In 1998, the Asian Financial Crisis occurred because emerging market nations had taken on too much dollar-denominated debt without earning sufficient dollars, creating a leverage blow-up when capital flows reversed—this was the first instance where central banks might have let market discipline work, but instead they cut rates and bailed out overleveraged banks, establishing the 'moral hazard' expectation.
causalpending
Speaker
Raul PowellEvidence Quote
“in 1998 we've now started building up gigantic Leverage...Emerging Markets have taken on too much versus their income so they start blowing up”
Created: 8/11/2026, 1:53:06 AM
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