> One reason may
> be that Wall Street is more pissed at the IMF than ever - partly, I hear,
> because most of the Asian debts are owed by private businesses rather than
> the public sector (unlike Latin America in the 1980s) - meaning that they
> don't have sovereign taxing power behind them. If the debtor units go under
> because of engineered depression, then it's bye-bye loans - they won't be
> able to hit up the education budget to get repaid.
And we all know how tenacious, smart and strategically flexible Asian businesses can be, judging by the high quality of the computer peripherals and industrial goods they're exporting by the bucketful to the US. Though Indonesia and Thailand are clearly being nailed to the cross of the T-bill (a.k.a. rentier gold), I still think South Korea is going to ameliorate the worst of the austerity drive -- not so much because of any newfound tolerance on the part of US banks for their Asian competitors, but because US banks don't really have that much leverage over Asia. The April 1998 issue of "The Banker" had an interesting chart on page 59, which summed up the exposure of Japanese, European and US banks to the various Asian countries, reproduced below (all figures in billions US$):
Country Total Japan France Germany UK EU USA China 57.9 18.7 7.3 7.3 6.9 28.1 2.9 Hong Kong 22.3 87.4 12.8 32.2 30.1 99.5 8.8 Indonesia 58.7 23.2 4.8 5.6 4.3 22.5 4.6 Malaysia 28.8 10.5 2.9 5.7 2 12.7 2.4 Philippines 14.1 2.1 1.7 2 1.1 6.8 2.8 Singapore 211.2 65 15.4 38.4 25.2 113.3 5.2 South Korea 103.4 23.7 10.1 10.8 6.1 36.3 10 Taiwan 25.2 3 5.2 3 3.2 14.4 2.5 Thailand 69.4 37.7 5.1 7.6 2.8 19.8 4
source: Bank of International Settlements
So Japan had 46% of the total exposure to Asia, but Europe as a whole had even more: 59.8% of the total! The US banks weighed in at a piddling 7.3%. Also interesting: the share of the German banks alone was 19.1%, bigger than the UK's share of 13.8%. Admittedly, the giant Brit banking firm HSBC, the Hong Kong and Shanghai Bank, though nominally headquartered in London, has its historical roots as a Hong Kong city bank: still, the Continental Europeans have moved into Asia bigtime, and are at least as important to the region as Japan. If Asia recovers, then the EU-Japan codominion will have passed its first major test: it will have flexed its muscles and shown that it can manage its neocolonies more efficiently than its American predescessor. Today Seoul, tomorrow Warsaw!
-- Dennis