An Asian Iceland?

Posted by: Bruce Einhorn on October 10, 2008

What Asian countries are most at risk of an Iceland-like debacle? The countries especially vulnerable, says S&P’s Elena Okorotchenko, who does sovereign research from the Singapore office, include Indonesia, Pakistan, the Philippines, Sri Lanka and Vietnam. S&P (which is owned by McGraw-Hill, which also owns BusinessWeek) came out with a report on Oct. 8 with the ominous title “Asia-Pacific Sovereign Report Card: As the Financial Storm Spreads, Major Uncertainties Loom.” While there aren’t any Asian countries in quite as bad shape as Iceland, the situation could get worse pretty quickly. “With the financial crisis spreading, more and more sovereigns are coming under pressure,” she says. “Nobody is completely immune.”

Reader Comments

Vee

October 10, 2008 9:16 PM

None of them.

Askari Kazmi

October 11, 2008 7:13 AM

Yes, that will be the fate of Pakistan, but by determined. I know Mr Ali Raza, Chairman National bank of Pakistan now (Previously Reginal Manager Bank of America). He is a brilliant banker I have worked with him in BOA Lahore Pakistan branch. He introduced in 2004 the policy of lending huge money (15 salaries) to govt employees of all cadre who are unable to hold their monthly salary for full month even , with out any guarantee, and other loans like that , those loans never returned fully and huge debts brought the bank up to this stage. Why so?

Newbie

October 12, 2008 9:43 PM

There was no shortage of 'brilliant people' in Lehmann Brothers, yet it failed. Same goes with Merill Lynch, AIG, etc. Having brilliant people is no guarantee that an institution will not fail.

Wrong!

October 13, 2008 12:41 AM

Wrong! Most endangered countries are Viet Nam, Philippines, India and Indonesia. All of them have huge balloning foreign debt problems.

Tan S.H.

October 13, 2008 3:34 AM

I work in investment banking industry in Hong Kong. We deal with many organisations and banks around Asia Pac. Largest problems we have seen in the past years is with some countries with shaky fundamentals, weak markets, poor or absent legislation and enforcement of laws and corrupt or non working court and legal systems. Prime example of such are Pakistan, Indonesia, Cambodia and Vietnam (rampant corruption, chaotic governments), Philippines (archaic and chaotic system), India (huge bureaucracy and red tape, things take a lifetime to move).

Specially now these countries need to change, adapt and act very quickly to face the economic tsunami heading our way. The systems in these countries are either too slow to adapt or too politicised to care.

Terrorism Blackmail

October 13, 2008 6:07 AM

I will count Pakistan out since they will creatively manufacture some terror crisis and have US loan them another $10 billion to handle it. Mushharaf did that for last 7 years. I am sure between the Pakistan ARMY, ISI, and the Taliabn they will have a creative solution pretty soon for their current financial crisis.

A-singh

October 13, 2008 6:32 AM

China will be on the top of my list.
1.8 trillions reserve is a phoney number. It does not exist.

Sundar Velu

October 13, 2008 2:24 PM

Sri Lanka has huge foreing dept with failed government. It is in line to debacle next.

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