The causes of the 1997 Asian crisis. The start of subprime crisis

Mihut Marius ()
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Mihut Marius: “Babes-Bolyai” University of Cluj-Napoca

Ovidius University Annals, Economic Sciences Series, 2010, vol. X, issue 1, 721-726

Abstract: This article was started with the theoretical approach of the general economic crisis, the increase/decrease model, by using the process of the money becoming, merchandise money and fiat money. During the time of fiat money there was a break between the material substances from the symbolic value. There was the break when the credit function appeared, because the money and the merchandise cannot circulate simultaneously. The credits have two aspects: a positive one, because it multiplies the possibilities of financing with the same quantity of money; and a negative one, because there is the danger of multiplying of fiat money who will bring increasing value, or much more a symbolic one, of the economy over its inner value, and when trust is lost, there are no money anymore to sustain the growth and the economy will crash. We have presented the Asian Crisis from 1997 and made a debate on the foreign debt of those countries, the high return rates of investments and the bad allocation, the decreasing rhythm of the exports, the lack of commercial law and of course the huge sums of money taken as loans by the South Eastern Asian countries before the crisis, for investments that had profit rates below the capital cost. At the end of paper, we tried to present two figures showing and explaining the mechanism of forming and bursting of the speculative bubble.

Keywords: increase/decrease model; Asian Crisis; foreign debt; investments; exports; profit rates; speculative bubble. (search for similar items in EconPapers)
JEL-codes: E32 G01 G14 G18 (search for similar items in EconPapers)
Date: 2010
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