As reported by Bloomberg, it would appear that, as soon as next week, IMF will be formally involved with rescuing the plunging Greek economy. The world markets heaved a collective sigh of relief on Friday, as Euro and Greek bond prices rebounded from their week's lows.
One has to remember, however, that rather signaling as the end of the crisis, the combined efforts of IMF and EU to provide much needed finance and supports in economic restructuring merely mark the end of a chapter in an epic novel.
For one, Greece will have to go through the painful reforms as prescribed by IMF which depends on the political will of the government and the supports of its people.
Then, there is the contagious ripple effect. The Asian Financial Crisis is the case in point. Initially targeting the Thai baht as its peg to US Dollar did not reflect Thailand's economic position, market participants quickly trained their focus on its neighbouring East Asian economies after the baht was forced off the peg and IMF agreed to provide emergency funding in the Summer of 1997. Over the next 12 months, from Indonesia, The Philippines , South Korea, Hong Kong, Malaysia to Singapore, currencies and stock markets of each of these countries, one after another, were under attack.
It will therefore be very interesting to see if the episodes of the Tom Yum Goong Crisis in 1997 will be repeated and, if so, which market(s) will the Greek Echo reverberate through next? Afterall (and befittingly), the word echo came from the Greek mythology.
One has to remember, however, that rather signaling as the end of the crisis, the combined efforts of IMF and EU to provide much needed finance and supports in economic restructuring merely mark the end of a chapter in an epic novel.
For one, Greece will have to go through the painful reforms as prescribed by IMF which depends on the political will of the government and the supports of its people.
Then, there is the contagious ripple effect. The Asian Financial Crisis is the case in point. Initially targeting the Thai baht as its peg to US Dollar did not reflect Thailand's economic position, market participants quickly trained their focus on its neighbouring East Asian economies after the baht was forced off the peg and IMF agreed to provide emergency funding in the Summer of 1997. Over the next 12 months, from Indonesia, The Philippines , South Korea, Hong Kong, Malaysia to Singapore, currencies and stock markets of each of these countries, one after another, were under attack.
It will therefore be very interesting to see if the episodes of the Tom Yum Goong Crisis in 1997 will be repeated and, if so, which market(s) will the Greek Echo reverberate through next? Afterall (and befittingly), the word echo came from the Greek mythology.
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