trip between Ayuthaya and Bangkok in 1994. the first was the degree to which the urban sprawl of Bangkok had expanded far beyond the city I had known when I lived in Thailand during the late 1970s. in "the Venice of the Orient," canals had been paved over to accommodate ever-expanding vehicular traffic in the capital city of the world's most rapidly growing economy. Bangkok was growing rapidly upward, as well as outward, in an exploding urban sprawl. Second, during the leisurely trip down the river, I spied several new, luxurious -- and thoroughly empty -- thirty-story apartment buildings that had been built on the assumption that large numbers of wealthy buyers would rapidly be produced by the ever-increasing Thai prosperity. Thus, my first inkling of the coming collapse of Asian assets came from mingling the images of empty Bangkok buildings in the 1990s with memories of equally bold real estate developers of South Florida who had so woefully misjudged the marketplace of the 1920s.

On a subsequent trip to Bangkok, inkling became hypothesis. in the company of business colleague Rod Porter, I returned to Bangkok in September 1994. Representing a New York foreign exchange firm, we were attempting to interest Thai institutional investors and wealthy individuals in the firm's foreign exchange risk management services. the businessmen with whom we spoke were polite but non-committal. After all, the value of the baht would "never" change; hence, there was little risk to be reduced. My colleague's morning jog that Sunday morning passed numerous construction sites. Later, he hypothesized with me that there was no way the Bangkok market could absorb all of the modern offices and luxury . . .

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