Essay east asian crisis

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East Asian financial crisis are an evidence of fact that economies are prone to fianacial pressures in spite of a stable sustainable growth rate. The East Asian economic crisis is the most important economic event in the region of the past few decades. That much is agreed. Beyond this, there is yet no unanimity about its root causes nor about the solutions. The differences of views are being debated in academic and policy circles and reflected in the media. One thing though is certain: the earlier optimistic expectation that it would last only some months has proved wrong. Instead the financial crisis has been transformed into a full-blown recession or depression.
Moreover the threat of depreciation has spread from a few countries to
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In an attempt to blame the crisis solely on the affected countries, intellectual "flip-flops" were made. Features that had been toasted as strengths were overnight concerted into evils. For example, the countries had been praised (indeed, over-praised) for having strong linkages between the public and private sectors. Today, that is totally condemned as the fatal flaw of crony capitalism. As an alternative to mainly blaming the countries, there rapidly developed another view of how the crisis emerged and spread. This view put the blame on the developments of the global financial system, with the combination of the following features:
•     Financial deregulation and liberalisation across the world (as the legal basis);
•     The increasing interconnection of markets and speed of transactions through computer technology (as the technological basis); and
•     The development of large institutional financial players (such as the speculative hedge funds, the investment banks, and the huge mutual and pension funds).

This combination has led to the rapid shifting of large blocks of short-term capital flowing across borders in search of quick and high returns, to the tune of US$2 trillion a day.
Only one to two percent is accounted for by foreign exchange transactions relating to trade and foreign direct investment. The remainder is for speculation or short-term investments

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