From Sovereign Man:
There is a delicious irony in the world of economic policy at the moment.
Back in 1997 and 1998, I had a ringside seat to the Asian financial crisis from my trading desk in Seoul. When everything collapsed, the policy prescriptions from the World Bank and IMF for Asia's sick economies was to:
1. HIKE interest rates
2. CUT government spending
3. Further deregulate, liberalize, and open their economies to foreign investment to attract capital
4. And let their zombie banks FAIL
Though they experienced brutal recessions after swallowing this tough medicine, the two countries which carried out these policies to the fullest extent: South Korea and Indonesia, are today among the most successful and dynamic economies in Asia... and the WORLD.
Since emerging from recession in 2000, Indonesia has enjoyed more than a decade of fast, uninterrupted economic growth. In fact, one emerging markets funds manager told me this week that Jakarta today is "far too modern" to interest him now. It has already "emerged."
South Korea also emerged bigger, better, and stronger from the crisis 14 years ago. On my last trip there in late 2010, ahead of the G20 meeting in Seoul, I was astounded at how far it had come since I'd last been there in 2003.
I remember having a chat with my cab driver and telling him it really looked to me as though South Korea had reached "developed country status." Becoming a "seon-jin-guk," as they call it in Korean, was always one of the burning desires of Korean politicians, bureaucrats, business people, and ordinary citizens alike.
My cabbie was far too modest and said, "No. We still have a long way to go," as he waved my Visa card in front of a payment gadget mounted on his dashboard that instantly deducted the fare and had me on my way in about 5-seconds flat, without having to fumble around for change or sign anything.
South Korea today is the most wired country on the planet. So good are their technology companies...
Read full article...
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