BIS Review 46/1998  -4-  Perceptions and Confidence In this fragile world, the critical issue that changed - motivating the volte face of capital between 1996 and 1997 - was an extraordinary change in confidence - what Stiglitz calls the “instability in beliefs” and Keynes called “animal spirits”.
Such reversals of sentiment are not uncommon, even in the United States: one notable example was the October 1987 share market shake-out.14 But the opportunities for these reversals of confidence are greater in the Asian countries, where foreign investors did not know these economies well and the economic fundamentals are not well established.