Investors may be kidding themselves into believing the Asian financial typhoon will blow over as quickly as Mexico's currency debacle did three years ago.

Last week, sunny optimism prevailed as the stock market hit new highs, with even bank stocks belatedly joining the party. But several economists warn of clouds on the horizon.

If corporate earnings prospects deteriorate this year because of Asian fallout, stock valuations would weaken. That could hurt consumer confidence and spending, muffling the U.S. economy.

"A lot of people are citing Mexico, using their model for rushing back in," said economist and money manager A. Gary Shilling. "But there are quite a few reasons why it shouldn't be a model."

Mexico adopted strong measures against the currency crisis in 1995 and quickly recovered the confidence of international markets.

Mexico was at the time an isolated case, Mr. Shilling noted. By contrast, the problems in Asia have spread across the region.

In addition, Mexico has a 2,000-mile-long border with a highly developed neighbor, the United States, which was enjoying a vibrant economic expansion and felt compelled by its own interests to give aid.

By contrast Japan is an island nation that has not demonstrated the same degree of leadership in Asia. Moreover, it has a sagging economy and serious financial problems of its own.

The size difference also is striking, pointed out Edward Yardeni, chief economist at Deutsche Morgan Grenfell. Mexico's national economy is comparable in size to that of Greater Los Angeles, but Asian nations account for nearly one-quarter of world output.

"Investors want to believe Asia doesn't matter and the worst is over," he said. "They looked at fourth-quarter earnings and said, 'That wasn't so bad.'"

In fact, Asia's crisis remains a fresh event, and major tremors have not yet been felt here, Mr. Yardeni said, adding, "I think we are fooling ourselves if we think a quarter of the world's economy can take this kind of hit and it will only benefit us."

Sung Won Sohn, chief economist at Norwest Corp., said economic conditions in affected parts of Asia are unlikely to hit bottom until later this year or even early next year.

He, too, cited important differences between the Mexican and Asian crises. Mexico had been through a wrenching debt crisis in the 1980s, he pointed out, and so wanted to act swiftly on its second crisis.

Asian nations have not suffered economic reverses in decades and thus do not have the political and social consensus to make structural economic changes quickly. In some cases, he said, this involves changing habits and behaviors reaching back 3,000 years.

Finally, Mr. Sohn noted, Mexico had a strong leader in President Ernesto Zedillo Ponce de Leon, who is a trained economist.

The key question remaining about the Asian financial crisis is whether China will devalue its currency and spark a second round of trouble.

"China is the 800-pound gorilla," accounting for 50% of the regional economy, noted Mr. Shilling, who heads his own firm, A. Gary Shilling & Co., Springfield, N.J. He said he thinks China will ultimately be forced to devalue after the recent moves elsewhere in Asia.

Both Mr. Yardeni and Mr. Sohn think so, too, but that it will delay doing so as long as possible-possibly until next year.

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