WESTERN HYPOCRISY PERSISTS 20 YEARS ON

Western central banks continue to print money on an unprecedented scale

JULY marks the month, exactly 20 years ago, when the meltdown of the Thai baht set off an economic and political tsunami across much of the Asian region with its contagion effects.

Indonesia was among the worst affected. The severe beating that the rupiah took led to riots and mayhem in the streets of Jakarta and saw the downfall of then president Suharto.

Even economically-robust South Korea was brought to its knees, with Seoul and ordinary citizens having to endure the considerable humiliation of going, cap in hand, to the International Monetary Fund (IMF) for an emergency bailout.

Then IMF managing director Michel Camdessus became emblematic of that bygone era when he was photographed standing with arms crossed as then Indonesian president Suharto signed his country’s IMF bailout papers. Malaysia, of course, famously struck out on a contrarian course, refusing to turn towards the IMF and instead imposing currency controls. The conventional wisdom then was that bucking the trend would doom the country, cutting it off from international capital flows.

But if the problem had, in the first place, to do with irrational and sudden surges and ebbs in capital flows that were beyond the sovereign control of national governments, cutting off such free and untrammelled flows had to be a rational response.

Luckily for our nation, its crisis response then would be ever so grudgingly accepted by the supposedly omniscient “international community” later as the correct call, saving us from the ravages of steep economic, social and political costs that would have resulted from an IMF bailout programme.

There was, throughout the crisis period in the region, rather sanctimonious pronouncements by foreign observers, and reflexively parroted by the supposedly smart set in each of the afflicted countries, about the risks of moral hazards if international debt obligations incurred in these countries were reneged on.

The supposed sins of regional countries adopting policies consistent with the so-called Asian values then in vogue were eagerly exposed and highlighted to be “crony capitalism”, involving massive collusion between big business and governments.

But if the supposed feet of clay of Asian countries were exposed by the crisis, the West suffered the same fate when, just over a decade later, the Global Economic Crisis began in those major countries (including the United States) that espoused so-called Western values. “Crony capitalism” was not a disease peculiar to countries of the Asian-values persuasion, after all.

However, the global double standards and hypocrisy did not die with the onset of the Westernoriginated crisis. For whatever reasons, arguments about moral hazards have now disappeared from international public discourse. Western central banks went on a spree of “monetary easing” which seems like good, old running of the money printing presses, the scale of which the world has never seen and its duration not nearly over even though almost a full decade has passed since this latest economic crisis.

And if the afflicted Western economies have no qualms about potentially debasing their respective currencies as they tried their best to avoid the pain of economic austerity that Western-led financial institutions Former IMF managing director Michel Camdessus looking on as then Indonesian president Suharto signs his country’s IMF bailout papers in Jakarta in 1998.

such as the IMF demanded of almost all other nations before, China certainly looks askance at current goings-on over economic and monetary policies pursued by the developed world.

To be sure, there is never going to be any fairness in this world. Powerful nations, as the old saw goes, are going to act as such and other nations must just suffer the consequences. But, by dint of its own diligence and perhaps an even more bold and pugnacious take on the Asian values of old, China has grown to become the second largest global economy and on course to overtake the US.

Such a newly confident China is not going to suffer fools easily, particularly at the hands of the always overbearing West that seems hardly chastened by its own humiliating reckoning following the 2008 economic crisis.

Such a China will know to remain ever pragmatic politically and economically, seeking to synthesise whatever it feels to be best and practical from either East or West, for its own purposes. Those same irrepressible smart sets everywhere foretell the impending economic or political implosion of China only to see first, the economic implosion of swathes of the West and then the election of Donald Trump as US president.

Malaysia has shown that a small nation can buck conventional wisdom and live to tell it. China looks to set the world on course towards an entirely new conventional wisdom.