ASIAN MARKETS ENDURE SECOND DAY OF HUGE DECLINES

From The New York Times:

Markets in Tokyo, Hong Kong and Sydney all fell farther in late trading Tuesday than they had all day on Monday. The Hong Kong market plunged another 8 percent by late afternoon after tumbling 5.49 percent on Monday. In Tokyo, the Nikkei dropped 5 percent, hitting a low not seen since September 2005 and facing its worst two-day drop in 17 years on concern global growth is faltering.

While Asia has been less buffeted by the credit crisis than Europe, the Bank of China now appears vulnerable, with analysts predicting it will have to write-down the value of its American mortgage holdings.

Investors in Asia have been in a state of denial about a possible recession in the United States, said Adrian Mowat, JPMorgan’s chief strategist in Asia. But now, he said, many believe “there’s no debate about it.” The only question, he added, is “how long and deep” a recession might be.

In Japan, which may be facing a new recession of its own, most indexes were off Monday by more than 3 percent .

THE WORLD ACCORDING TO LARRY SUMMERS

Lawrence H. Summers, the former Harvard president and chief economist at the World Bank, may not be overly popular in the United States right now, but he is the toast of Asia, giving keynote speeches at major conferences in China, India, Singapore, and Hong Kong, as well as serving as the only American on a panel mapping the future of the Asian Development Bank.

From The New York Times:

In a series of visits to China, India, Singapore and Hong Kong since early 2006, Mr. Summers has reiterated several themes that have special resonance in Asia, but have yet to be widely accepted in the United States.

Among them are the idea that growth and changes in Asia are the most important thing to happen during our lifetimes, that the United States and Europe have not yet appreciated the impact of these changes and that the global imbalances from the United States’ current-account deficit — nearly $1 trillion in 2006 — could have severe consequences.

Mr. Summers has been sharply critical of current American fiscal policy and the way that Asia sustains borrowing by the United States by continuing to purchase government debt. During a visit to Mumbai in March last year, Mr. Summers warned the Reserve Bank of India of the United States’ “unsustainable and dangerous” current-account deficit.

In Beijing this January, he asked hundreds of economists and policy makers at a Global Development Network conference to consider the fact that $2 trillion from developing Asia, invested in United States Treasury bills, was making a “zero real return.” Imagine instead, he said “all the opportunities in these countries for productive investment.”

Mr. Summers also visited Singapore for the International Monetary Fund conference in September, then stopped in Hong Kong, where he told those attending an Asia Society dinner that 300 years from now, what will be seen as the most important event of these times will not be the end of the cold war, the terrorist attacks of Sept. 11, 2001, or the war in Iraq, but the “the rise of Asia and all that it meant for people in Asia and all that it meant for the world system.”

The controversy at Harvard, where Mr. Summers’s comments that “intrinsic aptitude” could explain why fewer women than men reach the top ranks in university math and science led to his resignation in February 2006, hardly registered in Asia.

“The gender issues didn’t get much play here,” Mr. Gokarn said.