Meltdown: Asia's Boom, Bust, and Beyond

, by Mark L. Clifford and Pete Engardio. Prentice Hall Press, November 1999; 320 pages.

Asia's economic boom -- dubbed the Asian miracle by some -- and its subsequent bust have been fodder for a lot of writers. But few have told the story in as riveting a way as Mark L. Clifford and Pete Engardio in

Meltdown: Asia's Boom, Bust, and Beyond

.

The award-winning journalists, both Asia editors for

Business Week

, were on the scene during Asia's go-go years and were also witness to the crash that rolled across the region seemingly overnight. But Clifford and Engardio show that the signs were there long before the crash. In

Meltdown

, the two tell the story of what happened, who played which roles and what Asia must do to move forward.

Forget those dry economic treatises that so many have delivered about the Asian crisis.

Meltdown

reads more like a novel, with the story told through the eyes of the key players. The life force of the book is thousands of interviews conducted by the two journalists and their colleagues with the movers and shakers of the Asian Tiger economies -- specifically South Korea, Thailand, Indonesia, Malaysia, Hong Kong and China. (Japan's economy is so massive that it deserves its own book, according to the authors.)

The book opens in May 1998 with the tale of an investment banker fleeing Jakarta, Indonesia, eluding rioting gangs by throwing money out of her car window. As gripping as this image is, the authors soon make clear that the bust actually began in July 1997 when Thailand was forced to devalue its currency, sparking investor panic that rolled across the entire region. As investors pulled their money out of the region at breakneck speed, political mistakes compounded the economic ones. Asia's collapse rocked global stock markets and started a financial tidal wave that ultimately touched economies from Russia to Brazil.

So what brought about the biggest economic boom -- and bust -- in history? And how could the world's most powerful growth zone self-destruct, seemingly overnight? Clifford and Engardio say Asia's so-called miracle was shattered by thousands upon thousands of ill-conceived projects financed by a deluge of cheap money.

More than $355 billion in foreign private capital flooded into Thailand, South Korea, Malaysia, Indonesia and the Philippines between 1990 and 1996. In Thailand, that meant foreign inflows reached 55% of annual output by 1996. This hot money was in short-term instruments that could be jerked from one country to the next at the touch of a button. However, Asia's movers and shakers were using it to finance long-term projects, such as building roads, electric power plants and semiconductor plants.

Other factors played into the bust as well, including

guanxi

capitalism, in which connections are more important than anything else -- such as, say, risk analysis or good government -- in winning a project. Pure egotism also played a role; there was a mad rush by Asia's go-getters at the tail end of the boom to build the biggest building in the world, the longest building in the world or other monuments to their supposed greatness.

One of the most outrageous tales of greed involves the family of Indonesia's former President

Suharto

. At one point, the first family controlled more than 1,000 companies and had amassed a fortune estimated at $30 billion. His children controlled everything from airlines to telecommunications to electric power companies.

The sweetest deal for the family came in 1993 when son Bambang acquired two

Hughes

satellites from the government for free. He used those satellites to offer the country's first digital cellular-phone service. Within three years, his company,

Satelindo

, controlled 45% of Indonesia's wireless telephone market. He later sold a 25% stake in the company to

Deutsche Telekom

(DT) - Get Report

for $580 million, placing a value of $2.3 billion on Satelindo -- not bad, considering he put up no money to start the business.

The tales go on and on. In China, "princelings" -- that is, the sons and daughters of high-ranking officials -- avoided taxes, pressured banks to give them cheap loans they never repaid and generally were above the law. One even went so far as to kidnap and jail business partners to settle disputes. In Thailand, Prime Minister

Banharn Silpaarcha's

administration was dubbed "the most corrupt government in recent history" by the

Bangkok Post

, which said his administration should be called "Ali Baba and the 40 Thieves."

This book has a cast of thousands, and to help the reader sort them out Clifford and Engardio put together a "Who's Who" of thumbnail sketches of the major players. This is helpful, as is the map of the region at the beginning of the book. Photographs would have been a welcome addition since, by the end of the book, many of the characters are so well-known to the reader that natural curiosity is aroused as to what they look like. (Wouldn't you like to know what a Bambang looks like?)

The biggest problem with

Meltdown

is the wide scope of its subject matter. Covering so many different countries requires a lot of skipping around; there are times when it gets confusing as to which country is being discussed. Another small beef: These writers are such insiders that they assume some knowledge that general readers may not have.

But these are minor points in a book that is basically well-written and informative, especially given that so many other writers have reduced the topic to a confusing mass of numbers. So settle back and enjoy a story about unbridled greed, overambitious tycoons, megalomaniacal dictators -- and what happens when economies are seriously overindulged with cheap money.

Janice Wood is a Summerville, S.C.-based freelance writer. She previously wrote for American City Business Journals in Los Angeles, Dallas and San Antonio, as well as the Pacifica Tribune in California. She can be reached at

woodfam@wpmedia.com.

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