As one fund manager after another began to realize their profits and pull out their investments out of Thailand
and Indonesia, the stock markets in these countries rapidly collapsed (in Thailand it had been preceded by
the collapse of an over-built property market). As these foreign fund managers converted their gains back to
US Dollars from the local currencies, they were prepared to take some losses on the exchange and the
values of the local currencies fell drastically (nothing compared, however, to the gains which had already
been realized by them).

Malaysia of course could not believe that it would be next. Its economy had better "fundamentals" than
Thailand or Indonesia or so it thought, believing in its own propaganda. It was different and better managed.
Its population was generally better educated and more skilled and trained. It had a dynamic, uncorrupted
and more stable government (which apparently could do no wrong).

But the harsh reality is that it had pretty much made the same mistakes that the Thai and Indonesian
governments had, especially in allowing itself to fall under the vise-like grip of crony capitalism, nepotistic
practices and the attendant corruption that came with this - the only difference being that in Malaysia the
corruption was not so open or noticeable, having been masked by the generally higher levels and slightly
better spread of economic development. Corruption was in fact rampant but only small fish got caught while
the real sharks got away - the reason being not just that they were protected by the government but that
they were the government and at all levels, departments and ministries that mattered.

Most of these cronies who had over-committed themselves were unable to respond effectively or in any
timely manner to the rapidly changing economic scenario and the damage that foreign capital flight and
foreign currency speculation had wrought. Neither was any immediate assistance to be had from the
government, which staggered from one inappropriate and ineffective response to another. Mahathir’s
ill-conceived remarks blaming the crisis thus caused on foreign currency speculators and hints of a Zionist
plot further angered foreign fund managers who caused further damage by liquidating their shares and pulling
out their funds - thus leading to successive slumps of the Kuala Lumpur Stock Exchange and drops in the
value of the Malaysian ringgit each time he opened his mouth.

Whether Mahathir's criticisms had any truth is not really at issue. His being right in this matter did not undo
the wrongs, perceived and actual, which his government was responsible for. Failure to recognize the
damage and accept some measure of accountability, lack of transparency, generally inept and even
inappropriate responses all combined to doom any real effort to redress the critical situation.
 
 
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