Is it 1997 all over again for South East Asia?
I have vivid memories of the 1997 crisis in Indonesia, where I was based at the time, watching in disbelief as a once stable currency slid, gently at first, from 2,400 rupiah to the US dollar in July, to 4,000 by early December, and then, dramatically to more than 16,000 in January.
The economy seized up, and within months Indonesia was in chaos.
I remember something else too.
The foreign fund managers, who had been cheerleaders for the investment boom before the crisis, privately admitting that the corporate data they were given by Indonesian companies was suspect.
But they continued buying into the country's broader economic growth story, despite nagging fears about corruption and the persistent current account deficit.
End Quote Jada Wattanasiritham SCB
Today the Thai economy is very different. Because we learned things like risk management, corporate governance, the ability to be flexible”
I remember the World Bank and other respected international experts telling us, after Thailand's economic collapse in July 1997, that Indonesia was different, its fundamentals were sound. It would not be infected by the disease, they said.
Later, when Indonesia was infected, the International Monetary Fund prescribed a purge of the banking system that caused panic and a bank run.
For anyone who experienced those bewildering months, and especially those who were victims of the crisis, they left a lingering mistrust of official reassurances, and an anxiety that they could be caught out again.Struggle for survival
Jada Wattanasiritham was in the eye of the storm 15 years ago. A career executive with SCB, Thailand's oldest commercial bank with close ties to the monarchy, she was elevated to the post of chief executive in 1999, as the bank found itself in a struggle for survival.
SCB had previously been judged by international ratings agencies as one of Thailand's strongest and most professionally managed financial institutions.
But after the official currency peg was abandoned in 1997, the Thai baht lost half its value, throwing many of SCB's corporate clients, especially those with dollar-denominated loans, into bankruptcy.Continue reading the main story
"When the crisis hit, and the corporates were damaged because their debts increased to twice what they used to be, then the quality of the bank's assets suffered horribly," she recalls.
SCB's non-performing loan portfolio shot up to more than 40% of loans on its books.
Attempts by Ms Wattanasiritham and her colleagues to increase the bank's share capitalisation - from 4bn baht ($124m; £80m at today's rates) to 10bn baht at the end of 1997, then from 10bn baht to 40bn baht in 1998 - were lagging behind its deteriorating balance sheet, and the more demanding standards now being required by the Thai authorities.
In the end, SCB needed to raise 65bn baht in a new public offering, in an extremely harsh financial environment, where the reputation of Thai companies had been badly tarnished.
There were not enough potential investors left inside Thailand.
In 1999 Ms Wattanasiritham had to lead a roadshow, first to Hong Kong and Singapore, and then to Europe and the US, to try to persuade foreign investors to climb on board.
Fortunately, she says, sentiment had started to turn positive, and the bank was helped by the government's offer to match any new investment SCB attracted.
But it was an exhausting, and nail-biting time.'Less vulnerability'
End Quote Mathew Verghis World Bank
Thailand is no longer defending a fixed exchange rate. So there's a lot less vulnerability”
So could it happen again?
Ms Wattanasiritham doesn't think so.
"Today the Thai economy is very different. Because we learned things like risk management, corporate governance, the ability to be flexible," she says.
"Not only for the banks, but also our corporate customers who are now much more disciplined - they know the value of having small debt-to-equity ratios, not being over-indebted."
Big Thai companies are also growing in scale and ambition, seeking investment opportunities and acquisitions overseas. The recent capital outflows do not appear to pose a significant threat to them.Continue reading the main story
"There's a lot less external borrowing - in particular a lot less short-term external borrowing - by the private sector," says Mathew Verghis, lead economist for South East Asia at the World Bank in Thailand.
"And Thailand is no longer defending a fixed exchange rate. So there's a lot less vulnerability."
But there are worries about the current account's recent slide into deficit and household debt, which has risen this year to nearly 80% of its gross domestic product (GDP).
If interest rates rise, warns Mr Verghis, the inability of ordinary consumers to pay back their loans could strain the financial system.
However, the current account deficit, he believes, will self-correct, as exports pick up on the back of the weaker baht and economic recovery in the US and Europe.Better prepared
What about Indonesia? It has seen its currency fall by 18% since May. Its current account deficit has widened to more than 4% of GDP.
It is certainly the most vulnerable economy in South East Asia, after recent inflows of "hot money", which is now being pulled out, just as in 1997.
There has been a lot of talk in Indonesia about a recent report by the Singapore-based bank DBS, and its eye-catching statement that South East Asia is "absolutely headed back to 1997 again".
But read a little further, and what the report actually says is that, yes, that is where current trends are taking the region, but this won't happen for five years, and won't happen at all if policy-makers can prevent it.
It's worth remembering too that before 1997 Indonesia had been running current account deficits of 6% or more for many months, and that it was ruled by a nepotistic dictator, Suharto, whose stubbornness crippled decision-making.
Unlike then, the response this time by the Bank of Indonesia has been swift and realistic.Stocks to sandwiches
There was perhaps no figure more emblematic of the 1997 crisis in Thailand than Sirivat Voravetvuthikun, a millionaire who saw his fortune evaporate as the stock market and property prices collapsed.
He responded to bankruptcy by going out onto the streets of Bangkok to sell home-made sandwiches.
And over the years he has carefully built up a modest but successful business in snacks, drinks and cafes. Today he employs 30 people, and has an annual turnover of 20-30m baht.
His experience in 1997 has made him innately cautious.
He frets about the recent drop in exports, and about expanding consumer credit, and fears another 1997 crisis is inevitable.
But it is those searing memories of a financial meltdown which have ensured that Thailand's corporate sector, at least, is well-prepared this time to weather the shift in market sentiment away from emerging markets.