I’ve been a tad busy this week, so I haven’t been able to post much, but this needs to be noted:
At the same time, the government has been waging an all-out war against the foreign media, actively responding to critical reports by the Financial Times, the Wall Street Journal and others that it previously ignored.
It has issued a number of press releases refuting media reports, that it claimed distorted the facts of the world’s 13th largest economy, and exaggerated the difficulties facing Korea in the wake of the global credit crunch and economic slowdown.
Officials from the National Intelligence Service are said to have held a meeting with the correspondent of the Financial Times here in October at the height of the government’s war against foreign media.
Bringing the spooks to talk with foreign correspondents? Sheesh, who the hell at Cheong Wa Dae thought that was a good decision?
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This article seems more to highlight reality:
“2.6 million households lack main source of income”
http://joongangdaily.joins.com.....id=2898042
This reminds me of the days before the ass fell out of the won in ‘97. The government kept screaming at the top of its lungs through every media outlet possible that it had 100’s of millions in foreign cash reserves, when in fact the well was dry. It was an attempt to try to change reality by making everyone believe it was different. I guess the thinking here is, if foreigners actually believe the Korean economy is sound, they pour investment money back in the country, reversing the downward won and KOSPI, and giving our companies enough capital to weather the storm. After years of watching the North Korea and its bullshitting no one believes, you think the South would realize no one is going to throw money into Korea just because the government is claiming the opposite of facts that everyone can see. In fact the BS crusade is probably stopping the government from taking legislative action that might help the nation, but would “tip their hand” to the foreign media.
Evidently waterboarding isn’t persuasive enough. Next time use another of the classics: fingernail removal.
Well if this doesn’t work, Lee can go with plan be. Hanwha’s Kim Seung-yun can stop by for a little “discussion” about the Korean economy.
One thing I don’t understand, maybe someone can explain this to me. Why does Moody’s and other rating agencies still give such toxic companies like AIG, which got bailed out massively, a credit rating of AAA? Why isn’t the US, with its 13 trillion dollar foreign debt, rated down at least a notch? Why do crooked companies like AIG, Fani May, and others who have cooked their books bringing on one of the greatest financial failures in human history, have higher credit ratings than Samsung who will go onto record yet another solid profitable year, despite some slowdown? Why are they so quick to rate down Korea yet, none of the companies who are responsible for the sub prime disaster are punished?
A little bit strange, no?
This is the CEO of GM talking:
“There isn’t a Plan B,” said chief operating officer Fritz Henderson. “Absent support, frankly, the company just can’t fund its operations.” Without help, he warned, “the company will default in the near term, very likely precipitating a total collapse of the domestic industry and its extensive supply chain, with a ripple effect that will have severe, long-term consequences to the U.S. economy.”
Default? No Plan B? Total collapse??
The spooks are also conducting “audits” of foreign employees at Korean brokerages/financial institutions. But you didn’t hear that from me.
Since when do Korean brokerages and financial institutions have foreign employees? Or do you mean the ethnic Koreans with foreign nationalities (have they betrayed their blood)?
Is that sarcasm? I am talking about foreign employees. Ethnic Koreans don’t count.
seouldout,
Mythbusters proved that chinese water torture makes you go buggy pretty quickly. Maybe that’s the way to go.
I’m serious, red sparrow. So far as I have known, that industry is homogenously Korean, and the only foreigners employed therein have been proofreaders of research reports and press releases.
linkd> I used to be working for a Korean financial institution, front office, not proofreading. and I was not the only one. and I know other foreigners working in Korean financial institutions. there are probably not a lot, but there are.
Linkd: There have been foreign analysts and traders in the Korean brokerage houses and banks for many years, although they now are fewer in number and farther down the food chain than in the past, the pioneers having had their grey matter assimilated by the Borg before being pushed out the door.
lawyers, too.
and many were white house niggers, although increasing numbers of all ranks have been Gyopo nobi, who are more tractable
Evidently, several people have been harassed, several economists and writers critical of the government have been visited by security agents. Korea-in-Focus has it on their schedule as a topic for this week’s podcast.
Very scary.
Ethnic Korean foreign attorneys are preferred for three reasons: (i) they can usually speak and read Korean, and thereby are more useful to the firm and to the client; (ii) they are eager to “fit in” and so will put up with a lot more bullshit if the firm’s management likes the bullshit; and (iii) the rest of the society prefers ethnic Koreans too.
I guess that settles that, then. Much as I cherish my city-wide popularity (I was always one of the cool kids in school), I guess I don’t know everybody.
More to the present discussion of information suppression:
Something that I appreciate very much about “Western values” in the context of the current global financial crisis is the extent of the intelligent public debate that is going on now. For some years, economists, bankers, pundits and think tanks have kept the BIG question bouncing around among themselves (The US is going into debt at a rate of $800 bil per year, and China is posting a profit of $800 bil per year. Where is this heading?). And there were very intelligent people with very different views able to make their views public.
Now that things have hit the fan, there are a LOT of (to me, at least) very interesting things to discuss, from big macro questions:
We got here through too much consumption & too little savings. So should the Fed now force Americans to save, or help them spend their way out?
Is it right to even believe that everyone should own their own home?
Did Greenspan get it all wrong?
to company-level issues:
Was it right or wrong to let Lehman fail?
Should Citi be saved?
Really – WTF about GM? Can we let it go?
to total geek shit:
Should we suspend mark-to-market accounting for the duration of the crisis?
Should we force derivatives dealers to accept a portion of their payment in the derivatives themselves?
I have been hugely impressed by much of what I’ve read lately, and I think there is some evidence that the discussion itself shapes policy, namely: Paulson was all set to spend the $700bil TARP buying up CDOs. For about a week, the financial press and blogs went totally apeshit over that idea, and then Paulson abruptly announced that the money would go into capitalizing banks instead, giving the US taxpayer some hope of a decent payout in the end.
But for the public, at whatever their level of knowledge about finance and economics, to even HAVE these discussions (or lurk among them and listen), there needs to be a large pool of experts who have access to real data. And that’s what’s great about Western values. We FORCE our companies and governments to release data, lots of it, and this data is what underlies intelligent opinions.
Koreans accept opacity from all the elites who control their economy, with the result that we get nonsense at the public discussion level. Take this, an 800-word column from a professor of international relations with NOTHING to say except that China has had more meetings on its economy than Korea has. Or this 700-word editorial which takes the potentially defensible position that Korea should try to force foreign investors out of its stockmarket, but where the writer is incompetent to explain why his idea is any good. Or this pathetic travesty by a Yonsei professor, where any attempt at intellectual rigor has failed entirely. A sad display of total ignorance of the very concept of cause-and-effect, presented as policy recommendation to nation’s rulers.
#5,
You’re not the only one who’s wondering about those things. The whole world has been asking those questions.
“This reminds me of the days before the ass fell out of the won in ‘97. The government kept screaming at the top of its lungs through every media outlet possible that it had 100’s of millions in foreign cash reserves, when in fact the well was dry.”
Yes, but, if I remember correctly, it took just two weeks for the Korean economy to go tits up back then (one week was wasted claiming that the IMF’s demands were too harsh…a face saving subterfuge that sent the economy plummeting).
I agree with Linkd at #17.
I read the International Herald Tribune / JoongAng Daily package each day. The IHT editorial page is something to look forward to: style, wit, strong opinions, a dash of delicious sarcasm, and real flair in the writing. (The same can be said of the WSJ, too.)
Turning to the Korean editorial pages, I groan. With some notable exceptions, the style is flat, dry, pedantic, stiff, stilted, etc. — some of it from the translations, no doubt, but that can’t be all of it.
It’s the difference between repeating conventional wisdom, on the one hand, and being truly wise, on the other.
Korea’s got better girls, though.
# 17 Linked
“And that’s what’s great about Western values. We FORCE our companies and governments to release data, lots of it, and this data is what underlies intelligent opinions.”
I think you are a bit confused. There isn’t any “FORCE”/data being released concerning where the 700 Billion is going. Paulson WON’T tell congress.
http://www.everythingiknowiswr.....ilout.html
I’m shaking my head and my belly is bursting from laughing too hard. Where was this “opacity” when the Wall Street crooks were having their party? Where was this system when they “sold their souls to the devil”? Give me a break. I don’t think any American or British economist have the right to lecture about anybody about “opacity” at this point.
That is a good one, isn’t it? But go to your Google, and type in “Bloomberg sues Fed”. I think we’ll soon be finding that the US freedom of information act kicks Paulson’s ass.
CM:
Why does Moody’s and other rating agencies still give such toxic companies like AIG, which got bailed out massively, a credit rating of AAA?
That’s a real good question. Is it still AAA? Anyway, none of that matters right now, or for the next several months. The ONLY thing anyone seems to want to buy right now is US gov’t bonds. Yields on T-bills are zero, and now that the US gov’t has said it will backstop, let’s see, AIG, all commercial banks, all investment banks, credit card companies, student loans…the list goes on. Anyway, AIG’s debt is now just as good as a T-bill, because the company has been – say it with me – NATIONALIZED.
Why isn’t the US, with its 13 trillion dollar foreign debt, rated down at least a notch?
Because the US gov’t pays its bills in US dollars. It CANNOT default, because it can print dollars in unlimited quantities. More interestingly, the price of a T-bill credit default swap has been increasing, and has recently hit a record 66 basis points (it’s usually about 2). This is the price of buying insurance against a default on a T-bill. Note that default should be conceptually impossible, so the price of insurance should be zero. But these are strange times.
Why do crooked companies like AIG, Fani May, and others who have cooked their books bringing on one of the greatest financial failures in human history, have higher credit ratings than Samsung who will go onto record yet another solid profitable year, despite some slowdown?
Because Samsung isn’t a company, it’s a fiefdom ruled by a feudal lord. Also, last I checked, Samsung Electroncis was worth about 15-20% of Korea’s ENTIRE stock market. Buying a stock in this company is basically a bet on the entire national economy, which is export-based, and which has lost a big chunk of its export market, and which (see above) does not have the luxury of paying its bills in its own currency.
Why are they so quick to rate down Korea yet, none of the companies who are responsible for the sub prime disaster are punished?
Who is responsible for the subprime disaster is indeed a big subject. But Wall Street has been changed forever, and 150,000 financial professionals are out of work; many of them will never work in the financial industry again. And as for Asia, nobody forced them to keep buying US bonds and financing America’s consumption boom. Asia bought into this disaster, too.
That’s not true at all, cm. There was plenty of warning about this disaster, years and years worth of warning. It was no secret at all to the financial managers who controlled your pension funds and your mutual funds that a bubble had formed. And anyone who cared to read a paper or browse a website could have easily found that there were serious concerns about the economic situation and the fragility of the financial industry since at least 2004, though the story wasn’t well-known until maybe 2005-2006.
It IS definitely true that the ratings agencies had been seriously corrupted and that debt had been badly mispriced, but again, this became well-known years ago, and financial managers could have taken short positions or retreated to cash well before the crash. It’s also true that the regulatory authorities and risk managers failed in their jobs. But the basic framework of the impending disaster was no secret.
The problem, as with any bubble, is that a lot of people make a lot of money while it’s inflating, and although everyone knows it will pop, no one knows when. Everyone thinks they’ll get out in time, but they actually don’t.
As for lecturing other about opacity or whatever, I do have some sympathy with that. The US system has lost a lot of credibility this year, and it will take a long time to win it back. As far as I’m concerned, if an economic model works, whatever its level of planning/freedom, opacity/disclosure, openness/protection etc., then it’s fine with me. I just appreciate open disclosure for my own intellectual curiosity, because I want to know what’s going on around me. I’m also an investor, and I don’t believe in buying what I can’t understand. Buying a stock in a Korean company means buying what you can’t understand, since they don’t reveal enough about themselves.
“Buying a stock in a Korean company means buying what you can’t understand, since they don’t reveal enough about themselves.”
That’s also the same with buying western stocks.
Look, I’ve lost half of my hard earned savings(so far), and some of things that I had no clue was happening, are what I’m starting to find out now. It makes my blood boil. I don’t believe what anything that comes out of Wall Street’s mouth anymore. As far as I’m concerned, they’re all crooks to me.
A lot of people feel that way now. I’ve lost half of my investment also. I bought back in during August, because I thought that was going to be around the bottom. But I thought carefully about how much I wanted to spend. I’m still well over half in cash, and I only put as much into stocks as I was willing to lose half of.
That’s right: half. Meaning when I bought in July I was thinking “worst case, I could lose half”. Is that what you thought when you put your hard-earned savings into stocks? Because it IS speculating. You can try your hardest to make an educated guess, but it’s still a guess. That’s in the disclaimer at the bottom of whatever real or electronic document it is that you made your purchases with.
Later, when you’re calmer, you will still (again) have the choice of making a guaranteed 3% or on your savings in a bank account, or making an almost-guaranteed 5% or on a bond, or a risky average of about 7% on stocks. It’s up to you, and it always has been.
Here is the link for an article about the gagging of economists. What’s interesting is that though this issue drew a lot of attention here, it seems to be off the radar domestically. The article is already relegated to archive status and never made any of the “most read” or “most interesting” lists.
You can’t have security police visiting people (and their bosses) who criticize the government. I don’t think people here understand how fragile their democracy is.
“Why isn’t the US, with its 13 trillion dollar foreign debt, rated down at least a notch?”
“Because the US gov’t pays its bills in US dollars. It CANNOT default, because it can print dollars in unlimited quantities.”
OK, Linked, what about Britain, with over $10 trillion foreign debt, external debt per capita of $190,000, and external debt to GNP ratio of 376%? Britain’s foreign reserves is at less than $80 billion. Similar pictures for other heavily indebted Western countries like Germany, France, Australia, etc. Why aren’t they being talked about rated down?
I guess because the foxes are guarding the chicken coop?
It only came to that because they’re foreigners. Among the brood, all it takes is a phone call.
CM, I know I admitted to taking some joy in the abundance of interesting reading at hand during this meltdown, but there’s no need to get carried away. Really, when was the last time you were having a conversation with somebody who used the phrase “external debt to GNP ratio” in a sentence?
redstateleroy: do you mind posting that link again?
http://online.wsj.com/article/.....lenews_wsj
Latvia has also detained a “gloomy” economist. These are the times when I’m glad that the U.S. has more respect for freedom of speech than most other nations.
Regarding the initial post, we can imagine the rest of the story:
The NIS official reported to his superiors that the browbeating would not likely work.
The British ambassador to Seoul is summoned to the Ministry of Foreign Affairs and told to immediately stop spreading malicious lies and distortions concerning the Korean economy.
The ambassador is at pains to explain that a private organization, the Financial Times, is reporting the news, not the UK government. He goes on to explain that all his government can do is encourage the FT to be prudent in its coverage, but the UK is constitutionally constrained from actually controlling (much less stopping) the FT from exercising its right to free speech.
The incredulous Foreign Affairs Minister accuses him of being disingenuous; reminding him that it’s not so difficult to bulldoze and control the media, constitutional niceties be damned, just look at what we’ve managed this year in Korea! You just need some balls, Neville!
Meanwhile, to underline the message, officials from the Ministry of Strategy and Finance are dispatched to Korea’s three main Free Economic Zones. They call on the representatives of British businesses that have been invited to invest in these FEZs. They unsubtly ask how long it would take for them to evacuate half of their British employees.
Fast forward a few months, and little Ji-Song comes home from school and asks:
“Mommy, is it true the economy is actually declining this year?”
“Ji-song, why on earth would you ask such a question?”
“Well, while walking home, I found this article. It was attached to a balloon. Mommy, what does ‘redacted’ from the Korean edition of the Financial Times mean? And what are ‘Reporters Without Borders’?”
“Ji-song, give me that right now! And don’t believe the lies you read in this article! Our Great CEO has promised us 7% growth and $40,000 incomes. If that doesn’t happen, it’s only because of these kinds of imperialist lies that are trying to destroy our economy!”
“Okay, you can have the article. But if you want the 1 quid that was attached to it, Mom, apparently I’d be a fool to accept anything less than 3,000 won in exchange.”
(Note to self: don’t drink coffee at night, and you won’t be posting this nonsense at 2 AM).
My Korean heritage taught me two things about investments: 1. Stock leads to ruin. 2. Smart investment in real estate is the only good investment.
I know there are a lot of reasons to say those two lessons are wrong. But all I know is unlike all of my friends with a stock portfolio, the value of my house in New York remains steady while I continue to receive tax breaks from it. Plus the view of the Hudson River is real nice.
Sounds like you live in Westchester County. I live in Fort Lee, NJ. I own property also. An apartment really. I have a great view of the parking lot.
Real estate is a tangible investment with real value. If you own a home, you have a place to live, and if you have a bit of land, you can grow your own food as many of my colleagues do. My grandparents and parents fed large families from their own gardens and fields. A couple of my colleagues even heat their homes with wood stoves fueled by wood collected from their property. One colleague’s father owns about 100 acres, which he accumulated over time, paid for with earnings from his small appliance sales and repair business.
Why do Koreans like Ft. Lee so much?
Is it the name?
Yes, it’s the name.
Case in point? Palisades Park.
Also, I believe that Cerritos (세리토스) began attracting Koreans when Pak Se-Ri (박세리) began her illustrious career.
Then why aren’t there more Koreans in Park Slope?
Park Slope, clearly, is not named after a Korean person, unlike Fort Lee or Palisades Park. I am a distant relative to both Fort and Palisades actually, although I only met each once at a family reunion. They were both really old, and had this crazy hybrid of Jersey and Korean accent.
Park “Slope”? Think about it, DB.
Very clever and funny, Sperwer, very funny. You’re a riot.
Just offering a thought on why it was NOT likely to have been named after a Korean. Damn, and here I thought I was being PC. Apparently I need remedial classes from those who live in the nanny state up north.
No need to get defensive, I wasn’t accusing you of anything.. a slope is a slope. Gook chinks that they are. No need for any PC here. We’re all man enough here and can take a little joke without getting our knots tied.
@33 “it’s not so difficult to bulldoze and control the media”
if this were true in Korea, I suppose the Bulldozer himself might have given it a go much earlier this year.
Maybe you should get your tubes tied.
@33, governments in most OECD countries influence the media heavily. You sound like another liberal idealist with your nativity.
When it comes to British media, or anything British they are heavily influenced by the Japanese government so in actuality the Korean government should be talking to the British government and not the private media if they want to end the rumors.
Given the direction the Korean government took it looks like they are aware of the Japanese influence.
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