05-02-2008, 11:14 AM
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>The Fall of the Dragon</b>
By Ashish Puntambekar
EXCERPT:
What has the western world to gain by allowing this global financial crisis to develop? If they really wanted to, they could have easily tightened lending regulations to ensure that the subprime problem did not happen in the first place. Anyone who has any experience with government knows that this statement is true.
It therefore appears that the forces of globalization will be unleashed only when the strategic drivers behind the current market conditions allow the market to drop to a point where the prize would be big enough to put together a comprehensive rescue package to revive the world economy.
The South East Asian currency crisis of 1997-98 gives us some indication of where we are headed. The crisis started out as a property market bubble in the beginning, and we saw the price of Dubai crude going below $ 10 per barrel. Asset prices also crashed and there was huge unemployment. Finally, the situation was retrieved, but only when the West & Japan went in with huge amounts of money to buy cheap assets in South East Asia. The recovery came, but outsiders ended up controlling a substantial portion of the economy in the ASEAN region.
This time around, the triad countries (the US, EU and Japan) have a lot to gain by letting the subprime problem get so big, that it creates a global systemic problem in the markets which needs policy intervention at the highest levels in the Government. But the money bags will not come in and mount a rescue attempt till. China is taken out.<!--QuoteEnd--><!--QuoteEEnd-->
By Ashish Puntambekar
EXCERPT:
What has the western world to gain by allowing this global financial crisis to develop? If they really wanted to, they could have easily tightened lending regulations to ensure that the subprime problem did not happen in the first place. Anyone who has any experience with government knows that this statement is true.
It therefore appears that the forces of globalization will be unleashed only when the strategic drivers behind the current market conditions allow the market to drop to a point where the prize would be big enough to put together a comprehensive rescue package to revive the world economy.
The South East Asian currency crisis of 1997-98 gives us some indication of where we are headed. The crisis started out as a property market bubble in the beginning, and we saw the price of Dubai crude going below $ 10 per barrel. Asset prices also crashed and there was huge unemployment. Finally, the situation was retrieved, but only when the West & Japan went in with huge amounts of money to buy cheap assets in South East Asia. The recovery came, but outsiders ended up controlling a substantial portion of the economy in the ASEAN region.
This time around, the triad countries (the US, EU and Japan) have a lot to gain by letting the subprime problem get so big, that it creates a global systemic problem in the markets which needs policy intervention at the highest levels in the Government. But the money bags will not come in and mount a rescue attempt till. China is taken out.<!--QuoteEnd--><!--QuoteEEnd-->