Russell Napier of Orlock Advisors joins Jack Farley to share lessons from his experience as an financial analyst in Hong Kong during the Asian Financial Crisis. Napier notes that during the bull market in Asian equities of the first half of the 1990s, analysts attributed the boom to the high rates of economic growth in much of Asia. However, Napier tells Farley that the true cause of the dramatic bull market was the multitude of pegged exchange rates that did not allow Asian currencies to strengthen as foreign capital flowed in, boosting liquidity conditions.

However, once the tide of foreign capital reversed course, the “Asian miracle” became a nightmare.

Napier is the author of “The Asian Financial Crisis 1995-98: Birth of the Age of Debt.” https://www.libraryofmistakes.com/

Library of Mistakes Twitter: @EdinburghLoM
Jack Farley’s Twitter: @JackFarley96
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Timestamps
00:00 Introduction
05:20 The Alleged Cause Of The "Asian Miracle"
10:24 The True Structural Forces Behind The Bull Market
15:43 Short-Term Speculative Capital Flows
17:43 Being a Bear During a Boom
20:15 Currency Pegs
23:13 The End Of The Party?
29:36 The Destabilizing Rise Of The Dollar
39:54 Rising Cost of Capital
47:12 The Contagion Spreads
49:25 Hong Kong
52:50 The Birth Of The Age Of Debt
1:00:32 Inflation
1:04:56 Historical Parallels
1:11:08 Will The Fed Be Able To Tame Inflation?
1:14:27 QE & The Commercial Banking System
1:20:35 Earnings Cycle and Liquidity Cycle
1:24:00 Growth-to-Value Rotation
1:27:42 Emerging Markets & Europe