HONG KONG — At the annual World Bank conference over the weekend, two men on opposite sides of the region's economic crisis--the speculator and the statesman, the accused villain and the alleged victim--had a showdown, firing off words like "moron" and "menace."
"It's 'High Noon' in Hong Kong," said a World Bank official.
George Soros, an American financier who once made $1 billion in a day betting against the British pound, has drawn the ire of Malaysian Prime Minister Mahathir Mohamad after his speculative attack on weak currencies in Southeast Asia. The fall of the Thai baht sparked a devaluation domino effect across Indonesia, the Philippines and Malaysia this summer.
As a result, the central bankers' main theme this week has become how to stop the meltdown of the Asian miracle.
Mahathir, 71, who has overseen Malaysia's growth during his 16-year rule, charged that Soros aimed to stop the fast-growing region in its tracks. "All these countries have spent 40 years trying to build up their economies," Mahathir said before the conference, "and a moron like Soros comes along with a lot of money" and undermines them.
The opposing views of Soros and Mahathir encapsulate a key issue that was a major topic of the conference and divides developed and developing countries: how to respond to financial crises tied to the movement of capital markets.
Since July, Malaysia's ringgit has lost 20% of its value. Although experts say the country's economic policies invited such a correction, the prime minister said Malaysia is the victim of a costly game.
"Currency trading," Mahathir declared in a speech Saturday evening, "is unnecessary, unproductive and immoral. . . . It should be illegal."
Soros denied that his hedge fund, the $9.1-billion Quantum Fund, had a role in devaluing the ringgit; in his own speech, he said that ironically the buying of Malaysian currency during the crash helped buffer the impact. Mahathir, he claimed, was using him "as a scapegoat for his own mistakes."
But Soros admitted to zeroing in on the Thai baht and other currencies, sending regional stock markets spiraling downward. He dismissed Mahathir's desire to ban currency trading, calling it "a recipe for disaster." After the prime minister's speech, Malaysian finance officials hastily reassured bankers that policies would not change.
"Dr. Mahathir," Soros added, "is a menace to his own country."
