“Corrupt Asians” feel vindicated by Wall Street bust

A decade ago, Federal Reserve Chairman Alan Greenspan declared that Asia would realise that "market capitalism, as practiced in the West, especially in the United States, is the superior model".

Asia never quite saw it that way. Now the region's policymakers can feel that the collapse of Wall Street investment banks and Washington's planned $700 billion bailout vindicated their suspicion of freewheeling capitalism.

The implications for investors in the region are enormous, if not immediately obvious. Governments may slow deregulation, rush to rescue of troubled companies or clampdown more quickly on market ructions.

Greenspan made his comments to U.S. lawmakers to justify a bailout for Asia's collapsing economies during the 1997/1998 crisis. He is now in the dock, charged by some economists with pursuing a lax monetary policy and loose regulation that helped create the bubble that led to Wall Street's financial implosion.

Asian policymakers have not forgotten the hectoring they got from the United States and the International Monetary Fund, which dispensed cash in exchange for hiking interest rates, closing banks, slashing spending and opening markets.

"At that time, (IMF and U.S. officials) behaved as if they were treating an owner of a small business just about to go bankrupt," said Chung Duck-koo, chief South Korean negotiator with the IMF in 1997, when he was a deputy finance minister.

Malaysia, which spurned both the cash and the IMF advice by fixing the value of its ringgit currency and imposing capital controls back in 1998, sees Washington's rescue efforts as proof it had converted to its way of thinking.

"We are now seeing the West, particularly the U.S., ignoring the standard IMF prescriptions and implementing the same measures that Malaysia had done during the 1997 crisis," said Nor Mohamed Yackop, a top Malaysian finance ministry official, who in 1998 helped impose capital controls.