This exuberance was followed by its inevitable downfall when the US economy began to raise interest rates making it a relatively attractive investment destination. This raised the US greenback against Asian currencies. By this time the Asian states were burdened with large amounts of external credit driving up asset prices to unsustainable levels, only to be followed by a collapse led by defaults on debt obligations.

We often propound," learn from your mistakes". Asia countries, now guarded from their experience hold large current account surpluses and foreign exchange reserves. Asia now services the current account deficits of the west. Moreover what is most congruent to the situation at hand is the fact that the inflows have been unjustifiably directed towards unproductive mortgage back securities and CDO's that are packaged forms of unyielding sub prime loans.

Such a situation could bear the underlying risk of shrinking global liquidity. Signs are already visible from the fact that interest rates are rising, leaving its impact on the hedge funds evoking margin calls resulting from defaults on sub prime loans. It is also lending its impact on the LBO market, and across all financial stock markets as well.

However, its is implying that History would indeed repeat itself in its entirety? Possibly not. The US economy is far too resilient to be shaken and encapsulated by these vagaries. It has successfully dealt with concomitant circumstances such as the savings and loan crisis way back in the 1980's as well. Nevertheless, the current situation cannot be evaded without a significant impact.