Even tigers have growing pains Asian crisis: Thais learned nothing from Maryland's S&L; disaster.


THEY WERE the tigers of economic development. Many investors were caught when sharper ones bet against the Thai baht, the Philippine peso, the Malaysian ringgit and the Indonesian rupiah. Thailand had tied its currency to the U.S. dollar too long, and should have let it float earlier. The baht went down one-fifth.

Malaysian Prime Minister Mohamad Mahathir blamed "rogue speculators," particularly George Soros, the Hungarian-born American hedge-fund tycoon whose charitable arm is underwriting democracy in Eastern Europe and clean needles in Baltimore. This echoed a British prime minister, a generation ago, who blamed "all the little gnomes in Zurich" for a run on the pound.

In fact, Japan's economy, which frightened many Americans, has been subsiding and Thailand's 10-year growth frenzy has been becalmed for 18 months. The International Monetary Fund bailout announced yesterday is much smaller than the one for Mexico in 1995, but Thailand's embarrassment is less threatening to the global economy.

The IMF will extend $10 billion credit to Thailand's central bank to stabilize the baht. In return, Thailand will raise taxes and take over 42 finance companies that had funded a commercial building orgy. It is as if the collapse of Maryland's savings and loan industry in the 1980s, the repetition nationwide and subsequent loss of independence of Maryland's largest bank carried no lesson.

Thailand will recover, its growth slowed somewhat. Its own lessons may also go unlearned. The smaller tigers are losing manufacturing investment to China, which offers a massive skilled labor market at even lower wages and unbridled capitalism in the provinces. But a building boom of skyscrapers for unidentified occupants is engulfing Shanghai. The world's tallest building went up in Malaysia; a taller one is promised in China.

The Mexican peso crisis of two years ago has been overcome, satisfactorily for lenders if not for ordinary Mexicans. Thailand's crisis will be resolved more quickly. Asian economic development and manufacturing will resume. But growing pains will hit other emerging markets.

Pub Date: 08/06/97

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