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How Many Remember E Asia Crisis

The most active area of the global econ was being transnationally restructured and substantataially weakened evev as ‘hot money’ boomed in [only to rush out not so much later and help w/stockmarket keynsieismn in los estatdos unindos plus a bit of yen carry through swaps]

Point? Most all ‘financial crises’ originate in the real economy yrt brcome most evident in the finanancial where, through credit, they act back upom the real’

Shin Gyoung-hee
Only ten months before the crash in South Korea mainstream economic commentators and analysts were still admiring South Korea’s economy. Jeoffrey Sachs at Harvard University, adviser to the IMF and most famous preacher of free market economics, argued in South Korea’s most influential bosses’ paper, ‘Since the economic structure of Korea is fundamentally different from that of Mexico, there is no possibility of recurrence of the situation that happened to Mexico’.1 Paul Samuelson said, ‘Most economic specialists [including himself] predict that this year’s growth rates of East Asian economies will be higher again than are expected’.2 As for the IMF, it could see ‘no problem in Korea’s economy in light of macroeconomic indexes such as international payments, growth rate, prices, and so on’.3

ut right after the bankruptcy of Hanbo chaebol (conglomerate), some pro-capitalist media commentators suddenly began to see the problems. The Financial Times on 4 February 1997 indicated that ‘Korean banks are in financial difficulties because of the insolvent obligation which is estimated to be some 8 percent of the total credit and because of fall in stock prices’.4 And Business Week on 24 February 1997 also warned of the weakness of Asian banks. According to the New York Times, South Korean capitalists themselves began to have ‘a sense of total crisis because of the slowing economic growth rate, declining stock market, decreasing currency value of the won, increasing trade deficit, and cumulative bad bonds of financial institutions’.5 =================

Until the late 1980s the average rate of net profit of South Korea’s manufacturing industry was higher than that of Japan’s, the US’s and Europe’s. But it has tended to fall during the three decades since industrialisation started in 1963. See the table and graph below: AVERAGE RATE OF NET PROFIT OF MANUFACTURING INDUSTRY South Korea Japan US Europe1963-1971 39.7 48.2 28.4 16.41972-1980 27.7 22.9 17.4 12.71981-1990 16.9 14.4* 12.6* 13.4*

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