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“You know what’s truly weird about any financial crisis? We made it up. Currency, money, finance, they’re all social inventions.”*…

 

napoleon curency

First Argentina. Now Turkey. The next country to face a financial crisis could be any one of a slew of emerging-market economies that have grown dangerously dependent on borrowing in dollars and other foreign currencies.

As of the end of 2017, corporations in emerging markets owed $3.7 trillion in dollar debt, nearly twice the amount they owed in 2008, according to the Bank for International Settlements. Analogies to 1997’s Asian financial crisis and Mexico’s “Tequila” crisis of 1994 abound. But the roots of emerging-market crises lie further back in the history books. In The Volatility Machine: Emerging Economics and the Threat of Financial Collapse, finance professor Michael Pettis urges us to look to Europe in the early 1800s, just after the end of the Napoleonic Wars. The financial conditions and innovations that gave rise to the first truly global crisis, in 1825, are in many ways similar to the conditions that have led Turkey and Argentina to their current precarious states…

Learning from the past: “The global financial crisis of 1825 foreshadowed the problems of emerging markets today.”

* Bruce Sterling

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As we contemplate currencies, we might recall that it was on this date in 1955 that the Manilla Pact was signed, creating the Southeast Asia Treaty Organization (SEATO).  Intended as “an Asian NATO,” SEATO was a collective defense agreement aimed at stopping the advance of communism in the region.

Despite its name, SEATO mostly included countries located outside of the region but with an interest either in the region or the organization itself: Australia, France, New Zealand, Pakistan (including East Pakistan, now Bangladesh), the United Kingdom and the United States; only the Philippines and Thailand were actually in the region.

While SEATO-funded cultural and educational programs some long-standing effects in Southeast Asia, the alliance is largely considered a failure, as its military/defense mission never gelled.  In June of 1977, after many members had lost interest and withdrawn, SEATO was dissolved.

220px-Flag_of_SEATO.svg

The official flag of SEATO

 

Written by LW

September 8, 2018 at 1:01 am

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