New Left Review 47, September-October 2007

MEREDITH JUNG-EN WOO

THE NEW EAST ASIA

When did the Asian Financial Crisis of 1997 actually begin? Most South Koreans will trace its origins to the stream of bad economic news that cast a pall over the otherwise crisp days of autumn 1997. The Thais will likely push it back a few months to the early summer, when currency traders could not sell Thai baht fast enough, putting unbearable pressure on the exchange rate. For Indonesians, the full impact of a crisis that would eventually roll back the economic gains of three decades was not felt until the early part of 1998. Others first sensed that something big and dreadful was afoot in July 1997, when the Prime Minister of Malaysia, Mahathir bin Mohamad, blamed the freefall of Southeast Asian currencies on a ‘worldwide Jewish conspiracy’, headed by George Soros. Conspiracy or no, the event is so indelibly etched in the collective memory of the region’s investors that when, in August 2007, the Dow Jones industrial average dropped 340 points amid fears of a liquidity crunch triggered by the tanking of the us sub-prime mortgage market, South Korea’s stock market suffered its biggest decline in five years as small investors fled in fear of another crash. Indonesia’s stock index also recorded a 7 per cent drop. The American market then quickly rebounded; the others did not. [1]

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