Bloomberg
May 25, 2012
As Greece burns, European officials fiddle and Asia braces for another global crisis, my thoughts are on Thailand.
This summer marks the 15th anniversary of the baht devaluation that ignited one of history’s worst meltdowns. Thailand’s plunge ricocheted from Indonesia to South Korea to Malaysia before heading west. The pain went global with the Dow Jones Industrial Average plunging more than 500 points in a single trading day, hedge funds blowing up and giant bailouts becoming a norm.
Fifteen years on, the world finds itself upside down. In 1997, Asia sent contagion to the West; since 2008, Europe and the U.S. have returned the favor by sending turmoil eastward. Now, Europe is looking to deep-pocketed Asian nations for help. It should be doing something else: learning the lessons from Asia’s collapse and impressive revival.
Asia showed the world the danger of ill-timed austerity, denial and slavish devotion to conventional economic policies amid very unconventional circumstances. Why, then, is Europe resorting to a crisis-response toolbox that Asia clearly demonstrated doesn’t work?
Europe is still putting politics ahead of economics. In doing so, it’s missing two things Asians (MXAP) long ago accepted and internalized. One, the nature of the global financial system is shifting faster than summits and communiques can follow. Two, we live in a world without reliable economic engines.
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