Development, Urbanization, Migration, and Quality of Life - Dragons and Tigers: A Geography of South, East and Southeast Asia - page 97

economies came into the United States. The Federal
Reserve kept interest rates too low , and millions of Amer-
icans were granted unrealistic housing loans. Interest
rates rose and mortgage payments rose so that ultimately
buyers couldn't pay their debt.
Loan defaults led to millions of foreclosures. As de-
mand lessened, housing prices declined and global in-
vestors lost money . With no financial cushion to absorb
losses, lenders cut back their investments. This resulted
in a major decline in global economic activity—bank and
business failures, unemployment and shrunken con-
sumer wealth. Dramatically reduced spending generated
even more business failures and more unemployment.
India lost 500,000 exports in the last four months of
2008. Malaysia has revoked work visas for 55,000
Bangladeshis in order to boost job availability for locals.
The global economic downturn has hit the most vul-
nerable half of humanity—women—with exceptional
force. Women, who make up 70 percent of the world' s
poor, are usually employed in low-paying and part-time
jobs. In times of crisis, they are the first to be let go.
Developing countries rarely have safety nets to help
them survive, and increasing numbers of women are
descending into poverty worse than ever before.
According to the Brookings Institution (2009), U.S.
consumption accounted for more than a third of global
consumption income between 2000 and 2007. In other
words, world economies have been dependent upon
American consumers to stay afloat. So when the U.S.
economy crashed, there were reverberations throughout
the entire world system. Japan' s GDP fell 15.2 percent in
the first quarter of 2009. With an economy that depends
heavily on exports of machinery and electronics,
Taiwan' s exports slumped 34 percent and its GDP
dropped in the first six months of that year. An estimated
9 million of 210 million migrant workers who work in
China' s cities have lost their jobs and been forced to re-
turn to their villages. Leading economists have called
this economic downturn the worst financial crisis since
the Great Depression (1929-1941).
Governments have responded to the crisis by pro-
viding stimulus packages to businesses to generate em-
ployment. They have given bailouts to financial
institutions and funded social programs and infrastruc-
ture projects. China, for example, has poured money into
rural development projects such as new irrigation facili-
ties and the provision of safe water. It has also invested in
energy-saving environmental engineering, as well as
family planning programs.

Some countries now have anti-smoking pro-
grams. Both Indonesia and South Korea target a
portion of their tobacco revenues for anti-smoking
campaigns. Under Singapore' s very strict laws,
smoking is prohibited in public buildings.
Although they know that cigarette smoking is
harmful, tobacco companies produce more than
1,000 cigarettes every year for each man, woman,
and child on Earth. Currently , 3 million people die
each year from tobacco-related diseases. Costs of
medical care and lost productivity are in the billions
of dollars. Will WHO' s prediction of 10 million
deaths annually materialize? Should there be curbs
on the activities of American or other multinational
tobacco companies overseas?

PRIV ATE INVESTMENT
This postmodern era has witnessed a dramatic increase
in the amount of private capital flowing into Asia. Over
60 percent of international bank financing to emerging
economies goes to ten countries, four of which are in
Asia (South Korea, China, Thailand, and Indonesia).
Deregulation of capital markets in Japan, the United
States, and Europe, along with telecommunication net-
works permitting instant cash transfers, have facilitated
this trend. International bank lending rose to its highest
levels in 1996, with more loans to Asia than any other re-
gion. In that same year, EU banks surpassed Japanese
banks as the paramount lenders in Asia. The two largest
borrowers were South Korea and Thailand, followed by
Indonesia, Malaysia, China, and the Philippines.
In recent decades, macro-financial flows have en-
abled some developing nations to reverse capital flows in
their own favor and fostered the rearing of Economic
Tigers. In 1997 and 1998, however, several countries
such as Japan, South Korea, and Thailand experienced an
economic downturn. Numerous banks had floated ex-
cessive loans for too many poorly evaluated development
schemes. Many projects still stand incomplete or unoc-
cupied, their loans outstanding.

FINANCIAL CRISIS 2007
Recoveries have been cut short by the current financial
crisis that began in 2007 with the bursting of the American
“housing bubble.” Up until that time, significant
amounts of foreign capital from fast-growing Asian