ID :
187386
Thu, 06/09/2011 - 08:07
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Shortlink :
https://oananews.org//node/187386
The shortlink copeid
Unending economic blues
(EDITORIAL from the Korea Times on June 9)
The global economic woes have seemed like a "fire on the other side of the river" for Korean officials. Not any longer. The Bank of Korea said Wednesday the nation's gross national income (GNI), or the people's real purchasing power, fell in the first quarter, for the first time in two years.
This is not news for many Koreans, who haven't felt the country's "fast recovery" over the past couple of years. With their income stagnating and prices soaring, the working class have already been experiencing a negative growth in GNI.
The signs of a double-dip recession (two consecutive downward cycles with a brief upturn in between) looming for global economic powers, ranging from the U.S. to Europe and from Japan to China, would even deepen the gloom of this relatively small, export-dependent economy.
All of which stress the need for the Lee administration's third, and probably last, economic team to take extra caution charting out the course for the second half of the year and beyond. There are two explosive issues facing new Strategy-Finance Minister Park Jae-wan.
The ongoing mutual savings bank fiasco, as glaring as its stench of widespread, deep-rooted corruption is, will prove the easier of the two ticking bombs to defuse. The government should inject 2-3 trillion won in public funds into them, even if it means braving popular criticism.
Far harder to deal with is the snowballing household debt of more than 800 trillion won. Korean households' debts account for 155 percent of their disposable income, much higher than the 122 percent of their U.S. counterparts.
Unless handled with extreme care and dexterity, household debts could torpedo the entire economy, as corporate debt drove the nation into an unprecedented financial crisis in 1997. In a worst case scenario, the Lee administration should be ready for their refinancing.
A financial euphemism for applying lower interest rates and even partial write-off of principals, this measure will also likely trigger criticism, this time from lenders and debt-free individuals. If the alternative proves to be another national crisis, however, the government should not exclude the option.
Minister Park is right to mind long-term fiscal balance. But his primary duty as a closer is to finish this game with minimum damage. Anyway, he can use two last resort resources: withdrawal of tax cuts for the rich and downscale of river projects _ although he needs his manager to OK it.
The global economic woes have seemed like a "fire on the other side of the river" for Korean officials. Not any longer. The Bank of Korea said Wednesday the nation's gross national income (GNI), or the people's real purchasing power, fell in the first quarter, for the first time in two years.
This is not news for many Koreans, who haven't felt the country's "fast recovery" over the past couple of years. With their income stagnating and prices soaring, the working class have already been experiencing a negative growth in GNI.
The signs of a double-dip recession (two consecutive downward cycles with a brief upturn in between) looming for global economic powers, ranging from the U.S. to Europe and from Japan to China, would even deepen the gloom of this relatively small, export-dependent economy.
All of which stress the need for the Lee administration's third, and probably last, economic team to take extra caution charting out the course for the second half of the year and beyond. There are two explosive issues facing new Strategy-Finance Minister Park Jae-wan.
The ongoing mutual savings bank fiasco, as glaring as its stench of widespread, deep-rooted corruption is, will prove the easier of the two ticking bombs to defuse. The government should inject 2-3 trillion won in public funds into them, even if it means braving popular criticism.
Far harder to deal with is the snowballing household debt of more than 800 trillion won. Korean households' debts account for 155 percent of their disposable income, much higher than the 122 percent of their U.S. counterparts.
Unless handled with extreme care and dexterity, household debts could torpedo the entire economy, as corporate debt drove the nation into an unprecedented financial crisis in 1997. In a worst case scenario, the Lee administration should be ready for their refinancing.
A financial euphemism for applying lower interest rates and even partial write-off of principals, this measure will also likely trigger criticism, this time from lenders and debt-free individuals. If the alternative proves to be another national crisis, however, the government should not exclude the option.
Minister Park is right to mind long-term fiscal balance. But his primary duty as a closer is to finish this game with minimum damage. Anyway, he can use two last resort resources: withdrawal of tax cuts for the rich and downscale of river projects _ although he needs his manager to OK it.
