ABSTRACT
In previous chapters the driving forces of stock market bubbles were examined. In the case of East Asia, the origins of stock market euphoria shared common threads with the experience of Japan, the bubble of 1929 and the US bubble of the late 1990s. Excess liquidity and loose lending policies destabilized these three regions by ballooning both stock and real estate prices to peaks that could not be sustained-leaving a wake of bankruptcies and bad debt-in the deflationary aftermath. Balance sheets of corporations and individuals were severely dented-if not permanently damaged. Spending flows were severely restricted as a consequence and these economies went into a tailspin. What shocked Asian investors was the suddenness of the crisis-as it came like a thief in the night.
