The Looting of Asia
In the summer of 1997, economic crisis hit Asia from no apparent cause beyond rumors the Thai bhat was in trouble, and Thailand didn’t have enough dollars to back it. Hot money in became an electronic stampede out with “Asian Contagion” unleashed and heading for Indonesia, South Korea and other so-called Asian Tiger countries that were fast-growth miracles until they crashed together with the plight of one affecting the others. It then got worse and spread to Latin America and Russia with US markets also affected briefly in 1997 and then again with a severe jolt in the summer of 1998.
The 1997 Asian panic was crippling with $600 billion in stock market wealth taking decades to build wiped out in a year. Klein notes “a classic fear cycle” ignited the crisis that might have been contained by the same type “quick, decisive loan” rescue package offered Mexico in 1994 in their so-called Tequila Crisis. It would have been a strong signal to markets the US Treasury and international lending agencies wouldn’t let the Asian Tigers fail. No help came, and the message instead was: “Don’t help Asia.” Why? Because “Asia’s catastrophe was an opportunity (for predatory western corporations and vulture investors) in disguise.”
Asian Tigers grew by protecting their markets and barring foreign companies from ownership of land or national firms. They also restricted imports from the West and Japan and instead built up their own domestic markets. Western predators wanted unfettered entry to the region with the right to scoop up the best Asian companies but needed a way to do it. Now they had it from an event Klein calls “the fall of a second Berlin Wall,” as important to western capital as the first one.
Enter the IMF with crisis-struck Asian countries too sick to resist it. They needed help, and the lending agency had plenty to offer on similar terms as to previous crisis recipients. With economies in trouble and empty treasuries, the Tigers got no choice. First, they had to remove all “trade and investment protectionism and activist state intervention that were the key ingredients of the Asian miracle.” IMF also demanded big spending cuts, “flexible” workforces (meaning mass layoffs and constrained wages and benefits), privatized basic services, and the rest of the package they demand for loans.
The regional toll was devastating with the International Labor Organization estimating 24 million lost jobs along with “what was so remarkable about the region’s ‘miracle’ in the first place: its large and growing middle class.” In addition, 20 million people fell into the “planned misery” of poverty, reversing an earlier trend reducing it. Women and children suffered most with families selling daughters to human sex traffickers to survive as child prostitution had a new growth market.
So did Wall Street as IMF structural adjustments put “pretty much everything in Asia....up for sale” in the affected countries. The more markets panicked, the lower asking prices became, and the more pressured hurting companies were to sell out for what they could get or face bankruptcy. It was a bonanza for buyers, and major deals went through in a great fire sale at bargain prices. Asia became hugely transformed with hundreds of local brands replaced by western transnational ones. The New York Times called it “the world’s biggest going-out-of-business sale.” It also became an early glimpse of post-9/11 disaster capitalism - a way for corporate predators to exploit crises in what’s become common practice in the age of “terror” creating opportunities galore and big profits for well-connected firms.
Klein notes the Asian crisis never ended as desperation took root after 24 million people lost jobs in two years. No nation handles that, and the fallout can be unpredictable. It led to a rise in religious extremism in Indonesia and Thailand and “the explosive growth in the child sex trade.” Unemployment is still high and layoffs continue with new foreign owners demanding higher profits with jobs disappearing to provide them.
Eventually things settle down but never to where they once were. Throwing people overboard, displacing small farmers and business owners and crushing unions means those affected stay that way. “They end up in slums, now home to one billion people (and rising); they end up in brothels or in cargo ship containers. They are the disinherited (or what) German poet Rainer Maria Rilke (called) ‘ones to whom neither the past nor the future belongs.’” They’re the human wreckage left behind by countries swallowing Chicago School economic medicine. Its promised miracle is people-poison but not for vulture investors thriving on it. Disaster capitalism is on a roll, and its growth market potential is unlimited and guaranteed to continue unless mass public outrage stops it as one day it will.
