Thursday, February 23, 2012

Europe Should Heed Asia's Lessons

by William Pesek


February 23, 2012

If Europe wants to know how Greece's crisis ends, Asia provides some vital clues, ones being actively ignored at the moment.

Yes, it's a less-than-perfect comparison. Fourteen-plus years after Thailand's currency devaluation touched off a region-wide meltdown, Asia and Europe are still a world apart. Asia wasn't shackled with a single currency or one central bank. Yet it's the last place to experience anything similar to what's afoot in the euro zone. Asia's 1997-1998 implosion toppled governments, fueled riots, devastated living standards and brutalized markets.

Europe's own pain is just beginning. What can it learn from Asia's experience? Four things, actually.

One, politicians can't stop an unavoidable default. Europe's efforts to save Greece are as commendable as they are futile. Athens will default no matter how many bailouts are tossed its way. In 1997, remember, Thailand said it had plenty of currency reserves left -- it didn't. Indonesia swore it wouldn't get dragged into the mess -- until it was. South Korea assured the world it would avoid an International Monetary Fund aid package -- until it couldn't. It would be better for Greece to default tomorrow rather than two years from now. Let's get it over with.


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