mer was one of guarded optimism. Although it was recognized that Thailand's economy was seriously out of balance -- as were those of several other Southeast Asian countries, notably Indonesia -- the troubles were regarded as local, containable, and manageable. The main news story of summer from Southeast Asia was not of faltering economies but of out-of-control forest fires in Indonesia that blanketed the whole region in smog and caused an airline crash.
In early August, however, the Thai economic crisis was continuing to deepen, and spill over increasingly into that country's always-turbulent political life. When the baht was floated, the intention was to allow it to sink by fifteen percent, to about 30 baht to the dollar. However, by early August the baht had already fallen 32 to the dollar, and business people were doing their costing on a basis of 35 baht to the dollar (Tasker, 1997, 27). Inflation, which had been at about five percent, was sliding up to the ten percent level. The commander in chief of the military declared that the armed forces had no intention of staging a coup -- a statement that was in itself an indication of the high level of political tension in Thailand (Tasker, 1997, 27).
By August, the Bank of Thailand had lent more than $19 billion -- over ten percent of Thailand's GDP -- to the country's 91 finance companies, attempting to keep them afloat. On August 5, the Bank of Thailand, unable to maintain such a bleed-down of its reserves, and estimating that an additional $15 billion was required, announced that it had reached an agreement with the International Monetary Fund, under which it published a list of an additional 42 finance companies to be "suspended" (What the doctor ordered, 1997, 32). That brought to 58 the total number of finance companies that had temporarily or permanently been closed by the authorities, or nearly a third of the total.
Through September, the crisis both deepe...