I've had the chance to read and review lots of material on the Asian economic crisis and financial mess. The weakness of Thailand's, South Korea's, and Indonesia's currencies has made their dollar denominated debts virtually unpayable, and without outside financial help they will default on many of these loans. The IMF(International Money Fund) has attempted to come to their rescue, but is attaching strings to any money advanced. Many of the Western World's financial experts have postulated both high-powered theoretical and belt-tightening conventional solutions. Some support, and others refute, the tight money and austerity conditions imposed by the IMF in exchange for billions of dollars worth of loans to keep the former Asian Tigers' economies functioning.

Most of what is happening overseas has yet had no adverse effect on the average American. We have begun to notice a slight drag on our economy. It has helped us obtain cheap gasoline, since slowing Asian economies use less of it and the surplus of crude oil lowers our price at the pump. It has kept American companies from raising prices on the goods they make. A suddenly impoverished Asia is attempting to export more, and devalued currencies result in inexpensive imports to America. It has most likely kept our Federal Reserve from raising short-term interest rates in America, because that would make our exports even more expensive and foreign imports cheaper than they already are. Naturally, people in Asian nations are trying to convert their savings into a more stable currency: the U.S. dollar. Their readiness to exchange depreciating money for our stable money increases the worth of the dollar. Simply put, our money buys more Asian goods.

Actually, for a brief while, most of the effects of Asia's problems probably benefit the American consumer. But as time goes on, American exports will diminish, our factories will have to cut back on production, and that means layoffs. Further, farm goods, lumber, and other raw materials the Asians once bought from us also pile up. Parts of our economy slow, prices for farmers' crops and lumberjacks' tree trunks decline, oil exploration and our refinery profits are hit, and numbers of Americans also suffer. Unless we modify America's position on free-trade, which is unlikely, the long-term, fundamental result will be that Asia exports its unemployment over here. Americans who are employed will be content, but low prices don't mean too much to people who have lost jobs and can't find work.

But all that is many months away from a nation whose present unemployment rate is 4.5%, as ours is now, where tens of millions watch their stock funds appreciate every month. Most of us are probably unaware of anything that's not directly in our face, and the Asian crisis is across the Pacific Ocean.

Being American, and being practical, and being through with this little tutorial, now what do we do about it! Well, the answer is we jawbone a bit, as our Secretary of the Treasury, Mr. Rubin, has done. We mention that Japan is the engine that must now do for Asia what the United States did for Europe after WWII. We tell the world that a stable yen will serve as an anchor for the Asian Tigers, and even help China keep the value of its yuan unchanged. Then, after declaring that currency intervention will not remedy Japan's basic problems, Mr. Rubin stated that Japan must take steps to solve them by writing off half a trillion dollars in bad bank loans. Further, he asked the Japanese to modify their life style by becoming a nation of consumers just like us. After all that jawboning, Mr. Rubin did finally intervene by ordering the U. S. Treasury to massively buy yen for dollars. The United States bought enough yen to drive its price from 148 to a dollar to 137 to a dollar, which in five days increased the value of the yen by seven and a half percent. Without growing, manufacturing, or servicing anything, some currency traders made a handsome profit that week.

For its part, Japan's Prime Minister, Mr. Hashimoto, has pledged to introduce a publicly acceptable tax cut which sometimes seems as though it will be permanent, sometimes not. Much of what has been said by officials of his Liberal Democratic Party resembles electioneering. If it sounds ambiguous, it is. Nothing will be done until after the impending election of the upper body of the Japanese Diet.

My take on the matter is that the Japanese have for centuries lived in an insular way on several islands. Over the centuries, they have developed the strongest us versus them mentality I have ever seen. Over here, when the economy gets tough, we digitally select a million or so lone cowboys and toss them overboard to swim, thus making it easier to save the ship. Band playing, the ship steams off into the night with the remaining passengers dancing in the salon. Except for those in the water, everyone is happy, particularly the sharks.

In Japan, they believe in sharing the pain. No-one gets deep-sixed over the side, and the ship, off course and listing badly, continues on too slowly to answer the rudder. A sudden storm could sink her, and if one occurs, that is what may happen. From the point of view of the sharks, it's either feast or famine.

Where Americans seem to have trouble with the Japanese is we naively, or perhaps arrogantly, expect them to act as we do. Their culture and background differ so greatly from ours that they do not want or permit free trade, and are incredulous that we do. Their pay system of large semi-annual bonuses is intended to promote hefty savings of 20% of their earnings. Because of Japan's protection of Mom and Pop stores and an archaic distribution system, their domestic prices for goods are higher than for the same goods in Hong Kong or New York City. Their system's unofficial bias toward helping Japanese businesses that are doing badly, causes them to carry along weak and inefficient firms: the strong support the weak in a rather humanitarian and noble effort to float all boats. In so doing, bad loans stay on the books, preventing a crisp recovery. Our assumption that we can transform them into a nation of spenders, people who live on credit beyond their means, is destined to failure. Worst of all, I think the Japanese concept of us versus them is so deeply ingrained they regard the entire world, including other Asians, as total outsiders. In my view, Japan lacks the moral imperative to jeopardize its own interests in order to help the rest of Asia.

None of that is terribly optimistic, but I think it is accurate. Japan is highly unlikely to generate a modern Marshall Plan to rescue Asia as America did to save Europe after WWII. Where does that leave Asia today? My answer is: in considerable trouble. Most of the help will have to come from the West. If we deny further aid to Asia, if Japan fails to take effective action and the yen weakens further, and if China subsequently devalues the yuan, the world-wide economic impact will become significant, perhaps affecting America's GDP by as much as 5%.

Our political system is reluctant to provide additional money for IMF loans, and the average citizen is primarily concerned about his own garden. All I can say, and it isn't much, is that after another six months of inactivity, America will become fully aware of and experience significant economic dislocation from the Asian crisis.

Sam Orr
World Traveler
and Philanthrope
(Location Unknown)