The Korean crisis<\/p>\n
The world's financial community has come to South Korea's
\nrescue -- again. The International Monetary Fund already rode in
\nostensibly to the rescue once, yet the stock market and currency
\ncontinued to slide; both lost more than half their value in less
\nthan a year. Estimates of economic growth worldwide have been
\nadjusted downward in part to account for South Korea's drag.<\/p>\n
It remains true today that many of South Korea's fundamentals
\nare in good shape: an educated and motivated workforce, a high
\nsavings rate, an impressive industrial base. The nation's
\nstructural problems, particularly its outmoded form of crony
\ncapitalism, are very real, but a psychology of panic had set in,
\nwith investors reacting out of proportion to those problems.<\/p>\n
The South Korean government helped create that crisis of
\nconfidence by waiting too long to seek help and by failing to
\nfully disclose the extent of its difficulties, although in truth
\nprobably no one -- not the IMF, not the South Korean authorities
\n-- knew the size of South Korea's short-term external debt. Mr.
\nKim did not reassure anyone when he pronounced himself \"totally
\nflabbergasted\" by the depth of the problems.<\/p>\n
Now, though, the South Korean legislature seems set to approve
\na series of reforms, some of which it rejected only a few weeks
\nago; Mr. Kim has pledged to fully implement needed reforms; the
\nIMF, the World Bank and others are rushing in with more loans;
\nand private banks are prepared to roll over loans that are coming
\ndue soon.<\/p>\n
These steps, along with the underlying strength of Korea's
\neconomy, should be enough to restore confidence. If not, South
\nKorea will go deeper into default. That would have the advantage
\n(to South Koreans) of spreading the pain to the U.S. and other
\nforeign creditors.<\/p>\n
But it would cost South Korea for many years in damaged
\ncredibility and higher interest rates. In any case, there seems
\nto be no option now that would spare ordinary South Koreans a
\ngreat deal of hardship.<\/p>\n
-- The Washington Post<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/the-korean-crisis-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }