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Asian financial crisis: When the world started to melt

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Following currency devaluations and stock-market crashes, Asia now faces its biggest challenge: a full-blown credit crunch. No big bond issues will be done for the rest of the year, spreads on outstanding bonds have gone haywire and trading has ground to a halt. Local sources of credit have also dried up. Corporate borrowers can expect little help from their bankers; devaluation has blasted a hole in many local banks' balance sheets and they have no money to lend even if they wanted to. Peter Lee reports on the likely shape of things to come.

What will go wrong next?
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Asian research: Worth the paper it's printed on?
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Investment bankers are a tough breed, more used to hard negotiations and aggressive trading than to dealing with delicate human emotions. So the Asian capital-markets chief of a western firm pitching to the Thai ministry of finance one Thursday in early November found it difficult to know how to handle the scene that confronted him. "These people were panicking," he says. "I had one senior official literally in tears. Hardly anyone is visiting them any more and they don't know what to do. They were saying 'please help us'."

After a few gruff words of encouragement, the banker came up with one interesting proposal: not for...