everything's really ok

Doug Henwood dhenwood at panix.com
Wed Oct 11 15:15:05 PDT 2000


Brad DeLong wrote:


>But the East Asian financial crisis was not the apocalypse. It was
>not the end of capitalism. It wasn't even the terminal crisis of the
>East Asian mode of development. Instead, it was a standard variety
>creditors' panic.
>
>It did set economic development back one year in South Korea, two
>years in Thailand and Malaysia, and (I hope) less than five years in
>Indonesia. It could have been much, much worse. It wasn't much much
>worse because Camdessus and Fischer brought a lot of money to the
>party and used it as Walter Bagehot said it should be used (even
>though they also made inappropriate recommendations on fiscal policy
>and bank regulatory policy at the same time)...

You could also argue that it wasn't worse because the underlying economies were much stronger - thanks to ignoring years of WB/IMF advice - and because they avoided following all the IMF wisdom.

I think your picture of Mexico's recovery is too sanguine - yeah, the GDP turned around, but real people's real lives haven't anywhere near as much.

And, what to do about this tendency of financial markets to throw whole regions of the world into panic and depression? It's not like they've done so much to finance development on the upside, either.

Doug



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