September 17, 2008

Comparing 2008 to 1997/98 Asian Financial Crises

Link: Abroad, Bailout Is Seen as a Free Market Detour - NYTimes.com.

In parts of Asia, the bailouts stirred bitter memories of the different approach the United States and the International Monetary Fund adopted during the economic crises there a decade ago.

When the I.M.F. pledged $20 billion to help South Korea survive the Asian financial crisis of the late 1990s, one of the conditions it imposed was that the Korean government allow ailing banks and other companies to collapse rather than bail them out, recalled Yung Chul Park, a professor of economics at Korea University in Seoul, who was deeply involved in the negotiations with the I.M.F.

While Mr. Park says the current crisis is different — it is global rather than limited to one region — “Washington is following a different script this time.”

“I understand why they do it,” he added. “But they’ve lost credibility to some extent in pushing for opening up overseas markets to foreign competition and liberalizing economies.”

Posted by Anupam Chander on September 17, 2008 at 10:02 PM in International Finance | Permalink