Alternative History

The Asian bubble, also known as the Oriental bubble, was a major asset price bubble that started in the late 1980s and accelerated into the early 2000s, particularly notable in the late 1990s, fueled by speculative and exuberant investing in Asian economies, both by Asian countries that racked up major debt to grow their export-oriented or import-substitution economies, and by Western investors in Europe, the Americas and Russia who sought "long bull" returns in the emerging world, particularly due to Japan's success in the 1940s and onwards later spreading to "Asian Tiger" economies. Compared to Dutch tulip mania, the bubble was proliferated by a general sense of uneasiness in the United States about the "American model" coming out of the early 1980s depression and was a way for institutional investors to generate high returns during the early 1990s stagflationary period driven by the oil shocks; as for European investors, which were perhaps even more overexposed, it was driven as a "geostrategic" impetus to maintain Versailles Pact influence in Asia after the various Indochinese Wars, to build up "safe harbors" after a variety of civil wars curtailed European investments in South Asia as had previously been the case, and to reinvigorate European industry and trade after the long period of dirigisme was coming to an end and countries throughout the French-aligned bloc were liberalizing their economies en masse. The latter half of the Asian bubble coincided with the technology bubble in North America, with the two being seen to feed each other.

The bubble was burst in 2002, in tandem with the tech bubble which was widely seen as ending in 2001 in the United States. The devaluation of Asian currencies, overleveraged banking institutions, and the sharp declines of asset prices on the Hanseong and Edo stock exchanges in the spring of 2002 triggered a ripple effect through first Asia, then the world, as two bubbles bursting on either side of the Pacific quickly led to a sharp, acute and global recession even more severe than the one in the late 1970s and early 1980s (unlike that one, however, the severity was the opposite; the Western Hemisphere and Anglosphere was least effected, and continental Europe and then Asia the most). A number of major companies failed, both in Asia and abroad; the two largest bank failures in world history (Creditanstalt of Vienna and Chiao Tung Bank of Shanghai) occurred, as well as the second-largest bank failure in American history (Wells Fargo). Major industrial conglomerates failed as well; the Korean chaebols Taeko Group and LG perhaps the most prominent.

The United States suffered a 15-month recession and elevated unemployment did not come back down to pre-crisis levels until late 2007; compared to most peer economies, this was the least significantly effected economy in the world. High unemployment, particularly for the young, persisted in the rest of the world for the rest of the "lost decade" of the 2000s, asset prices in many Asian economies never recovered, deflation set in within a number of economies (most prominently Japan, which otherwise did not suffer as badly as its other Asian Prosperity Area peers), and the long depression is widely viewed as being responsible for the Spring of Nations in the early 2010s when a second global downturn, though cyclical rather than asset based, turned masses of people against their authoritarian, single-party governments that were seen as having done little to stave off the malaise. The Asian bubble and its bursting is also viewed as fueling the rise of nationalist populism, anti-establishment attitudes and illiberal political movements around the world, particularly in the wake of the Spring of Nations.