Argument: IMF bailouts failed in the Asian financial crisis
Daryl Montgomery. "Will the Eurozone Crisis Crash World Markets?" May 2010: "A small country with a currency problem causing major problems in the global financial system has a recent precedent in Asia in 1997. The Thai baht, which was pegged to the U.S. dollar, came under speculative attack in May of that year and the government was forced to drop the dollar peg and float the currency on July 2nd. The problems in Thailand, a relatively small economy, then spread throughout East and South Asia. They eventually washed up on the shore of the U.S., with a mini-crash in the stock market that dropped the Dow Jones Industrial Average 7% in one day. The selling may have been worse, but stock trading was halted early that day. While events in 1997 had their biggest impact in East and South Asia, echoes of the problem wound up impacting U.S. and other stock markets into 1998. The current situation is much worse in 2010 than it was in 1997. Bailouts were used to deal with the problems in 1997. Governments and central banks have already used this tool to a massive extent for the last two years. If we are having another crisis, clearly it isn't working."