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This is from a US congressional paper listing in detail the events and causes that led up to the 97 collapse in Indonesia (and the rest of Asia to, of course).

Chronology of the Asian Financial Crisis (97-98)

* Early May (1997) - Japan hints that it might raise interest rates to defend the yen. The threat never materializes, but it shifts the perceptions of global investors who begin to sell Southeast Asian currencies and sets off a tumble both in currencies and local stock markets.
* July 2 - After using $33 billion in foreign exchange, Thailand announces a managed float of the baht. The Philippines intervenes to defend its peso.
* July 18 - IMF approves an extension of credit to the Philippines of $1.1 billion.
* July 24 - Asian currencies fall dramatically. Malaysian Prime Minister Mahathir attacks "rogue speculators" and later points to financier George Soros.
* Aug. 13-14 - The Indonesian rupiah comes under severe pressure. Indonesia abolishes its system of managing its exchange rate through the use of a band.
* Aug. 20 - IMF announces $17.2 billion support package for Thailand with $3.9 billion from the IMF.
* Aug. 28 - Asian stock markets plunge. Manila is down 9.3%, Jakarta 4.5%.
* Sep. 4 - The peso, Malaysian ringgit, and rupiah continue to fall.
* Sep. 20 - Mahathir tells delegates to the IMF/World Bank annual conference in Hong Kong that currency trading is immoral and should be stopped.
* Sep. 21 - George Soros says, "Dr Mahathir is a menace to his own country."
* Oct. 8 - Rupiah hits a low; Indonesia says it will seek IMF assistance.
* Oct. 14 - Thailand announces a package to strengthen its financial sector.
* Oct. 20-23 - The Hong Kong dollar comes under speculative attack; Hong Kong aggressively defends its currency. The Hong Kong stock market drops, while Wall Street and other stock markets also take severe hits.
* Oct. 28+ - The value of the Korean won drops as investors sell Korean stocks.
* Nov. 5 - The IMF announces a stabilization package of about $40 billion for Indonesia. The United States pledges a standby credit of $3 billion.
* Nov. 3-24 - Japanese brokerage firm (Sanyo Securities), largest securities firm (Yamaichi Securities), and 10* largest bank (Hokkaido Takushoku) collapse.
* Nov. 21 - South Korea announces that it will seek IMF support.
* Nov 25 - At the APEC Summit, leaders of the 18 Asia Pacific economies endorse a framework to cope with financial crises.
* Dec 5 - Malaysia imposes tough reforms to reduce its balance of payments deficit.
* Dec 3 - Korea and IMF agree on $57 billion support package.
* Dec 18 - Koreans elect opposition leader Kim, Dae-jung as new President.
* Dec 25 - IMF and others provide $10 billion in loans to South Korea.
* Jan 6 - Indonesia unveils new budget that does not appear to meet IMF austerity conditions. Value of rupiah drops.
* Jan 8 - IMF and S. Korea agree to a 90-day rollover of short-term debt.
* Jan 12 - Peregrine Investments Holdings of Hong Kong collapses. Japan discloses that its banks carry about $580 billion in bad or questionable loans.
* Jan 15 - IMF and Indonesia sign an agreement strengthening economic reforms.
* Jan 29 - South Korea and 13 international banks agree to convert $24 billion in short-term debt, due in March 1998, into government-backed loans.
* Jan 31 - South Korea orders 10 of 14 ailing merchant banks to close.
* Feb 2- The sense of crisis in Asia ebbs. Stock markets continue recovery.

Here is the complete article for those that are so minded
http://www.fas.org/man/crs/crs-asia2.htm

I found some of the parallels with today quite sobering if you change some of the country names and leave out the IMF (where have they gotten to when you need them?)

Markit wrote:I found some of the parallels with today quite sobering if you change some of the country names and leave out the IMF (where have they gotten to when you need them?)

I don't see too much similarity between the two crises.

this crisis has nothing to do with the Asian crisis of 97.

Today's crisis finds its roots in people's greediness. Homeownership, the latest car, taking on a loan to pay for holidays in Dubai,... it's all gone.

The bankers are not to blame, the people and the governments are.

The first beneficiary of these excesses has been the state. How much money flew in the coffers during these unsustainable times?

The state, the biggest pimp around.

Alexandre wrote:The bankers are not to blame,

Can't agree with that. The bankers took the craziest risks with loans to insolvent people and businesses. Only to make as large a bonus for themselves as possible. They did this to an extant of them their selves not even knowing the risks the took wit selling and buying the most risky derivates. If there is one group to blame then it is the bankers.

Rien love that avatar but shouldn't it be headed downwards?

The blame game will be one of the more interesting parts of this whole disaster.

Whomsoever they interview now on who's to blame the interviewees always have more excuses than a convict about to hang on why they, personally, didn't have anything to do with it and anyway, they knew it was all going to happen years ago... If you believe that I've got a bridge to sell you in San Francisco

And for those that still don't see any similarities between then and now:

Markit wrote:July 24 - Asian currencies fall dramatically

They've done that already but more to come.

Markit wrote:Aug. 28 - Asian stock markets plunge. Manila is down 9.3%, Jakarta 4.5%.

They have fallen more than that in the last 2 days - lots more! Jakarta closed its stock market on Wednesday promising to open it today (Friday) but kept it closed when the rest of the world fell like a rock.

Markit wrote:Oct. 14 - Thailand announces a package to strengthen its financial sector

Thailand is deeply in trouble today both political and economical.

Markit wrote:* Oct. 20-23 - The Hong Kong dollar comes under speculative attack; Hong Kong aggressively defends its currency. The Hong Kong stock market drops, while Wall Street and other stock markets also take severe hits.

Europe down average of 9% today alone, matching falls in Asia and the US - more to come.

Markit wrote:* Nov 25 - At the APEC Summit, leaders of the 18 Asia Pacific economies endorse a framework to cope with financial crises.

The big 8 are meeting today in New York...

Markit wrote:Oct. 28+ - The value of the Korean won drops as investors sell Korean stocks.

Won has lost more value than ever before in the last few days - stocks are going to.

Markit wrote:Nov. 3-24 - Japanese brokerage firm (Sanyo Securities), largest securities firm (Yamaichi Securities), and 10* largest bank (Hokkaido Takushoku) collapse.

Japan's largest insurance company declared insolvency last night.

Most of the other points on the list cover offers of help from the IMF or western countries that is simply not happening this time around because the IMF effectively doesn't exist any more and the western countries that helped last time are deep in the sh*t themselves now.

Hold your breath and watch it from a safe, warm bar.

No markit, the situation during the Asian and the current crisis are very different. Before the Asian crisis „tiger countries” had accumulated huge dollar debts and held no reserves, leading to a currency crisis when the bubble burst. Currently Indonesia for example, has much lower leverage, has huge reserves and a strong banking system.
The Thai political crisis has been on for a while regardless the current financial turmoil. Despite your statement, Asian currencies have not depreciated dramatically (in fact, IDR gained against the EUR or AU$ for example). Stocks are falling of course, but this is the case in any crisis.

excerpts from an excellent article published in the Telegraph

It was the age of credulity. For a decade or more, Britain and America put their faith in a westernised version of a Melanesian cargo cult. It was as though millions of consumers expected to accumulate the riches of dreams through little more than positive thinking and negative saving.

With the aid of "sophisticated" finance – ie, unbridled borrowing – simple folk were able to mimic the lifestyles of higher orders in the hope of becoming like them. Those who proselytised for this hocus-pocus have much explaining to do.

They told us that the economic seasons had been banished in favour of an eternal summer of prosperity. In mistaking a mountain of debt for a mine of gold, they encouraged a reckless chase of unaffordable gratification.

Greediness and stupidity. Goodbye credulity, hello austerity.

vandor wrote:No markit, the situation during the Asian and the current crisis are very different. Before the Asian crisis „tiger countries” had accumulated huge dollar debts and held no reserves, leading to a currency crisis when the bubble burst. Currently Indonesia for example, has much lower leverage, has huge reserves and a strong banking system.
The Thai political crisis has been on for a while regardless the current financial turmoil. Despite your statement, Asian currencies have not depreciated dramatically (in fact, IDR gained against the EUR or AU$ for example). Stocks are falling of course, but this is the case in any crisis.

Definitively true. Rupiah has appreciated drastically against the euro recently and hit its highest point October the 6th this year when it went a little bit below 13000 rupiah per euro. It did not happen since October 2007. From mid July untill now, rupiah has appreciated almost 10% against euro, going from 14500 rupiah per euro to 13000 rupiah per euro. It is even more drastic if you compare with aussie money, which was close to 9000 (though under) for 1 AUD in mid July and is now barely IDR 6500 for AUD 1.
Thai money, though much more volatile than rupiah and more fragile toward speculations, follows the same trend. In July we were exchanging it at 53 baht for EUR 1 while it hit his record high for the year today at about THB 46 for EUR 1.
It would be then accurate to say that asian money are badly loosing their value.
Also, the situation as Vandor said is way different. The major indicators on Indonesian economy are fairly good and BI is using its monetary tools quite skillfully to maintain economic growth, support the rupiah and try to control inflation in an acceptable target.
Thus it is very different from KrisMon time, and I am not gonna run to the bank to get out my time deposits Not yet, at least

I think you are both right as far as you go but I would add the proviso that the Indonesian economy only seems to be going still well.

The government has left the stock market closed for 3 days and done its damnedest to support the rupiah by selling as many dollars as they could to support it.

I am afraid that come Monday morning, presuming that they do open the Indo stock markets again I think it may be a very different story since the dollar reserves will be running low too.

Not much any of us can do but grit your teeth, clamp your sphincter and hold on for the ride.

where was it published that they were selling their dollar reserves markit? just curious..

the idr is structurally fixed (not mechanically) to the usd because indonesia maintains the majority of it's reserves in usd.. it tends to maintain a trading range +/-5% of the 9100 mark.. sometimes a little more, rarely a little less.. the idr's recent appreciation against the euro, aud and other currencies (apart from the yen) is entirely correlated to the usd's recent strength - and it is because of the structure of the idr and the fact that their reserves are heavily usd weighted.. but, that's not to say in times of crisis, that it couldn't react outside of this model..

ct

BaliLife, your wish is my command:

http://www.hemscott.com/news/static/tfn ... 6086216302
http://www.mysinchew.com/node/17189
http://www.forbes.com/afxnewslimited/fe ... 16398.html

These were just some of the easiest to find - I've been reading about these sales throughout the last week to 10 days.

BaliLife wrote:the idr is structurally fixed (not mechanically) to the usd because indonesia maintains the majority of it's reserves in usd

Any country that ties its currency to the dollar is just asking for trouble - ask George Soros

If and when the Indo stock exchange opens on Monday I'm betting on a 15% fall right off which will have devastating effects on the currency.

Unless the G7 (8) come up with some magic on Sunday. But my hopes are not high, from what I've read so far they might as well give it to Sarah Palin to play with...

hi markit - there's a bug on the forum (i think it's still there) and only the second of your links is working, and in that i can't find any reference to BI selling USD.. again not suggesting it's not true, just am interested in reading the article.. can you post the links again - but don't let your browser auto-redirect for review of them - i think that's the fix..

one interesting thing also to remember when slamming the fundamentals of the USD is to remember that even with passage of the bailout plan - assuming that $700b was spent today, government debt is still only 60% of GDP - that brings the US roughly in line with france and germany.. Japan's government debt is however 180% of japan's GDP.. another thing, and the most fundamental thing i look to (which doesn't necessarily reflect in short term trends) is PPP - purchasing price parity.. most of the developed world currencies are quite overvalued against the USD... (see below).. what does this mean? it means that for example if you compare what you can buy in the US for $1.35 to what you can buy in europe for 1 euro, you'll get about 15% less in europe than what you would in the US..



the reasons of course why most of the developing world fixes their currency (structurally or mechanically) to the USD are:

a) the US is the largest economy in the world (i assume this excludes the combined eurozone) and as a result of some just and unjust foreign poilicies, the USD was established in the 20th century as the 'global' currency.
b) oil and other commodities trade in USD and not being pegged to such would create huge inflationary risk in volatile periods
c) developing countries generally try to keep their pegs constantly undervalued (compared to the USD - again see above) as this makes their exports cheaper to their primary markets.. if they pegged to other currencies and those currencies appreciated against the USD, their's too would appreciate, making their goods more expensive to their largest customers - the US market..

anyhow, would like to read those articles - i googled "BI sells USD" and "Indonesia sells USD" and other variations and got nothing..

cheers,

ct

“If and when the Indo stock exchange opens on Monday I'm betting on a 15% fall right off which will have devastating effects on the currency.”

JKSE results, Monday, October 13: Up 10.20 pts, + .70%

IDR close (to US dollar): 9,810

One of the few times I'm very, very glad to be wrong - enjoy Roy.

The week aint over though...