How Asia Will Fare if Europe Cracks | Union Européenne, une construction dans la tourmente |
Greek elections may have assuaged fears of a European financial contagion spreading to Asia, at least for the moment.


   But as troubles brew in Spain, where borrowing costs shot up again Tuesday, and as Greece faces more painful cuts to meet bailout targets by September, many wonder who in Asia is most exposed should Europe's economy and financial system finally crack.

Lessons from the 2008 financial crisis show that while all of Asia tends to get hit when the world economy shudders, the severity differs depending on which countries have the biggest trade and financial linkages to the rest of the world, and which are best-prepared with big currency reserves, flush government coffers and central banks with room to cut interest rates.

In general, Asia has more room than the West to react with interest-rate cuts and government spending. But there are new wrinkles since 2008, and some countries, notably India, Vietnam and Japan, are in worse shape to weather a storm....