This fundamental change we are observing now reflects an impressive improvement in the quality of East Asia's economic management. Gone is the generation of Asian leaders who blamed their egregious policy errors on Americans and Europeans by tearing up in front of TV cameras their luxury brand neckties, kicking off their fancy (Swiss and Italian) shoes and threatening the western "morons" (some are still personae non gratae in parts of East Asia) for an entirely predictable capital flight.
They probably thought they would not live to see their revenge. But those who are still around can see the same hell unfolding in Europe – on a much grander scale – as inept EU leaders leave future generations with a soaring public debt and crumbling dreams of a peaceful and united continent of values, solidarity and inclusion.
The deep scars of the Asian crisis have driven home an unforgettable lesson. East Asia not only improved its economic management, but it also continued to build its financial and political architecture through dialog and cooperation. Western politicians, for example, were shocked when the Association of Southeast Asian Nations (Asean) declined to join sanctions against Myanmar. An Asean official told them, "we don't do sanctions."
East Asians are not only staying away from sanctions, but they also avoid economic and financial commitments that would require binding political constraints and sovereignty transfers they are not ready to accept. You won't hear them talk about the region's common currency, or about organizations for balance-of-payments financing. They are focusing instead on free-trade arrangements, and on increasing intra-regional trade through investments in transportation and communication networks.
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Investors should appreciate these practical and pragmatic East Asian growth-enhancing trade relations that are simple, credible and sustainable. That means that you are unlikely to see in East Asia anything similar to Spanish trucks carrying tomatoes being overturned on French highways because of "disloyal" competition. Or high-jacked Italian trucks with cheaper (and delicious) grapes from Sicily, Tuscany and Piedmont.
East Asia's relatively clean and strong fundamentals, and its rapidly growing intra-regional trade, make it an excellent investment destination -- an attractive alternative to a European chaos and to expensive markets facing rising interest rates in the United States.
Europe is a key threat to asset prices. The sad and a seemingly intractable Greek crisis is a symptom of ill-conceived European institutions, which magnify policy errors of politicians whose allegiance remains with national constituencies rather than with some abstract notion of European polity (remember the American adage: "all politics is local"). Under these circumstances, it is difficult to envisage anything but crisis management improvisations as Europe keeps hurtling from one financial precipice to another.
Lessons never learned
Here is an example of such improvisations swirling around Europe at the time of this writing. They range from a suspension of Greek debt payments to an imaginary cordon sanitaire -- proposed by Germany's finance minister -- to protect from the contagion of Greece's euro area exit. At the same time, his boss, the German chancellor, is trying to compose with the growing political opposition (especially from France, Italy, Spain and the E.U. Commission) to any idea of throwing Greece out of the monetary union.
Clear, isn't it? And to top it all off, the IMF – according to Athens, the most intransigent of all its creditors – has been promising "to keep helping Greece" while insisting that the failure to get a Greek check for $1.7 billion by June 30 was a case of formal sovereign default, barring the country from any of the organization's lending facilities.
Meanwhile, Greece's resounding "no" to the creditors' latest offer has put things back at square one. The deal is in the air -- as the hedge funds making money on Greece understood all along. The economic and political stakes are so big that the Greek exit from the euro zone is unthinkable.
Washington's new strategy of "leading from behind" has also nudged Europeans to do a deal. The overriding reason is that a destabilized Greece is dangerously exposing NATO's Eastern Mediterranean and Middle Eastern flanks. The White House, therefore, wants Greece to be kept firmly anchored in the E.U. and in the Western military alliance. That is particularly important now that West's strategic interests in Central Asia are being seriously challenged by political and military agreements expected to emerge from the forthcoming BRICs and SCO (Shanghai Cooperation Organization) summit in Ufa, Bashkortostan, Russia on July 9-10, 2015. The leaders of these two increasingly important economic and political entities will be hosting their counterparts from Iran, Pakistan, Afghanistan and Mongolia.
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Apart from these strategically critical issues, the U.S. is also losing patience with Europe's ongoing economic calamity because that is depressing more than one-fifth of American export sales. In the first four months of this year, the EU's trade surplus with the U.S. was running at an annual rate of $150 billion, and Germany's net exports are currently close to a whopping 7 percent of GDP. There is enough there for Washington to push for a credible solution to the Greek crisis and to call a halt to the E.U.'s free-loading.
To those who are scared out of their wits by perennial doomsayers, I am tempted to say: Don't go cash, go East Asia. That is an excellent investment alternative at a time when European shenanigans present a serious threat to the world economy.
A solidly growing East Asia may not be entirely immune to the EU contagion and the prospect of rising interest rates in the U.S. But East Asia has everything to resist the downward pressures on its asset prices coming from unbalanced and slow-moving developed economies.
If you want to be with the real bankers to the world, the choice is simple -- East Asia is the place. Its huge reserves and trade surpluses are earned in exchange for real resources, underpinning the region's stable economic growth and corporate profits.
Michael Ivanovitch is an independent analyst focusing on world economy, geopolitics and investment strategy. He served as a senior economist at the OECD in Paris, international economist at the Federal Reserve Bank of New York and taught economics at Columbia Business School.