Sunday, March 15, 2015

2015-02 Book Review

Book Review: The Asian Storm, by Philippe Riès

Financial crises are a boon to the publishing industry. Each passing financial crisis seems to bring about another endless volley of books describing, denouncing, and distressing the various aspects of the crisis. Most of them are not worth reading. The exception to financial crises and the publishing industry is the Asian Financial Crisis. Very little has been written on an event that changed the trajectories of economies created by hundreds of millions of people. The exception to the rule that most books about financial crises are not worth reading is Mr. Riès’ book: The Asian Storm. It is a pleasure to read.

The main difference between this book and the majority of books written on the topic is that the author has a journalism background, whereas most of the people that take the time to write about a financial crisis are academics. Mr. Riès uses his mastery of story telling as well as his understanding of the economy to write this book. (Here I must mention that Peter Starr translated the book from French to English. His name did not make the front cover.)

Two downsides of a journalist writing a financial book stand out in Mr. Riès’ book. First, there are no citations. Much of the book’s content came from interviews with people involved with the ordeal, but quite a bit of the rest of the book is statement of fact taken at face value. Related to the issue of interviews is the sense the reader gets that he does not want to compromise his relationship with the powerful people that he writes about. Only two people wrote blurbs for the book: Michel Camdessus and Steve H. Hanke. The chapter about Mr. Camdessus is titled “The Most Powerful Man in Asia.” The section about Professor Hanke is titled “Dr. Hanke’s Magic Potion.” Friends and colleagues writing a blurb about a book is acceptable, but writing a blurb for a book that has its own chapter dedicated to the writer seems like intellectual conflict of interest.

Even though the book was published in 1999, quite a few of the topics discussed are relevant to China today, and most likely other countries in the future. The Chinese leadership advocates “Chinese values”, “the China Dream”, and “the China Model”, which parallel the Asian values that were exalted before the Asian Financial Crisis. Richard Holbrooke was quoted as saying: “People who are talking about sovereignty and Asian values are really setting up a smokescreen in order to prevent scrutiny of their balance sheets.” (p. 192). Korean chaebol parallel Chinese state-owned enterprises in that “The cardinal rule for the chaebol was that capital had no cost. Each group could easily borrow funds from banks that were as familiar with risk as the Sahara was with snow.” (p. 200)

While the author approaches the financial crisis from an Austrian School perspective, the rest of the book is a love letter to the International Monetary Fund. The lack of people that share both these views with the author probably explains the limited impact the book has had.