A collapse of the Thai Baht caused

collapse of the Thai Baht caused a domino effect in the region causing their
currencies to come under attack followed by a rapid depreciation. This soon
developed into full-blown crises in Thailand, Indonesia, and eventually the
much larger Korean economy, as domestic financial institutions failed, and
foreign exchange sources dried up. Global financial markets saw how Asia failed
to meet their expectations as a growing economy. The crisis destroyed wealth on
a massive scale and sent absolute poverty shooting up.

Each step of this crisis created these
shockwaves that carried on into the next. What that really reflected was that indeed
globalization was a way these economies had become locked and investors dragged
together. Since sudden shifts in the market happened, panic on the part of
domestic and international investors, somewhat reinforced by the faulty policy
response of the International Monetary Fund(IMF) and the financial community.
The crisis exposed different structural and policy misrepresentations in the
countries of the region. Market overreaction and herding caused the plunge of
exchange rates, asset prices and economic activity to be more severe than wanted.

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In a macro perspective, numbers and charts
will tell how bad the situation was. I would like to give emphasis on the
common folk, especially business people, and show the micro perspective. The abundant
bankruptcy and sudden closing of businesses resulted into a lot of people going
jobless, and eventually living without money to spend even on the basic necessities.
Businesses that are still alive that time was considered frozen.  Planning on how to sell the product will not
lead into additional revenue since people does not even have the money to pay
for it.


I firmly believe that a difficult situation can
be solved when analyzed in small chunks. A microeconomic solution is what I
learned and have come up in studying this case. A downturn in economy is
something that can last for a really long time. I have observed that it starts
with the property sector most of the time. This is for the reason that property
is commonly used as collateral for loans.  Once businesses start to collapse, the
government steps in to deal with these bad debts. Spending and losses by the government
will then be eventually recovered through tax payers. The country’s economy
will then go to a long cycle of striving to become a stable economy once again.
I believe that it should not be taken too much as a financial issue, but rather
than an overall strategic issue. When stuck in this kind of crisis, cutting costs
should be the priority. Learning how to make the money work can ensure
survival. As for organizations, trust will always be the foundation of any
business. Assuring banks that you cannot pay right now, but will find a way how
to can build long term relationships.


Today, the
countries involved in the crisis have responded by improving their economic
frameworks. A wake-up call for countries to become more transparent and improve
health of the banking system. The crisis served as the needed push so that
there will be actions to become less reliant on the International Monetary
Fund. The IMF has also understood the need to ensure its programs focus on
issues that are critical to recovery, rather than detailed lists of conditions.
There will always be a time when you’re going to be forced to your limits. In
order to succeed, all it requires is a keen awareness that even though there
are few signs of smoke right now, we
need well-stocked and effective fire engines (Sterland,