Here’s a lesson from the 1997 stock crash: don’t panic

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Fact and opinion lesson plan

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On the surface, conditions seem ripe for a repeat of the sell-off two decades ago. But there are some big differences between then and what we are witnessing today. A financial contagion from Wall Street spreads across the Pacific to hammer Asian markets. Regional stocks plummet from Shanghai to Singapore. That was pretty much the story I wrote for The Washington Post in October ofwhen the New York Stock Exchange plunged more than 7 per cent and trading was briefly suspended.

But the essential elements would read pretty much the same for what we saw happening this past week. Regional stocks once again seem in free-fall. And, on the surface, the culprit once again is New York, and the bad news from Wall Street which invariably infects Asian market confidence. But there are big differences between the big October sell-off and what we may be witnessing today. The collapse was precipitated by a full-blown regional economic crisis that began with the collapse of the Thai baht at the beginning of July in Thailand, South Korea and Indonesia all saw their currencies collapse against the dollar, sparking a wave of corporate bankruptcies and unemployment spiralling overnight.

Wall Street was initially immune to the problems across the Pacific, but investors eventually fact and opinion lesson plan spooked. Ordinary people were buying and selling new condos like it was the back room of a Macau casino.

That crisis 21 years ago started in Asia and spread to the US. In Asia, the fundamentals are far stronger — and it is uncertainty in America that is infecting Asian markets. The Asian countries largely learned their lesson from the crisis. They cleaned up their banking system — scores of banks with too many bad loans were forced to close down, fact and opinion lesson plan.

Regulatory oversight was improved. More fact and opinion lesson plan, Asian countries that saw their currencies ravaged by speculators learned a lesson about stockpiling foreign exchange to prevent speculative attacks. They began amassing US dollar holdings. And this from the Republican Party that pledged to bring fiscal sanity to Washington.

There are also good signs from the US — wages rising, corporate profits up, fact and opinion lesson plan, unemployment hitting new lows. But in fact and opinion lesson plan reverse irony, good news means the Federal Reserve may raise interest rates to counter inflation.

As the markets continue their volatile up-and-down slide — and at the moment, mostly sliding down — we need to recall one other lesson from the past. Two years after the collapse, all the regional stock markets were hitting new highs. Hong Kong was up 40 per cent, Indonesia was up 64 per cent and South Korea was up 75 per cent. In fact, the financial markets were doing so well in that the warning then was that the countries would start becoming too complacent.

Markets may be overdue for a correction. Investors may be in for a wild ride. But countries should emerge from the carnage even stronger. That happened in Asia after But there are some big differences between then and what are synthroid and euthyrox compatible are witnessing today By Keith B. Traders at the Tokyo Stock Exchange in Wall Street tumbles again.

Opinion Quick Take Keith B. Newsletter Sign-up Asian insights and analysis direct to your inbox. Related topics China Briefing. How will Asia fare?


Fact and opinion lesson plan