Discussion based on the east asia crisis Assignment

Discussion based on the east asia crisis - Assignment ExampleThe international monetary fund (IMF) and world bank had not surveyed the abundant achievements of the area. According to Stilgitz, this may have resulted due to the East Asia rejections to follow western policies such as the Washington consensus so as to attain succeeder (Stiglitz 89-99).Stiglitz discusses two patterns. The devaluation of the nations currentness which occurred frequently all over the area. If a merchant believes a currency will devaluate they sell their stocks of that money, this leads currency to devalue since the supply of money rises while demand does not. The government also spends its foreign currency reserves to pile up its own currency until it gets half-hearted of the reserves, either way the currency falls in value. This case was mainly in Thailand(Stiglitz 99-111).The second pattern was realized after the end of the Korean War. The agricultural reformed its economy by tightly controlling its f inancial markets. After much pressure from the United States it reluctantly allowed its firm to borrow from aboard, this borrowing from the overseas exposed themselves to the vagaries of the international market. The Withdrawal of the World Bank from lending it caused its downfall in the economy (Stiglitz 99-111).IMF had a role of lending the money to the East Asia countries. barely it did it at a higher interest rate, cutbacks in government spending and increase in taxes. Other additional conditions a county was mandated to make increase in openness and transparency and improve in the financial market as well as minor reforms such as abolition of the clove monopoly in Indonesia.Moreover, the idea of the capital account liberation without evidence that such policies promote growth was the one of most important factor to the cause of the crisis. This made the develop nations subject to both rational and irrational whims of the investor community.The Beggar-thyself