An event that began in the summer
of 1997, with the decision of the Thailand government
to allow the value of the Thai baht
. It then promptly plummeted, causing a region-wide financial crisis
that shook markets as far as the New York Stock Exchange
Among the countries most affected by the financial crisis was Indonesia (leading to the removal of the dictator Suharto), Thailand and Korea.
There have been many explanations for the cause of the crisis, and they include:
Overspeculation of Asian currencies and the lack of government capital controls to stop it
Over-extension of lending credit by banks (similar to the Great Depression
Nepotism and favoritism in many Southeast Asian governments
Lack of democracy and expression of popular opinion
Shaky basis of economic development
The long term result of the crisis was that the myth of the economic invincibility of the Asian Tigers was forever shattered. Capitalism regained its position as the dominant economic thought in the world. The Asian model (which focused on state direction and government-directed development) was discredited.