Korean Job Discussion Forums

[Ya-ta Boy]

That really isn't what the article is about, it's a summary of the problems in Asian and European economies. It includes some disturbing comments on protectionism.

Asia, Europe Find Their Supply Chains Yanked. Beware the Backlash.
Over the past two weeks, the bottom has fallen out of Asia's export economy while Europe has come face to face with a financial crisis that is as bad as ours and will probably become even worse without the kind of unified response that individual countries have so far resisted...


According to Barry Eichengreen, an economist at the University of California at Berkeley, the 40 percent decline in Taiwan's industrial production at the end of last year was the "canary in the coal mine" of Team Asia's formidable export machine. At about the same time, Japan's exports fell 35 percent, Korea's 17 percent, and China's fourth-quarter gross domestic product was essentially flat -- no economic growth at all...

Demand for Asian exports will pick up again before too long, but it will be a long time before they reach the levels attained at the height of the bubble economy. And it will be longer still before foreigners will be eager to invest in expanding capacity again.

Ideally, Asians would respond to this challenge by reducing their heavy reliance on exports and foreign investment and reorienting their economy more toward domestic consumption. But as Raghuram Rajan of the University of Chicago points out, that's not as simple as it sounds...

In short, the Asian downturn is probably manageable, particularly now that the Chinese government has responded with a massive stimulus package. But it will take time for the region to make the necessary adjustments to get the region humming again...

Unlike the Asians, however, Eastern Europeans didn't save a lot of the money they earned from exports. After years of living under communism, they were eager to catch up to Western European living standards. So they spent their earnings -- and then some -- borrowing heavily in foreign currencies to finance the accoutrements of middle-class life. They also wanted more and better government services, some of which were also financed through government borrowing...

But this is Europe, so you won't be surprised to learn that things seem to be moving in the opposite direction. Leading politicians in Western Europe have vowed they will not ask their taxpayers to bail out other countries or their banks. And other countries are threatening to follow the lead of France, which last week threw a financial lifeline to Peugeot and Renault on condition they make their job cuts somewhere else.

Meanwhile, European banks are said to be quietly pulling capital out of their subsidiaries across the continent and bringing it home.

http://www.washingtonpost.com/wp-dyn/content/article/2009/02/19/AR2009021903284.html?hpid=topnews

[mises]

What a poor article. Mr. Pearlstein does not understand the severity of the problems in Asia (the Chinese stimulus was a sham, and to the extent it existed, was dumped into speculative trades in the stock market).