The Indonesian rupiah has lost more than a fifth of its value against the dollar so far this year and on Friday hit its weakest point since August 1998. Authorities swooped in to take over an
insolvent Bank Century, the first such takeover since the Asian financial crisis a decade ago.

   Are things in Southeast Asia’s biggest economy really that dire to prompt comparisons with the chaotic events of a decade ago? Today’s financial crisis is draining liquidity from many banks across the world, including in Indonesia.  And as was the case a decade ago, domestic capital is swarming hot on the heels of foreign capital in fleeing Indonesia.

    It is the kind of vicious circle that characterised the”Asian Contagion” crisis of 1997/98. Currencies depreciate. Foreign investors liquidate their portfolios and swarm to the exits. Creditors call in loans, plunging institutions into insolvency. More people take their money and run, further undermining institutions and weakeninging the currency … And so it goes.

    Ten years ago, I was covering South Korea’s fraught journey into near national bankruptcy. (More echoes of the Asian Contagion crisis: The South Korean won hit lows not seen in a
decade on Friday and analysts forecast the economy will shrink next year for the first time since 1997). 

    My brother and sister-in-law were in Jakarta, where the financial crisis had morphed into a populist movement aimed at overturning the autocratic regime of the late president Suharto.
I had lived in Indonesia in the 1980s and I could hardly believe what was happening in Suharto’s Indonesia.  Food riots swept across Indonesia as the rupiah halved in value in the second half of 1997 — and then halved again in January alone. Panic-buying stripped supermarkets and other
stores of their wares.  ”An army of perfectly coiffed Indonesian matrons stormed the
supermarkets this week and bought out all the rice, flour, sugar and cooking oil,” my sister-in-law Cynthia Mackie wrote in her diary in mid-January 1998. “The foreigners smelled the panic and
got very excited at the idea of their dollars being four times as strong as in July.”

    Suharto was sworn-in for a seventh five-year term after his Golkar party won an incredulous 70 percent of the vote in yet another rigged election of his New Order period.  For years, Indonesians had accepted limits on their political freedoms in exchange for prosperity and growth. Now they had
neither. They turned their rage on ethnic Chinese, who though comprising just 5 percent of the population controlled well over half of the domestic economy.

    The killings of students in pro-democracy demonstrations in May 1998 spawned an orgy of rioting that convulsed Jakarta for two days. Chinatown was gutted. Around 1,200 people died, many of them trapped in burning buildings. Anarchy descended on the capital. Foreign embassies ordered a
mandatory evacuation of their nationals. Convoys of foreigners streamed past burning cars and buildings to the airport, leaving pets and belongings behind, including my brother and his wife.
They would not return for months.

    Indonesia is an altogether different place a decade later, at least politically. The world’s fourth-largest nation arguably has the most liberal democracy in Southeast Asia, a free-wheeling
press, and a legacy of reforms that has decentralised power.  Corruption is still a problem, and an elite class with old ties to the New Order — President Susilo Bambang Yudhoyono was the
head of the armed forces political faction at the time of Suharto’s resignation — dominates politics.     

    But Indonesia has improved its ranking in the corruption tables and people can vent
their frustrations in free and fair elections, due next year.  As John Milton famously said: “Anarchy is the sure consequence of tyranny”. Indonesia is heading into turbulent economic waters,
but don’t expect to see a reign of terror again in the streets.

Hungary has negotiated a $25 billion economic rescue package with the IMF, the EU and the World Bank. What else is new? As that non-Hungarian philosopher of gamesmanship Yogi Berra put it, it’s ”like déjà vu all over again”.  

Consider the words of historian Paul Lendvai who wrote: ”Its economy in tatters, Hungary accepts a loan of 250 million gold crowns.” “Fiscal stability was restored, a currency reform was introduced…and after a modest upswing the value of industrial production stood 12 percent higher…”

The date? The 1920s. The lender: The League of Nations. Only the details have changed.

Hungary seems never to have encountered a global financial crisis it didn’t jump into head first.

If you want to see pictures of banknotes discarded on the street as trash (one is widely available on the Web) just dig in the archives for photos from post-World War Two Budapest.

Inflation in Zimbabwe has hit astounding heights of 230 million percent, but in 1946 prices in Hungary rose by more than 40 quadrillion percent a month.

Over the past century, Hungary has had three different currencies — the korona, the pengo and the forint, each introduced when the previous tanked.

The perky forint — the same currency that is in a bit of a pickle today — made its debut in 1946 at an exchange rate of one forint equal to 400 octillion pengo — a number that was essentially more than all the pengo then in circulation.

Hungarian inflation today of under 6 percent is not remotely in the ballpark of the 1940s and the chances of total collapse are slim to non existent.

Hungary is a member of the European Union and NATO and its economy is substantial. One of Hungary’s local banks, OTP, is a regional heavyweight. The Audi car plant in Gyor, western Hungary, churns out engines and the hot Audi TT sports car.

But there is cause for concern. Why has Hungary been hit harder than most, putting it in the company of  Pakistan, Ukraine and Belarus which have also been talking to the IMF.

Hungary’s external debt amounted to 89.9 billion euros, or 93.8 percent of gross domestic product (GDP), in the second quarter of 2008. This is not good at a time when banks are reluctant to lend to each other, let alone to a central European country with a history of currency collapse.

A good part of Hungary’s debt is Swiss franc or euro currency loans taken out to buy property or cars. As investors pull money out of Hungary, the forint declines in value and repaying those loans becomes harder.

“What I am paying a month all of a sudden rose above 110,000 forints ($532.80) from 90,000 (forints), so we need to restructure our spending,” a businessman with a mortgage in Swiss francs said.

At the same time, Hungary has gone from golden child of emerging Europe after communism collapsed to laggard in the race to adopt the euro. With chronic budget deficits, including a whopper in 2006 that was triple the EU guideline, Hungary’s joining date has been postponed again and again.

In good times, world leaders talk about globalisation and mutual cooperation. In bad times, everyone tends to scramble for cover.

Hungary’s rescue package is substantial and, as Yogi Berra said, “It ain’t over till it’s over.” But if it is, Hungarians have been there before — and know how to sweep the banknotes into the gutter.

European leaders have finally got their act together. After weeks of looking divided over how to tackle the global financial crisis, they agreed on joint measures at  emergency talks in Paris. 

Their meeting followed talks in Washington at the weekend involving G7 finance ministers and officials from the International Monetary Fund and the World Bank at which governments pledged to support the financial system. U.S. President George W. Bush said he was confident the world’s major economies could overcome the challenges.

But is it enough to stave off the crisis? 

Some equity investors appeared to be comforted. The pan-European FTSEurofirst rose on Monday, U.S. stock futures went up and Asian shares outside Japan, which was closed for a holiday, made gains. 

Just a few days ago, the IMF warned of the danger of financial meltdown but its chief, Dominique Strauss-Kahn said on Monday the worst of the crisis was possibly over. 

Many newspapers were cautious. The Toronto Globe and Mail saw hope in the fact that the world’s financial  leaders have started setting aside their differences but said some market participants could be disappointed by the lack of specifics. Floyd Norris wrote in The New York Times that there was no assurance that credit would flow when markets reopen this week.

The Economist said the “dithering” was over but  some problems remained.

Commentators and politicians are united in saying that staying together holds the key to success and that the consequences could be dire if unity does not hold. 

Commentator Will Hutton, writing in The Observer, said: ”I don’t know whether politicians and their advisers can move as quickly as they need in so many areas and collaborate across so many countries to restore stability.”

He added:  ”Without collaboration and leadership, we face disaster.”

German Chancellor Angela Merkel sent a clear “I told you so!” to the United States and Britain at the weekend, criticising them in unusually frank terms for resisting measures that might have contained the current financial crisis. The conservative leader of Europe’s largest economy reminded her partners that she had pushed for steps to boost the transparency of hedge funds during Germany’s presidency of the Group of Eight last year. ”We got things moving, but we didn’t get enough support, especially in the United States and Britain,” she told the Muenchner Merkur newspaper. Merkel expanded on her point in a speech in Austria, suggesting that both Washington and London were only now coming around to her view.

“It was said for a long time ‘Let the markets take care of themselves’ and that there is ‘no need for more transparency’…Today we are a step further because even America and Britain are saying ‘Yes, we need more transparency, we need better standards for the ratings agencies’.

Germany had made greater transparency a key theme of its rotating presidency of the G8, which includes the United States, Japan, Germany, Britain, France, Italy, Canada and Russia. Berlin had expressed fears that hedge funds could threaten the stability of the financial system through their heavy reliance on borrowing to finance risky trading strategies. But it ran into resistance from the United States and Britain, achieving little.

Whether Merkel’s G8 initiative could have averted or limited the current financial market crisis if it had been successful is certainly debatable. But reminding voters that she had sought to address the problem as early as last year could help Merkel score points on the domestic front ahead of a general election next year. Merkel’s Christian Democrats (CDU) rule in an uneasy grand coalition with the Social Democrats (SPD), and both sides have been trying to play up their own role as crisis manager in the current financial market turmoil.

Both Merkel and her SPD finance minister, Peer Steinbrueck, have tried to take credit for Germany’s efforts last year to agree better transparency rules for financial markets. SPD budget expert Carsten Schneider praised Steinbrueck’s efforts during Germany’s G8 presidency in a newspaper interview on Monday, adding: “At the time, the United States and Britain demonised every effort to agree more transparency and rules.”

As Germany’s election approaches, the “I told you so!” Berlin seemed to send to Washington and London on the weekend could turn into an “I told you so first!”-competition between Merkel’s CDU and her SPD rivals.