"THE ASIAN FINANCIAL"

Asia’s economic party ended in the early hours of July 2,1997.Tables 1,2,3 give

a stark picture of the extraordinary decline in the foreign exchange, followed by the

collapse of the stock market, and the eventual impact on the GDP.(Goldstein,pp1-3)

the first sign of trouble was the mid-1996 collapse of Bangkok Bank of

Commerce, which exposed the failure of Thailand’s central bank to crack down on

Corrupt banking practices. In early February 1997 two more serious signals came.

Somprason Land became the first real-estate company to default on an Euro-bond,

indicating that perhaps a real-estate bubble was waiting to burst;and Thailand’s largest

finance company, Finance One, indicated it was in trouble by seeking a merger with a

commercial bank.”This was a cue for investors to stampede to the door…Foreign

bankers began calling in their loans while hedge funds, smelling weaknesses in the

economy, went into overdrive, selling the baht short. Fearing their currency was on the

brink of devaluation, panicky Thai companies that had borrowed heavily abroad started

dumping baht for dollars, forcing the central bank to spend $26 billion in an ultimately futile bid to hold the peg.”(Chanda, p47)