Prime Minister Jean Chretien of Canada spoke for the group. The crisis, he said, was proof that the economic policies of the region were sound. Almost every day, the news from Asia gets worse. The first stage, a rolling sequence of stock and currency crises, has been ongoing for five months. The second stage, bank failures brought on by falling stock and property prices, is now underway, marked so far by the collapse of the Japanese banking house Yamaichi and now the closure of nine Korean merchant banks.
More failures are no doubt in store.
A compounding cycle is underway and no single developing country can stop it. The larger economies, including ourselves, do have a choice. We could stop the damage. We could take bold moves right now to lower interest rates, to launch public investment programs here and in Japan to replace the demand lost in the rest of Asia, and to make loans big enough to stabilize the Asian economies accompanied by stiff measures to curb international hot money speculation. The latter can be done by taxing foreign exchange and stock transactions, both here and abroad.