By Jack Crooks

Interesting! It seems the chances for another Asian-style financial crisis are rising. In fact, we are already seeing this happen in S. Korea (see the chart below).

This is surprising because it appeared the entire region was in the best position to weather a downturn in the major economies.

At least, it seemed like Asia could hold its own until the downturn morphed into an all out assault on all the ties that seem to bind the global financial system together. 

The Picture of Crisis: How the U.S. Dollar Is Rising Against the South Korean Won

Just this morning, Reuters reported that China’s economic growth slowed to 9% in the third quarter (the slowest growth in five years).

My view is liquidity is draining out of China faster than expected:

• Chinese factories planned their inventory before the Olympics started and before we faced a global financial crisis (when demand still existed for their products). Now they’re paying for these plans. The front-end loading of inventory was much too big and will represent an additional drag on corporate profitability and cash flow.
• The real estate bubble is popping, which represents another major liquidity drag now that the stock bubble has popped.

And that could have serious repercussions on the Chinese – and surrounding Asian – economies…