Asia presents a cumulation of apparently rational decisions that produced disastrous results - a textbook illustration of "financial instability" developing from the economics of euphoria. A combination of factors produced the crisis as enormous capital inflows were drawn to the "Asian...

The Asian crisis is a textbook case of the "financial instability hypothesis" first expressed in 1966 by the late Hyman Minsky. It began with what Minsky described as "the economics of euphoria:...The confident expectation of a steady stream of prosperity gross profits [produces a]...