Asian Turmoil and the U.S. Economy

Paper Summary:

This paper analyzes the under-regulated stock market, real estate ventures and currency instability in the Asian economy that resulted in world-wide financial crisis. This paper explores the events in the stock markets in Thailand, Manila, Singapore and Hong Kong that were extremely profitable for a short time, only to crash soon after, leaving countless people owing billions of dollars and the economies of many Asian nations in shambles. The writer of this well-researched paper discusses how banks in the U.S. suffered greatly because of fraud in Singapore as well as in trading in derivatives, which when the various nations' economies sank, so did the value of these investments. This paper also examines the tug of war between Asian exports and imports and their impact on the American economy.

Table of Contents:
Abstract
Introduction
The Derivatives Fiasco
Japan
Asia
United States Actions and Reactions
Conclusion
Bibliography

From the Paper:

"A staid old British banking institution, Baring Brothers, decided to enter the Asian derivatives field, and so sent a number of young traders, including Nick Leeson, first to Indonesia, then, based on his success, to Singapore. He used this great distance from the home office to trade in his own account, using the firm's money, as well as investments from other international banks. Because of the volatility of the market (and natural disasters like the Kobe earthquake) he first made poor judgment calls which had him owing 170 million pounds (about. $225 million). At the end, he was in the red (or, rather Baring's was) in the amount of $1.5 billion. When discovered, he and his wife fled, but were eventually arrested. This one man's greedy fraud had caused Baring's to go bankrupt, and caused a ripple effect in the U.S. where similar derivatives investments turned sour."

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