Asian Financial Crisis
On July 2, 1997, the Bank of Thailand was forced to abandon the baht's peg to the US dollar. The currency lost more than half its value within six months. The collapse spread by capital flight to Indonesia, South Korea, Malaysia, and the Philippines over the following year. The IMF organized rescue packages totaling roughly $118 billion. Indonesia's rupiah lost 80 percent of its value; the country saw food riots and the fall of the Suharto regime. South Korea's KOSPI fell 75 percent. The crisis briefly threatened to take Russia and Brazil with it before US Federal Reserve interventions in 1998 ring-fenced the contagion.
The 1997 crisis was the first major global financial event of the post-Cold War era and shaped the design of every emerging-market response since. Its lessons — keep your reserves high, do not peg your currency rigidly, do not borrow short in foreign currency to fund long domestic projects — are recited in every modern central bank. Argentina would learn them again in 2001. Russia would learn them again in 1998. Turkey would learn them again in 2018.
07 · Dot-com Crash
Between 1995 and March 2000, the Nasdaq rose more than fivefold. Any business with a .com in its name could raise money on a spreadsheet. The thesis was real — the internet would reshape the economy — but the valuations were a different thing entirely. Pets.com, Webvan, Kozmo, eToys. When the cash ran out, it ran out everywhere at once.
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