Word: asianized
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Though the plot is the same 10 years later, a different actor is playing the lead. In 1997, Asian countries sent ripples through the global financial system, beginning with Thailand's devaluation of the baht after a collapse of the nation's real estate bubble. In 2007, it is the U.S. and its subprime mortgage borrowers causing the greatest disturbance in credit markets in a decade. At the root of the turmoil is aggressive lending to American home buyers who previously were unable to obtain credit. Financial engineers pooled these loans together and sold off pieces representing different presumed levels...
...shadow of these giant alliance shifts, Southeast Asian nations, too, are scrambling. Vietnam, for one, is fortifying its outposts in the Spratly Islands and wooing its old enemy, the Pentagon. Singapore has become a de facto base for the U.S., and the Philippines has welcomed back American forces after booting them out in the early 1990s - mainly to fight local terror groups, but also possibly as a bulwark against China. Nations from Singapore to Malaysia have upgraded their submarine fleets, and Indonesia just signed a $1 billion weapons deal with Russia...
...forces intervene near its giant neighbor, as in East Timor in 1999. Worse, each step that major countries like Australia, Japan, the U.S. and India take toward an alliance only worries China more, sparking its fears of containment and prodding it to build its own links to Russia, Central Asian nations and Pakistan...
...memory of that image endured. Resolving never to relive such bitter experiences, Asian governments have since adopted fiscal, monetary and exchange-rate policies to sustain large trade surpluses. These policies create their own set of international and domestic problems, but they have also produced a situation in which Asian countries are now some of the largest creditors in the world, rather than the debtors they were back in 1997. This is one reason that many see Asia playing a role in the way out of the current financial mess. The massive trade surpluses of Asian countries have accumulated, in large...
...some time, given the lofty valuations of stocks and corporate bonds, have now begun to take the opportunity to add selectively to their portfolios. It is likely that market turbulence will continue to test the discernment and fortitude of investors. Whether and how quickly the large pools of Asian capital rise to the challenges and opportunities presented by the new environment will have an important influence on global financial markets in the weeks and months ahead...