Here we go again. The won has hit a new low against the dollar, falling to its weakest point in the past 30 months to 1,049.6 won to a dollar, a fact that has to be disconcerting to anyone getting their paychecks in the Korean currency and doing the mental calculation in another currency (i.e. foreigners).

(Graphic from The Korea Times)

The initial explanations center around uncertainty about the South Korean economy and the advance of the U.S. dollar against the Euro. One Bloomberg article cites a “monetary shock” as another reason for the big drop.

However, the other bit of South Korean economic news is the widening current account deficit (”CAD”), which has been in the negative for four consecutive months. As all graduate level economic students will tell you, currency fluctuations and CAD rate are linked, particularly if a country is still viewed by the international financial community as still “developing.”

Korea is simply not selling enough cars, ships, and plasma screen TVs to offset the amount of won flowing out of the country to feed Korea’s appetite for foreign commodities (i.e. Australia and Latin America), capital goods (i.e. Japan), education (the U.S.), investment funds (i.e. Europe), oil (the Middle East), etc. It’s interesting to note that the two components of CAD that Korea has had the most trouble with is Foreign Direct Investment (”FDI”) and tourism. These are two items that foreigners have take their dollars, yen and Euros to convert into won to be active in, which would help balance the CAD. Little wonder why increasing both FDI and tourism is such a hot topic in Korea.

The silver lining? Hyundai cars, Samsung cell phones, LG plasma screen TVs and STX LNG tankers get cheaper overseas and the sale of chaebol products goes up. This would explain why Hyundai’s stocks are doing well. In a sense, keeping the won low is an easier way to grow the economy, which may be the reason why Bank of Korea Governor Lee Seong Tae is all for it. So, expect it to get worse, before it gets better!

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Ignoring the advice of legions of bitter waegookin, Warren Buffet has actually decided that South Korea isn’t such a bad place after all. After decades of sound financial decisions guiding Berkshire Hathaway into one of the most successful investment holding companies in the known universe, 77 year old Warren Buffet thinks that for 2008, South Korea may actually be a safer investment bet then the U.S.

Per a UK financial journal:

Last weekend the world’s most famous investor Warren Buffett unveiled his thoughts on the current global investment climate at his investment firm’s annual shareholder meeting in Nebraska - tipping South Korea…

At the Berkshire Hathaway gathering, when asked what he would do with a million dollars to invest, the world’s most famous investor, dubbed the ‘Sage of Omaha’ Buffett replied: ‘I could find better things to do with a million dollars probably in Korea than I could probably find in this market (the US).’

Emphasis mine. Now this may have something to do with fact that POSCO made him $2.14 billion in a little over a year from just a $572 million investment. Hell, with return rates like that, even the most bitter waegookin (provided he’s an investor) would love Korea.

Other Korean stock tips can be had here.

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Okay, not really, but the picture is deserving of some kind of (attempt at a) witty remark.  It’s not every day you get a image of the two greatest living oligopolists of their respective countries conspiring with each other.

Anyways, looks like Bill Gates came to Korea on Tuesday to meet with LMB, business leaders and talk about the future of the Internet and IT industries.  He also came to town bearing gifts with an a promise to invest $147 million in Korea over the next five years.

Later that day, Bill Gates and Chung Mong-Koo announced an agreementby Microsoft and Hyundai-Kia to work together to develop a version of Microsoft’s “Sync,” the voice activated system currently used by some Ford (in North America) and Fiat (in Europe) cars.  That’s fine by me as long as my car’s engine doesn’t stall in the middle of the highway because Microsoft’s software inexplicably decides to, uh- stop working.

Update: Evidently, PC Magazine thinks the MS/Hyundai alliance is a good idea.  We’ll get cars with better cockpits, more multimedia integration and cheaper GPS systems.

I love ComputerWorld’s sub headline: “Hate Vista, laugh at Zune, dismiss Windows Mobile? You just might love Microsoft’s Windows for cars.”

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The Korea Times today reports that foreign investment has all but evaporated in the wake of five years of Roh Moo Hyun’s government and its handling of foreign-investment bête noire Lone Star Funds. Well, duh.

Bad news for hub dreamers:

“I don’t think Korea can change in the near future to reverse the poor FDI trend,” [former Morgan Stanley Asia economist Andy] Xie said.

“Korea may be unwilling to make the changes to attract FDI,” he added. “Korea may never become a truly open economy. The mere fact that people always talk about foreign versus local means that the economy cannot be truly open.”

See also this topic, and a handy chart showing the decline in net FDI, at Korea Law Blog.

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In this editorial on the controversy over US beef imports and the recent related MBC program, the editorial staff at the Chosun put the danger of contracting vCJD into perspective:

미국 쇠고기 반대운동을 벌이는 세력들의 거짓과 논리적 모순과 위선(僞善)은 한두 가지가 아니다. 우리 국민 1000만 명 가까이가 매년 광우병이 위험하다는 미국과 유럽 일본 지역에 태연히 관광 여행을 다녀오고 있다. 광우병 부풀리기를 한 사람들과 그 부풀리기에 올라탄 사람들도 그 대열에 끼어 맛있게 햄버거와 스테이크를 먹고 왔다. 지금 쇠고기 재협상 주장을 펴고 있는 민주당 등 야당의원들도 국정 감사차 뉴욕에 가선 유엔 한국 대사관저에서 미국산 쇠고기를 원료로 마련한 갈비와 육개장을 맛있게 들었다. 이 많은 미국 쇠고기 수입 반대론자 가운데 미국이나 유럽에 유학 가 있는 자녀들에게 ‘쇠고기를 먹지 말라’고 신신당부했다는 사람이 있었다는 소식은 여태 한번도 없다. 자기 자식들에겐 광우병 위험이 있는 쇠고기를 먹이면서도 다른 국민들에게만은 먹이지 않겠다면서 쇠고기 수입반대운동에 팔을 걷어붙인 대한민국 위선자들을 어떻게 받아들여야 할 것인가.

The hypocrisy, logical inconsistencies, and false appeals to authority that have launched the opposition movement against the import of US beef have no value. Every year up to 10 million Koreans head overseas to the US, Europe, Japan, and other regions where the dangers of Mad Cow lurk. Not one person savoring a hamburger or a steak has contracted the disease. The same MDP and opposition party members who dined on galbi and yukkaejang made from US beef at the Korean UN mission now stand together with Korean beef producers. We have not heard of any of these US beef import opposition activists warning their children heading overseas to study in the US or Europe to avoid eating beef. How can we accept that while their own kids risk eating beef which may harbor Mad Cow, these hypocrites march around in demonstrations to keep other citizens from eating US beef?

In the comment thread, some posters have chided the Chosun Ilbo for flipflopping on the issue, citing links to recent stories on the dangers of Mad Cow.

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As reported in two Chosun Ilbo articles, Koreans may be “going overboard” with mad cow disease. “PD Diary”, the famous MBC current affairs program, has claimed that 94 percent of Koreans have a “special” gene that makes them more susceptible to getting Mad Cow Disease vs. regular Americans or Britons (Canucks, Kiwis and Aussies were, unfortunately, not mentioned in the report). Per the article:

“A tepid and delayed response from the government is only fueling fears. The personal blog of President Lee Myung-bak, who promised that resuming import of U.S. beef will bring high-quality and low-priced beef to the table, has been virtually shut down by Internet users who bombarded it with messages protesting against the decision.”

Interesting bit of “scientific” exposé there MBC! It would have reinforced their case if they had interviewed just one gyopo from America who’s had his brains melted from a lifetime of eating American beef. Reminds me of another equally futile piece of pseudoscience that Koreans still hold dear.

Picture from Japanese show “Morning Musume”.

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So says today’s BusinessWeek Asia. With Samsung leaping past Motorola last year as the 2nd largest cellphone manufacturer and LG recently leaping past Sony Ericsson to take the #4 spot, consulting group Strategy Analytics says that Motorola is “…in real danger of being overtaken… by… [LG].”

It seems ever since they came up with the RAZR, Motorola has been asleep at the wheel. Is this another case of a once proud American giant getting complacent and letting overseas competitors get the jump?

Rest assured though, Korean companies still have a problem being innovative. In BusinessWeek’s list of the 50 most innovative companies Korea only had one player listed, Samsung at #26. Koreans will be sad to learn that Japan gets four: #16 Honda, #9 Sony (damn Blu-Ray and that PS3!), #7 Nintendo and #3 Toyota. Get this, even the Indians may be more innovative, with Tata Group at #6.

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Daai Tou Lam Diary is a quiet C-blog written by an American resident of Hong Kong. As he is fluent in Chinese, his posts often contain translations from the local Hong Kong media, and he is very critical of the Chinese government. A recent post on the Carrefour boycott drew this conclusion:

As anyone who has spent much time reading the history of the Sino-British negotiations on the handover of Hong Kong, China’s preferred diplomatic wedge is the foreign business community. Read through Jonathan Dimbleby’s The Last Governor and you’ll many many instances where the PRC negotiators leaned on the British business community to lean on Chris Patten to kowtow to PRC diplomatic demands. Carrefour, who needed China more than China needed them as opposed to French hi-tech or automotive companies, would be the fulcrum that the CCP[?] used to move Sarkozy and the French government. There was nothing Carrefour could do to stop the protests except lean on Sarkozy to kowtow to the CCP.

What the CCP wanted was for Sarkozy to quit criticizing China on human rights and commit to attending the Opening Ceremony.

Despite the bad press and public panic surrounding the safety of Chinese imports, China is not really vulnerable to boycotts because most of its exports do not bear Chinese brand names. Chinese imports from Korea and other countries, on the other hand, have foreign brand names that make easy targets for boycotts. While browsing Chinese forums yesterday, I came across a graphic with the logos of about 40 Korean brands sold in China along with a call for a boycott. This was just one website, so it doesn’t look like Samsung electronics dealerships will replace Carrefour as staging grounds for rallies anytime soon.

Carrefour was chosen for a boycott because it is seen as more dependent on the Chinese market than other French firms. Which Korean companies, if any, would be a “fulcrum” for the Chinese government to put pressure on the Korean government?

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OK, I will continue carry the banner of the Yi So-yeon around here (and don’t you naysayers try to shake it loose).  Cheers to her as she came back to Korea yesterday and will soon start her new gig(Chosun).

Having earned a doctorate from the Korea Advanced Institute of Science and Technology in February, Yi will now work as a researcher for the Korea Aerospace Research Institute and lecture on space science.

In case you might not have heard, Miss Yi’s trip was not a one-shot deal but part of a larger program to develop an indigenous space program, including manned space flight technology.  I have little doubt that Miss Yi’s training and experience with the Russian program and on the International Space Station (along with an assist from Ko San) will help that process along.

Whether the $25 million spent on the launch was a more economical use of research funds than the $2.3 billion that China has spent so far to put one man into space is another question.  Obviously, the Chinese are well ahead if the goal is to put several people a year into space.  I suspect that Korea might be better off shooting for the satellite launch business rather than trying to send humans up on the cheap with their own rockets.

In any case, welcome back to Korea Miss (I guess I should say Dr.) Yi.

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With the sub-prime tremors cooling down and with nothing else better to do on a slow news day, Forbes has compiled a list of Korea’s richest 40 people.  I know the gallery is not as interesting as the race girls or Djamilya scrubbing away dirt and body oil, but I sort of think that #4, Lee Myung-Hee, is a bit of a MILF.

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