Dawn of a new era?

Came away from a talk today with some profound insights and thoughts of my own. It just struck me out of nowhere, but I am penning this down and hopefully down the road, I can look back and reflect whether what I've thought of has come true or not.

The talk was on the credit crunch and mainly centred around its impact on US and Europe. It got me thinking about what does this mean for Asia. Then 2 statements made separatelt by the speaker struck me. The first one goes "During the burst of the dot com bubble, the US had a budget surplus 3% of GDP and fiscal stimulus resulted in a swift recovery which led to a budget deficit of 3%." The other went something like this "There will come a time when the sovereign wealth fund (SWFs) will no longer come to the rescue of these troubled financial institutions and this will occur at a time when they need it most. As such, Europe is likely to feel the brunt of the credit crunch much worse than US."

These 2 seemingly innocuous statements put together got me thinking about what this could mean for Asia and even Middle East. There will come a time when SWFS realise their folly that investing money into these foreign financial institutions aren't such a great idea. This is evident by the losses suffered by many of them with the subsequent fall in share prices of institutions like Blackstone, Merrill Lynch, Citigroup etc.

Therefore, instead of putting all the country's reserves in such places, why don't Asia Central Banks use it on stimulating domestic demand and fiscal spending? This will allow reserves painstakingly built up over the years to be spend on Asia for the benefit of Asians. In addition, this presents a great opportunity for Asia to "decouple" from the Western world while they are sorting out trouble of their own. This will allow the "decoupling" theory to actually be realised and not allow Asia to be stuck in a situation where "when the US sneeze, Asia catches a cold". The end product of the crisis will therefore result in Asia becoming the main engine for global growth and establish ourselves as a leader on global issues that the West has been so accustomed to.

I know my idea seems a bit far fetched and naive since my knowledge of economics isn't that great and there are probably barriers/politics that prevent such a scenario to materialise. But I am sure that this credit crunch presents an opportunity for Asia to start asserting ourselves on a global basis if we start thinking more about ourselves instead of thinking that we need the West to progress.

Can someone please tell the Asian Central Banks my great idea?

I SO WANNA GO HOME!