[MALAYSIA'S ALTERNATIVE STRATEGY]IntroductionThe 1997 Asian financial crisis drew attention to how fragile our global economic system can become both when overexposed to foreign market interventions and when the underperformance remains uncontrolled. Prior to June 1997, the Republic of Korea encountered problems as 10 of its 30 best-performing chaebol (conglomerates) collapsed due to debt that far exceeded their respective equity. Korean steelmaking giant Hanbo faced further stress after racking up $4.39 billion in debt for a new steel mill. Kia Motors collapsed due to the accumulation of nearly $2.1 billion in loans made on the basis of “need,” as opposed to the independent judgment of credit and cash flow determined by the lending authority. Central banking authorities in Indonesia, Hong Kong, Thailand, the Philippines and Malaysia have come under threat as their currencies have been rocked by speculative attacks from foreign investors. Political theorists have multiple hypotheses about what the absolute cause of the 1997 Asian financial crisis was, but one country that most analysts focus on is Thailand. year, and the deficit continued to increase. In 1996, the current account deficit represented -7.887% of GDP ($14.351 billion). Aware of Thailand's economic problems and the exchange rate of its currency basket, foreign speculators were certain that the government would devalue the baht again. In the spot market, to force devaluation, speculators took out loans in baht and made loans in dollars. In the futures market, speculators bet against the currency by contracting with...... middle of paper ......ia. Encyclopedia, nd Web. 5 April 2014. .Zumkehr, Hye Jin. “Malaysia and South Korea: A Decade After the Financial Crisis.” Chulalongkorn Journal of Economics 20.1 (2008): 1-26. Chulalongkorn Journal of Economics. Network. 1 April 2014. .Economist. "Ten years later." The economist. The Economist newspaper, 4 July 2007. Web. 5 April 2014. .Kaplan, Ethan. “Did Malaysian Capital Controls Work?” National Bureau of Economic Research (2001): 3-40. National Bureau of Economic Research. . April 1, 2014. .PBS. “Timeline of the Asian Financial Crisis.” PBS. PBS, March 1, 2000. Web. March 29. 2014. .