Source is AMAK - Asset Management Association of Korea/자산운용협회

Source is AMAK - Asset Management Association of Korea.

Source is AMAK - Asset Management Association of Korea.

First, you claimed that Koreans want to avoid taking responsibility for the financial system here in Korea. In essence, you claimed that foreigners have little to do with financial issues in Korea. However, you then turnaround and claim that excess liquidity in Korea is caused by the Yen Carry trade, in essence, pinning the problem of liquidity on low interest rates set by Japan’s central bank. You went from blaming the Bank of Korea to blaming the Bank of Japan in one post. You’re obviously confused.

In your newest litany of nonsense, you’ve also claimed that Korea has too much American currency. Austin, Austin, Austin, you still don’t get it do you? Korea most certainly needs American currency if it is to avoid a run on its currency by speculators. Korea also needs to stockpile this currency in case of a stampede toward lower risk assets. i.e. dollar denominated treauries. Last, but not least, because the Yen and Yuan are so cheap, U.S. currency is needed to maintain export price competitiveness. Again, this is all econ 101, but of course, I wouldn’t expect you to understand.

Empty apartments, Austin? That’s the whole point! That’s the reason the Government is trying to tamper down speculation. The government knows that housing prices are not indicative of demand for living space, but are driven by speculation. This is exactly why the government is raising interest rates.

There are a variety of other problems in your post, Austin:

1. You’ve fantasized a conspiracy between the Chaebol and the Bank of Korea to provide liquidity in the market, but then you attribute excess liquidity to the Bank of Japan.

2. You confuse the Bank of Korea with secondary Banks. (Secondary banks owned by the Chaebol, not the Bank of Korea, are commonly cited as responsible for excessive loans to cheabols and the collosal amount of debt owed by the Chaebol at the end of the 1997 Asian meltdown.)

3. You confuse a flat home market with a collapse of the housing market.

4. You claim that high interest rates do not effect the money supply. (Everyone knows that interest rates and the money supply are inversely related, Austin. Well, everyone except you)

5. You claim that market in Korea will “collapse” in two years, even though Korea recently achieved record exports. (With an overvalued currency to boot!)

6. You’ve changed your argument from, “Korea hasn’t learned anything from 1997 and blames foreigners too much” to “The Korean economy will collapse in two years!” Austin, stick to your thesis. You can’t change it all willy-nilly.

Austin, you don’t know squat about market principles.

The world’s stock markets had a bad few days last week, all on account of US sub-primes. Korea was included. There’s no story here, either.

America invests money on behalf of the whole world. Public funds, private funds, governments and individuals give money to Morgan Stanley, Goldman Sachs, Vanguard and others to invest on their behalf. Saying that the US was the big seller is misleading, to be sure, but that’s the Korean media as usual, no story here.

Korean household debt is at an all-time high, almost 40mil won per household. Biggest growth has come from people taking mortgages to invest in real estate. Real estate hasn’t collapsed, but it has leveled off (see the link in the previoius thread about the “pyung”). The BOK wants that trend to stop, so it raised rates to slow down household borrowing, mindful of the 2002-2003 credit card debacle. But the BOK is “run by idiots”, and this move is of course too little too late. The world’s financial markets have got much bigger problems to work through now than the mortgage gluttony of Korea’s amateur property speculators. No story here, either.

August being a slow news time, let’s blame America for something. Now THAT’s a story.

I’ll buy you a magnum of French champagne!

Champagne *is* French, no need to qualify that word

Any bubbly wine made outside the French region of Champagne is just sparkling wine.

The amount of money Koreans are investing overseas has skyrocketed in the past 6 months since capital gains tax was removed from onshore based internationally invested mutual funds. (however if you invest directly into an offshore fund you will pay the tax which has affected many international asset managers in Korea).

Ah, another eg of how Korea levels the playing field. Hubba Hubba!

Silly you. Don’t you know that it was the evil-American-backed IMF that caused the financial crisis of ‘97?