13 of 14 people found the following review helpful:
5.0 out of 5 stars
From "Topics," AmCham Taipei, 10/98, October 22, 1998
This review is from: The Great Taiwan Bubble: The Rise and Fall of an Emerging Stock Market (Paperback)
When Taiwan Was the Republic of Casino--- Reviewed by Paul Cassingham--- The Great Taiwan Bubble recounts the astounding rise and and fall of Taiwan's stock market in the late 80's. Part economic analysis, part social history, and part supermarket tabloid of Taiwan's most superlative moment. The Bubble fulfills the wish of every Taipei expat who has ever said, "Somebody oughtta write a book about this." Finally, somebody did.--- Even the basic plot of the story almost defies belief. The Taiwan Stock Exchange Index took 25 years to reach 1,000 in late 1986, then rocketed to 12,495 by February, 1990, then plummeted even more sharply to 2,560 just seven months later. No one who lived in Taiwan at that time had ever seen anything like the "Republic of Casino." Fortunes were made and lost, and society was turned upside down. Most foreigners, misled by prior experiences in other markets (any other markets) scoffed smugly and refused to join the ride. Most Taiwan natives suspended their disbelief, defended the boom as the fruit of 40 years of hard labor, and made and lost millions. In the end, almost nobody died and Taiwan's real economy survived and continued to flourish. Clearly, the Taiwanese had more fun.--- How crazy were the Eighties in Taiwan? Steven Champion chronicles some of the statistics. Daily turnover on the Taiwan Stock Exchange sometimes exceeded the combined turnover of the New York and Tokyo exchanges. At the height of the frenzy in 1989, PE ratios of Taiwan's listed stocks averaged more than 100 (in contrast to 13 in the United States and 10 in Hong Kong). Taipei Business Bank's shares traded as high as 358 times its annual earnings, which would have made economic sense only if the bank was expected to absorb the entire GNP of the world by the year 2002. In the first quarter of 1989, Hsin Chi Woolen Mills (to take but one example) yielded a return of 209 percent - that is 46 percent per month on a compounded basis - "completely unrestrained by the lack of any fundamental value." One stock player (acknowledged to be an exception) managed to trade over US$12 billion in shares that year in a total of over 125,000 transactions. Even Champion's ex-driver made and lost more than US$5 million (then asked for his old job back).--- But the Taiwan "bubble" was far more than just an economic aberration. Taiwan is a land of rich personalities, and Champion sprinkles his text with stories of some of Taipei's most colorful characters during this period. He devotes a full chapter to underground investment companies, including the Homey Group, from its origins among retired KMT soldiers through the tragic death of "Ironballs" Liu, to the group's dramatic demise...--- With tongue-in-cheek gravity, Champion also recounts his business discussions with Madam Boom-Boom, the proprietress of a famous Taipei nightclub of that time. Champion confirms from personal experience that Madam Boom-Boom's membership application was approved unanimously by the American Club board, no questions asked. Her business rose and fell dramatically with the fortunes of the market, but like many Taiwan entrepreneurs, she could see hope for the future after the crash as many of her most talented and experienced "assistant managers" came out of "retirement" and returned to work. Taiwan is blessed with many people who loom larger than life. Through Champion's snapshots of Taipei life in the late 80's, we see how the "bubble" fed their eccentricities , both for better and for worse.--- Throughout both his economic and social discussions, Champion displays a dry wit. Even after the bubble burst, he explains, the TAIEX remained a "Rasputin" market, never being quite ready to die. He describes the government's pattern of market support as free hedge on at least some of the market's ample level of downside risk." He is even masterful with his footnotes (which, inconveniently, have been printed at the end of the text). Where else could one learn of the brokerage firm that advertised a 'buy one, get one free' offer after the crash or of the "popular but hazardous" restaurant that reportedly increased the death toll from one of its fires by preventing its patrons from departing until they settled their bills?--- Unfortunately, Champion breaks away from his theme too quickly, shifting focus abruptly from the social and economic details of the "bubble" to outline its overall context, in particular the shortcomings of Taiwan's legal and accounting professions. In a chapter aptly entitled, "The Law: Vaguely Written, Randomly Applied," Champion explains the five common answers to the seemingly simple question, "Can a foreigner drive a car in Taiwan?" In the following chapter, "Chops for Rent," he notes the relative absence of detailed accounting principles and auditing standards in Taiwan, pointing out that Taiwan has 16 pages of accounting standards while the United States somehow needs more than 2000 pages to cover the same material. These also are rich in stories, and stories that no doubt explain certain aspects of Taiwan's stock market phenomenon.--- ...As most Taiwan expats are aware, there is a dearth of English language literature on any aspect of Taiwan, almost nothing between the Lonely Planet guide and Ph.D. dissertations in economics and political science. This vacuum forces Champion to stretch too far to provide a frame of reference for non-Taiwan readers. He is forced to explain not just the "bubble," but the entire economic "miracle" of which it is a part. No one book can achieve all that.--- "The Great Taiwan Bubble" ultimately raises far more questions than it answers. One of the most intriguing questions is one that Champion does not address: How did the Taiwan that gave us the "bubble" become such a rock of economic stability only seven or eight years later? Still, at least for lomg term Taiwan expatriates, he has answered a far more important question. He has reminded us why we stay.--- (Paul Cassingham is branch manager of Perkins Coie Commercial Finance Ltd. Liability Company.)
Help other customers find the most helpful reviews
Was this review helpful to you? Yes
No
