History
See also: 1997 Asian Financial Crisis See also: Subprime mortgage crisis See also: Greek Bond Crisis See also: European sovereign debt crisisWhile there was a period of systemic crisis in emerging countries in the early 1980s, both academia and policy circles did not analyze the crisis from a systematic point of view. Even when Latin American countries fell like dominoes into an abyss of successive devaluations, banking crises and deep recessions, much of the blame was placed on poor domestic policies and high real interest rates in the United States, with little attention focusing on the possibility that financial crises could be spreading and contagious.
A Lexis-Nexis search for contagion before 1997 finds hundreds of examples in major newspapers, almost none of which refer to turmoil in international financial markets. The term “contagion” was first introduced in July 1997, when the currency crisis in Thailand quickly spread throughout East Asia and then on to Russia and Brazil. Even developed markets in North America and Europe were affected, as the relative prices of financial instruments shifted and caused the collapse of Long-Term Capital Management (LTCM), a large U.S. hedge fund. The financial crisis beginning from Thailand with the collapse of the Thai baht spread to Indonesia, the Philippines, Malaysia, South Korea and Hong Kong in less than 2 months. After that, economists realized the importance of financial contagion and produced a large volume of researches on it.
Read more about this topic: Contagion Effect
Famous quotes containing the word history:
“When the landscape buckles and jerks around, when a dust column of debris rises from the collapse of a block of buildings on bodies that could have been your own, when the staves of history fall awry and the barrel of time bursts apart, some turn to prayer, some to poetry: words in the memory, a stained book carried close to the body, the notebook scribbled by hand—a center of gravity.”
—Adrienne Rich (b. 1929)
“It’s a very delicate surgical operation—to cut out the heart without killing the patient. The history of our country, however, is a very tough old patient, and we’ll do the best we can.”
—Dudley Nichols, U.S. screenwriter. Jean Renoir. Sorel (Philip Merivale)
“Modern Western thought will pass into history and be incorporated in it, will have its influence and its place, just as our body will pass into the composition of grass, of sheep, of cutlets, and of men. We do not like that kind of immortality, but what is to be done about it?”
—Alexander Herzen (1812–1870)