Please explain the following quotes in six to seven sentences from "Emerging Economics and the Financial Crises of the Late 1990s". Please also give any contemporary relevance of the quote. Do not just state what the quote is explicitly saying.

Quote 1

"Beginning in late 1994, a near-devastating series of financial crises struck the emerging market countries of Latin America, East Asia and Eastern Europe. Although the precise sequence of events differed for each country, the crises followed similar patterns. In each case the local currency collapsed, stock and bond markets plunged, the national banking system was overwhelmed by bad debt, and foreign investors fled the region. The afflicted countries all saw imports drop to very low lev- els as expanding debt, higher import costs, and a breakdown in the economy squeezed local consumers" (60)

Quote 2

"The market collapse in Mexico began on December 20, 1994, when the Mexican government suddenly announced a 13% devaluation of the currency band within which the peso was permitted to trade. In so doing, it abandoned a seven-year old policy that had seemed key to its recent prosperity.1 This band - a trading range within whose upper and lower limits the peso was permitted to float - was set by Mexico's central bank, Banco de Mexico, and it depreciated, or crawled, every day by an amount that was formally established by the government and known to the market" (60)

Quote 3

"The initial cause of the investor panic was not hard to discern. Mexico's government and its central bank had promised all year that the value of the national currency would remain within a predetermined trading band that set upper and lower limits in U.S. dollars for the value of the peso. The government insisted that it would never consider permitting the currency to trade outside of this band - the cornerstone of the Pacto , the agreement between the gov- ernment, labor, and industry that underpinned a series of reforms begun in the mid-1980s. Until the very last days of the year, a large number of major foreign investors had believed in this policy. After all, a little more than a year ear- lier, the U.S. Congress had passed the North American Free Trade Agreement (NAFTA); and in the excitement over the possibilities of a single North American market with more than 350 million people, an outpouring of optimism had overwhelmed Mexican markets" (61)

Quote 4

"In order to attract more capital and reduce imports, Mexico might have raised local interest rates and depressed the economy. Local interest rates had already increased from single digits (less than 9% in mid-February), to nearly 20% by early summer, but it was difficult to raise them much more in what would be a hotly contested presidential election. At any rate, investors were concerned that, given the large fiscal deficit which the ruling party was unlikely to tackle during a presidential campaign, any increase in rates might have actually worsened the underlying fundamentals by significantly increasing the governments debt servicing cost" (62)

Quote 5

"The "first financial crisis of the 21st century," as the Mexican Tequila Crisis has been characterized certainly did seem to be a harbinger of sorts, marking a new, horrible path in the world of international finance. In a few years similar crises hit other emerging market countries. In July 1997, the Thai currency, the baht, was forced to devalue, initiating a startling series of Mexico-like crises that over the next few months engulfed the economies of Thailand, Indonesia, Malaysia, and the mighty South Korea. For a while it looked like even Hong Kong, Taiwan and China would be swept away by the Asian tidal wave and that U.S. and European markets would be buffeted by the storm. On October 27 the Dow Jones Indus- trial Average (DJIA) lost 554 points in one day, in the biggest point loss in its history. The New York Stock Exchange was forced to suspend trading that day. In early November, Sanyo Securities, a large Japanese broker, went bust - the first time a Japanese securities house had gone under since the Second World War. Within two weeks Hokkaido Takushoku, one of Japan's top ten banks, also collapsed. In January, South Korea was forced to restructure $24 billion of international bank loans" (65)

Quote 6

"How can fundamental valuation ever become irrelevant in financial markets? Although the market consensus has it that investors bolted each market because of sudden changes in economic prospects, in fact a market collapse is nearly always implicit in the structure of the market itself. Market players, in other words, can be forced by the market itself to behave in such a way that asset prices respond to mechanical factors, not to valuation. It is the structure and behavior of market players that systematically undermines the market, not changes in fundamentals. These only set off the crisis" (66)

Quote 7

"Whatever the source, external or internal, the shock is transmitted to the real economy through the capital structure. An entity's capital structure is the way a whole series of its funding-related payments are indexed over time, and the indexation will automatically cause real changes in the value of these payments as external conditions change. This is not to say that only capital structure matters; an external shock can be great enough that no capital structure, no matter how well designed, can protect the economy. But depending on the character of the national capital structure, the initial shock can be partially dissipated, if the indexation causes the real value of payments to move in the opposite direction of the effect of the external shock, or exacerbated, if they move in the same direction.10 Although this may seem complex and even unlikely, the indexation implicit in a capital structure is very automatic and fairly easy to grasp. But to continue with Exhibit 3, the ability of the country to withstand or recover from the effects of the shock, then, depends on two things. These are shown in the middle and right-hand columns of Exhibit 3, as the arrows point- ing to "Recovery or Collapse." The first is the strength and credibility of the local system, including the banking and political system. The second is the magnitude of the shock as it is transmitted into the real economy via the capital structure" (70)

Quote 8

"The same is true for countries that face financial crises. The success or failure of a set of economic policies to foster growth is a separate issue from the failure of its capital structure to protect the country from financial distress or market-related disruptions. When a country's financial markets suddenly collapse, it is more appropriate to look at how the right-hand side of its balance sheet was designed than to second-guess the economic policies that drove its left-hand side. This is not to say that there is no relation between the two sides of the balance sheet - on the contrary, there is an important set of relationships between an economic entity's capital structure and its operations. But the crisis will have been caused by the way the capital structure was able or unable to absorb changes in external conditions, not by the quality of fundamental economic policymaking" (71)

Link to article: https://www.jstor.org/stable/pdf/43504227.pdf?refreqid=excelsior%3A4e2f2378b0406b2e023eba514c5b9c51&ab_segments=&origin=&initiator=&acceptTC=1