Anyone who doubts this should look at how Singapore, the most prudently managed economy in the world, is being pulled down with the rest of Asia. The IMF has tried to stop the disease from spreading by imposing draconian adjustment policies on the countries in trouble. It has demanded that governments spend less and tax more, and that monetary policy be kept tight and interest rates high. Finally, it has insisted, as a condition for any bailout, on micro-reforms to make economies more efficient and to strengthen financial systems. This is tough medicine.
Devaluation helps exports and cuts imports.
But it also makes people poorer because they cannot afford the nice imported goodies they enjoyed before. So there are many who think this medicine is too draconian. But Asia can't. If interest rates were kept low, no one would hold the currencies. Malaysia is a nice example.