IT WAS THE CRISIS ASIAN ECONOMIES HAS TO HAVE - UNCLE SAM SAID SO

After all the endless mouthing off in the pages of the English-language business press about East Asia's "crony capitalism," lack of "transparency" in the Asian stock exchanges, the "no pain, no gain" logic of the International Monetary Fund and how the Asian economic challenge to Anglo-American capitalism had fizzled, we now know that none of these things had anything to do with the Asian-now global-economic crisis.

Addressing what did cause the crisis is the main business of the leaders of East Asia as they reflect on what has happened over the past two years. If they ignore this question and pretend that the road is still open to "globalisation" in the Pacific, they risk being repudiated by their own people.

Here's the new explanation as it is developing in seminar rooms from Seoul to Kuala Lumpur to Beijing.

With the end of Cold War, the US decided it had to launch a rollback operation in East Asia if it was to maintain its global hegemony. The high growth economies of East Asia had become the main challengers to American power in the region, and it was time they were brought to heel.

The campaign worked in two phases. First, a major ideological barrage was launched to soften up the Asians. The Americans mobilised famous professors of economics from their universities, who never once faced a "market force" in their lives, to preach the beauties of globalisation, in this case meaning the American economic institutions.

They include total laissez faire, destruction of unions and social safety nets, staffing of regulatory agencies with retired financiers, indifference to the pay differentials between chief executive officers and the ordinary labour force, moving manufacturing to low-wage areas regardless the social costs, and totally unregulated flows of capital in and out of any and all economies.

Since the Asia Pacific Economic Co-operation summit in 1993, the Americans have hammered home to the Asians that they needed to "open up" their economies in these ways.

Then came phase two. Once the Asians economies had begun to "deregulate" and were standing in the world marketplace more or less naked, the "hedge funds" were let loose on them. These funds are actually huge concentrations of capital owned by very wealthy Western white men, who manipulate bewilderingly complex financial instruments called derivatives.

They usually lease their offices in offshore tax havens such as the Cayman Islands and do everything in their power to avoid regulators or tax collectors in the so-called free-market democracies.

The funds easily raped Thailand, Indonesia and South Korea and then turned the shivering survivors over to the IMF, not to help the victims but to ensure that no Western bank was stuck with "non performing" loans in the devastated countries.

The IMF is also the US chosen instrument for "reforming" these countries to make them look more like New York.

The Americans suspected that all this might cause some trouble

On March 4, 1998, Admiral Joseph Prueher, then commander in chief of American military forces in East Asia and today the US ambassador designate to China, testified before Congress that the US signs of "instability" in East Asia, including "labour disputes". The Indonesian armed forces, whom Prueher's special forces had been training for years, got rid of Soeharto when it seemed necessary. The Indonesian troops killed about 1,200 shopkeepers and raped more than 150 Chinese women doing so.

Then it all got a bit out of hand. One of the biggest hedge funds proved so greedy that US had to organise a bailout, which brought the scheme out into the open. David Mullins, a former deputy to the Federal Reserve chairman, Alan Greenspan, had gone straight to work for the Long-Term Capital Management fund after he left the Federal Reserve in 1994. Had this not been the case, it's unlikely that the Federal Reserve Bank of New York would have arranged a $US 3.5 billion rescue for it. The incestuous relationship between Washington and Wall Street what the Columbia University economist Jagdish Bhagwati calls the Wall Street-Treasury complex-made East Asia's crony capitalism look tame.

The weakened economies of East Asia also could not continue to buy the weapons the Pentagon wanted to sell them, and some began to have second thoughts about paying to keep US Marines (aka the Hedge Funds Protective Corps) in their countries.

Globalisation was discredited as a crooked financier's scam. The Chinese never looked so clever as they did in keeping out of the World Trade Organisation, as did the Japanese when they more or less ignored the pleas for "reform" from Washington.

These issues came to a head in Kuala Lumpur last November when the US trade representative Charlene Barshefsky, accused Japan of offering $US30 billion in aid to the stricken East Asia  as a way of buying their votes against further measures to open markets.

The Japanese foreign ministry responded that the US Government was possessed by "an evil spirit" a phrase painfully close to the evil empire epithet that President Reagan used against the Soviet Union.

The Vice-President, Al Gore then gave a speech in the Malaysian capital denouncing its head of state for trying to protect his country from international speculators and calling on the people of Malaysia to overthrow him. After that, APEC no longer had a future worth speaking of.

The Americans do not seem to understand that their message of free trade and market economies is in serious disrepute. Wall Street itself now looks like the ancestral home of crony capitalism.