THE AFTERSHOCKS of the terrorist attacks on the United States are reverberating through the world's economies in untold ways. In Asia, there is a risk they could weaken commitment to restructuring, as the US proves that intervention can sometimes be a good thing. In the 17 days since the attacks, global investors have applauded moves by the US to support its stock markets, bail out its airlines and keep a steady eye on the currency.
Even without the executive-led campaign of moral suasion against short-selling or other opportunistic investment strategies, US investment banks have taken it on themselves to show patriotic support for their country's assets, with a number of top Wall Street firms announcing stock-buying plans when bourses reopened six days after the World Trade Centre attacks.
In such an environment, it is worth asking whether Asian governments may feel a new-found justification to provide liquidity to busted banks, subsidise ailing industries or intervene to support flagging stocks as economic malaise worsens in the region.
Already the Bank of Japan has been intervening to steady the yen, with the help of the European Central Bank. Several Asian governments have guaranteed continued insurance coverage for their national carriers after insurers slashed war and terrorism-related coverage in the wake of the attacks. Restructuring talks for South Korea's Hyundai Group were unexpectedly delayed three days after the attacks, and yesterday in Indonesia, National Development Planning Minister Kwik Kian Gie mooted the idea of a fixed exchange rate.
Most analysts are adamant, however, that the 'helping hand' phenomenon will not extend to industry bail-outs or market interventions.
'This is a very extraordinary time. The last time in the world you want Washington to worry about the exchange rate, Japan is saying 'we'll take care of it',' Morgan Stanley managing director in Tokyo Robert Feldman said.
