It was, in the annals of Taiwan's economic history, a dark moment.
Taiwan's central bank in July moved to censor private-sector economists who dared predict the nation's currency might fall.
Officials in Taipei didn't call it censorship, but what else are we to make of a senior monetary authority saying: "We object to [banks] expressing views to the press that create a trend"?
That's what Hsu Yi-hsiung, deputy governor of Taiwan's central bank, told Bloomberg reporter Brett Cole at the time. Hsu also charged that the "media seem to be trying to conspire a falling Taiwan dollar trend."
The bank even faxed bullish analyst reports to news agencies, hoping for positive stories.
Bloomberg's Taipei bureau chief, George Hsu (no relation to deputy governor Hsu), was summoned to the central bank for a talking-to about his team's coverage of Taiwan's currency trends.
Monetary officials took exception with Bloomberg reporting the views of some analysts who felt the dollar might fall.
The episode was but one example of economic policy makers blaming the messenger and missing the point. Analysts and journalists merely say and write what they see. If an economy is weakening and government officials or monetary authorities aren't taking prudent steps to correct things, observers will warn investors. It's their job and responsibility to do so.
Tell that to many of Asia's policy makers. Rather than get their economies in order, they are reverting to conspiracy theories and anti-capitalist rhetoric that's scaring the very markets they're hoping to soothe. Call it the blame game, Asian style.
"If you take care of your economy, investors will stick with you," says Anthony Chan, chief economist at Banc One Investment Advisors.
Asia hardly has a monopoly on the blame game. European Central Bank officials aren't above ranting and raving about foreign exchange traders undervaluing the euro. US Treasury Secretary Paul O'Neill lashes out at the press now and again for moving markets by reporting what he says. South Africa's central bank governor, Tito Mboweni, recently chastised Bank of America Corp for "dumping the rand."
Still, Asia's blame game seems to be attracting many players these days. Take the Philippines, where President Gloria Arroyo recently cracked down on "currency speculators." Many of the alleged speculators were banks that dared to sell the peso, driving it below the government's preferred rate of 50 per US dollar. Waning investor demand has made the peso Asia's worst performing currency over the last six months.
So concerned is Arroyo about the "economic sabotage" being committed by traders selling the peso that she's raised the specter of fixing the currency's exchange rate. Such talk left few doubts Arroyo was reading from the playbook of Malaysian Prime Minister Mahathir Mohamad, who she's called a "model of a leader." Mahathir is famous for blaming everyone and everything for Malaysia's troubles, except himself and his policies.
Events in Manila, Taipei and elsewhere serve as reminder of how leaders' words and actions can scare away the investors they're trying to comfort. In today's anything-goes global economy, where capital zooms freely and rapidly across borders, officials must be careful not to "Mahathir" their economies.
Mahathir in 1997 and 1998 nearly toppled Malaysia's economy with words. By blasting capitalism, saying currency trading was "immoral" and should be made illegal and demonizing investors, Mahathir spooked global markets and capital fled. Rather than blaming others, he should've fixed the weak banking system at the root of Malaysia's problems.
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