Our aim was to allow an orderly economic adjustment and to minimise the risk of further contagion into other parts of Asia and the rest of the world. Our aim was not to capitalise on any of these countries’ difficulties in order to bring about a political transformation.
The bursting of that bubble induced a financial crisis and an economic plunge following the failure of Lehman Brothers. Households have had to continue reducing borrowing to repair their balance sheets, which weakened due to a decline in home prices. Financial institutions have also been pressed to dispose of a large amount of impaired assets and become cautious about new lending.