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The Asian Crisis Versus The Euro Crisis
By this point in the aftermath of the Asian crisis, even Indonesia was well on the road to recovery; Greece, Spain etc. are still sinking.
What’s worth remembering is that everything people say about why Greece can’t bounce back — structural problems, corruption, weak leadership, yada yada was also said about Indonesia. So why could Indonesia come back while Greece can’t?
Well, two obvious reasons: Indonesia had a currency that it could devalue, and did, massively. This caused a lot of short-term financial stress, but paved the way for export-led growth. And the IMF, after initially pushing austerity policies in Asia, backed off and reversed course; this time around the Troika has been relentless, learning nothing from experience.
http://krugman.blogs.nytimes.com/2013/08/28/the-asian-crisis-versus-the-euro-crisis/
What’s worth remembering is that everything people say about why Greece can’t bounce back — structural problems, corruption, weak leadership, yada yada was also said about Indonesia. So why could Indonesia come back while Greece can’t?
Well, two obvious reasons: Indonesia had a currency that it could devalue, and did, massively. This caused a lot of short-term financial stress, but paved the way for export-led growth. And the IMF, after initially pushing austerity policies in Asia, backed off and reversed course; this time around the Troika has been relentless, learning nothing from experience.
http://krugman.blogs.nytimes.com/2013/08/28/the-asian-crisis-versus-the-euro-crisis/