East Asian Economy A large economic downturn in East Asia threatens to end its nearly 30-year run of high growth rates. The crisis has caused Asian currencies to fall 50-60%, stock markets to decline 40%, banks to close, and property values to drop. The crisis was brought on by currency devaluations, bad banking practices high foreign debt, loose government regulation, and corruption. Due to East Asias large impact on the world economy, the panic in Thailand, Indonesia, Korea, and other Asian countries has prompted other Countries to worry about the affect on their own economies and offer aid to the financially troubled nations (The Great Wave). The East Asian crisis has affected almost all of the Asian Nations, but the three hardest hit countries are Thailand, Indonesia, and South Korea. The panic began in Thailand in May of 1997 when speculators, worried about Thailands slowing economy, excessive debt, and political instability devalued the Baht (Thailand currency) as they fled for market-driven currencies like the American dollar. Indonesias economy soon fell soon after when the rupiah hit a record low against the U.S. dollar. Indonesia is plagued by more than $70 billion worth of bad debts and a corrupt and inefficient government. Thailand and Indonesia also suffer from being overbuilt during real estate booms that they were the result of huge influxes of cash by optimistic foreign investors. South Korea faltered under the weight of its huge foreign debt, decreasing exports, and weakening currency (Asian Fall). Other major countries touched by the crisis are Japan, China, Malaysia, and the Philippines. Japans economy is burdened by $300 billion in bad bank loans and a recession. Chinese banks may carry bad bank loans of up to $1 trillion. The banks lend 66% of Chinas investment capital to state-run industries that only produce 12% of Chinas industrial output. Malaysia and the Philippines are bo…
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