Weekly News Analysis # 4 - Delegation Authorizing...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Delegation: Authorizing subordinates to make certain decisions Rugged: Tempestuous; stormy Terrain: An area of land; ground Compare and contrast the Icelandic financial crisis and collapse to those in Southeast Asia, Russia and Argentina in the late 90’s and early 00’s. Asian crisis of late 90’s: Financial crisis of southeast Asian countries precipitated by the floating of Thai baht. In 90’s ASEAN countries attracted massive amounts of foreign investment - spurred by high interest rates and high economic growth - Funds flow caused run-up in prices, causing increase in imports - Exports decreased due to increasing competition from China - U.S. interest rates rose, causing investors to shift there from SE Asia - Thai central bank sold reserves to maintain pegged currency - ran out of reserves, allowed currency to float - Baht tanked, markets seized up - Asset prices collapsed, causing owners to default on debt obligations - Defaults caused massive withdrawal of investment funds causing credit crisis - Firms could not attract operating funds, causing economy to slow - Problems spread to Indonesia & South Korea - Investors unwilling to lend to entire region - IMF initiated $40 billion program to support currencies in exchange for reforms - reduce government spending - allow insolvent banks to fail - change corporate governance - Less “cronyism” - More transparency - Investor confidence increased, funds flow resumed “Ruble” crisis: financial crisis in Russia 1998, exacerbated by Asian crisis - Russia maintained “floating peg” of ruble to dollar of 5.3 – 7.1 RUR/USD
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/25/2011 for the course FIN 320 taught by Professor Mercury during the Fall '10 term at Central Connecticut State University.

Page1 / 3

Weekly News Analysis # 4 - Delegation Authorizing...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online