Asian Financial Crisis: The Movie

Walden Bello | 04.01.1998

Food First Backgrounder, Spring 1998, Vol. 5, No. 1

After seeing Steven Spielberg’s syrupy tribute to Yankee patriotism, Saving Private Ryan, I told myself that surely I could manage something better on the Asian financial crisis. Anyway, here’s the screenplay for a movie tentatively titled Asian Financial Crisis—Heroes, Villains, and Accomplices. First of all, there are no heroes. The Japanese could have played the role of knight in shining armor nearly a year ago, when they had the chance to reverse the descent into depression via the proposed Asian Monetary Fund (AMF)—a mechanism capitalized to the tune of $100 billion that was designed to defend the region’s currencies from speculative attacks. In typical fashion, they shelved their proposal when Washington opposed it. Though the AMF is now resurrected as the Miyazawa Plan that would give the troubled Asian economies $30 billion in financial aid, it is too little and too late.

Villain of the Piece: Crony Capitalists or Foreign Speculative Investors?

On the other hand, there are a number of candidates for the role of principal villain. Taking the cue from the Western press, one might begin with the practices and institutions that are usually presented to the public as the villains of the piece—aside from Prime Minister Mohamad Mahathir of Malaysia, who has become the U.S. media’s favorite whipping boy—at the same time, it must be noted that they are in the process of elevating Philippine actorPresident Joseph Estrada to the status of Asia’s new hero.

One might begin by quoting the person that has come to be the chief screenwriter of one version of the crisis, U.S. Treasury Secretary Robert Rubin. In assigning the blame for the financial crisis, Mr. Rubin assigned pride of place to lack of information on the part of investors. In a speech he gave at the Brookings Institution in April 1998, Rubin said:

There are obstacles to getting good information about economic and financial matters. One is the temptation in the private sector and in government to avoid disclosing problems. But sooner or later, as we have seen in Asia, the problems will make themselves known. In many cases, lack of data meant that no one had a true understanding of this build-up or of these economies vulnerabilities.

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