Asian Financial Crisis Essays - Stock Market Crashes, World Economy

Asian Financial Crisis Have you ever been in a situation where you were low cash and in debt? Well, I know I have. I remember one time when I had used up all of my money for the month, and owed, at the same time, my sister ten dollars. Boy, that was pure hell. You can't buy anything, and you feel like you have no control over anything. Well, imagine an entire continent in a financial rut. That is what is currently going on in Asia. This dilemma is known as the Asian Financial Crisis. Now, what exactly is the Asian Financial Crisis? Well, it is the current imbalance of Asia's economy. While some areas are doing great, most areas are poor and economically unstable . Currency value has gone down drastically, the stock market is at an all time low, and people all over the continent are fearing for their futures. The United Nations definitely should get involved in this crisis. They should have been more involved in international loaning, which would have helped, if not prevented the debt Asia is in now. They also should have made sure that the currency rate stayed stable the second the stock market began to drop. Perhaps, if the UN was more involved in Asia's economic affairs this crisis would not be in this state of mishap. (There were many things that caused the Asian Financial Crisis. One of them would have to be overseas borrowing. It is very important to understand that if the country is borrowing from the rest of the earth its foreign debt will grow over time. Thus, flows (items on income and cash flow statements) translate into changes in stocks (balance sheet items, like family fortune, the stock of capital, government debt, and net foreign debt). So, in the end, Asian countries borrowed too much, and were careful too little. Companies in the worst-hit countries, South Korea, Indonesia and Thailand, borrowed boundless sums of money as their economies boomed. T Even worse, they borrowed much of it in US dollars because interest rates were much lower than on their own currencies. The exchange rates of local currencies were pegged against the dollar, so they had no fears about having to earn money in local currency to pay back loans in dollars.hey didn't realize at the time what a mess they were getting themselves into. Another thing to keep in mind when you try to figure out what caused the crisis was the fact the Asian economic strategy was very unorganized. See, their economy was based on trust, not organization and rules. The people who bought and borrowed and sold and lent were all "friends". That meant they could trust that their "friend" would not disobey disserve them. It meant that they could trust what was going on around them was right. It meant that they didn't have to have special rules and laws to make sure that their customers acted morally. So, think about what happened when the old manager died, and some new guy came in--Uh oh. Chaos alert! ) website: http://1208.921.80/hotasia.htm AND website: http://www.worldcom.nl/ni/issues/asia.htm AND (All these things I just told you about triggered the stock market to flop. People, when they get scared the market is about to drop, flea and quickly sell all of their stock. So, when people started to finally realize that what was going on was bad, they made it even worse by selling their stock causing the stock market to plunge even lower. So, all in all, a lot of not so good things were going around Asia and caused financial chaos in the Asian countries. Although the crisis was and is a continental issue, it effected each country differently. If the UN were to interfere with this issue, they would need to understand the problem from all different angles. Each country needs a certain from of help.) website: http://208.240.92.80/adjustmt.htm (One of the countries that was greatly effected by the crisis was Japan. Until the nineties, the Japanese economy had been expanding rapidly and was doing unusually well. Then, all of a sudden, in 1990, there was a substantial drop in the stock market, and in real estate. In various ways Japan is both the cause and the soltion of the crisis on hand here. Especially because Japan remains the economic locomotive of the region. It ihas by far the largest economy. It was until recently a 4 trillion dollar economy. That is just mammoth compared to any other power. So the rest of the region