BACK TO MAIN  |  ONLINE BOOKSTORE  |  HOW TO ORDER

The Economic Meltdown Becomes Global

AS international financial markets continue to tumble and national economies slip into recession, the fear of a global meltdown has begun to haunt people everywhere. Analysts commenting on the phenomenon have drawn parallels with the Great Depression of the 1930s. Clearly, what began as a financial crisis in East Asia in July 1997 has now developed into a full-blown global economic crisis. Recent developments in Japan and Russia helped to extend the crisis. It was the recent overlapping effects of the Japanese and Russian crises that have been a major cause of the recent worsening in the global economic situation. The intensification of the crisis has dramatically exposed the vulnerability of the international financial system to short-term capital flows and the policies of financial deregulation and financial liberalization being pushed by the West through the IMF, World Bank and the WTO.

As the waves of the financial crisis begin to pound upon the centres of world finance, there has been some belated recognition of the dangers posed by short-term capital flows. There has even been talk of developing a new architecture for the global financial system. However, for all this, the G7 leading industrialized nations and the IMF have made it abundantly clear that no fundamental change in the international system is being envisaged. In these circumstances, countries afflicted by the financial crisis have been forced to take their own measures to protect their economy. In a dramatic move in September 1998, Malaysia instituted capital controls. Malaysia has not been alone in bucking the market. The authorities in Hong Kong and Taiwan have also recently taken an active role in the financial market and instituted measures to curb and isolate speculators. It remains to be seen whether such state intervention represents a new paradigm which will challenge the prevailing free-market dogma.

 


BACK TO MAIN  |  ONLINE BOOKSTORE  |  HOW TO ORDER