Part of Tokyo...
Financial Crisis
SECTION I: 1997 Asian Financial Crisis
How the global economy is resilient can be seen in the 1997 financial crisis in Asia.
In this crisis, Gross National Product of Thailand fell by 40%. Indonesia by 80%, and South Korea by 34%.
The "Asian flu" had also put pressure on the United States and Japan. Their markets did not collapse, but they were severely hit. On 27 October 1997, the Dow Jones industrial plunged 554 points or 7.2%, amid ongoing worries about the Asian economies. The New York Stock Exchange briefly suspended trading. The crisis led to a drop in consumer and spending confidence (see 27 October 1997 mini-crash). Indirect effects included the dot-com bubble, and years later the housing bubble and the Subprime mortgage crisis.
Japan was affected because its economy is prominent in the region. Asian countries usually run a trade deficit with Japan because the latter's economy was more than twice the size of the rest of Asia together; about 40% of Japan's exports go to Asia. The Japanese yen fell to 147 as mass selling began, but Japan was the world's largest holder of currency reserves at the time, so it was easily defended, and quickly bounced back. GDP real growth rate slowed dramatically in 1997, from 5% to 1.6% and even sank into recession in 1998, due to intense competition from cheapened rivals. The Asian financial crisis also led to more bankruptcies in Japan. In addition, with South Korea's devalued currency, and China's steady gains, many companies complained outright that they could not compete.[29]
Another longer-term result was the changing relationship between the U.S. and Japan, with the U.S. no longer openly supporting the highly artificial trade environment and exchange rates that governed economic relations between the two countries for almost five decades after World War.Though anti-Japanese Anglo Saxon media did not report, it was Japan that fixed this crisis by offering $30 billion to Asian countries hard hit by the crisis.
http://en.wikipedia.org/wiki/1997_Asian_financial_crisis#Asia
The Japanese Government provided about $13 billion to Japanese companies of various sizes operating in ASEAN to help them continue their business in the region. (http://www.jbic.go.jp/ja/special/international/001/index.html)
The crisis was mostly triggered by greedy transactions on Wall Street targeting South East Asian countries that had only a financial system not so matured and not so well managed.
As a side-effect of this crisis, for example, South Korea was put under control of IMF. As a result, even today, six of the seven major banks in South Korea are under majority control of foreign financial institutions. In those South Korean banks, 60 to 100% of shares are held mostly by American banks. The financial sector of South Korea is dominated by Anglo Saxon banks.
So, this crisis is an example of how selfish transactions on Wall Street trigger a crisis which results in more dominance of Wall Street.
It is important to compare the Greek Crisis with this 1997 crisis in Asia, since another Wall Street might be behind the current crisis in Europe.
And, remember that the reason why the U.S. supported South Korea so much in every international conference after 1997, as if praising its recovery from the crisis, is that the U.S. came to have control over the financial sector of South Korea. They share interest.
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In Japan, Prime Minister Mr. Noda has made it clear that he wants to raise a rate of consumption tax which is now 5%.
However, it is a rule of thumb in economics that increase in duty should be avoided when people are suffering from a big natural disaster. It is rather desirable to decrease tax in such a case.
It is also recommended not to raise a tax when deflation is going on according to a principle of economics. It is in inflation that tax increase is effective.
So, PM Mr. Noda looks foolish in driving his tax hike policy. But, it is well known that elite officials of Ministry of Finance are behind PM Mr. Noda. The Japanese Ministry of Finance does not regard it as important that payment by the Japanese government for interest of outstanding government bonds is as small as that in the U.S. They just focus on a fact that the total value of Japanese outstanding government bonds corresponds to 200% of its GDP.
Yet, 90% of the interest paid by the Japanese Government to bond holders is received by Japanese but not foreigners, while 40% of such payment by the U.S. Government is received by foreigners. This is a big difference or a special condition for the Japanese state debts.
Nonetheless, according to a poll, 60% of the Japanese citizens are willing to accept increase in a tax rate (if the government budget is used for recovery projects in areas hit by the 3/11 earthquake and tsunami in addition to the Fukushima Daiichi accident).
(to be continued...)
Mat 9:30 And their eyes were opened; and Jesus straitly charged them, saying, See that no man know it.