Word: seoul
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That sense of distrust was intensified by the spectacle of South Korea's continuing meltdown. Seoul jolted the world again last week when its largest state-owned bank halted efforts to raise $2 billion in desperately needed cash to pay off loans from Japan and other countries. The retreat, which came barely a week after the International Monetary Fund agreed to ride in with a $57 billion rescue package, raised the specter of a massive default by the world's 11th largest economy on its far-flung foreign obligations...
...worst weeks yet in the region's financial turmoil, fears that the IMF's largest-ever handout would not salvage matters dragged down every Asian market and currency, especially Seoul's. That situation could reverberate ruinously in Japan. Not only is Korea in hock to Japan for at least $24 billion, but a further deterioration of the Korean won--which has lost a staggering 50% of its value against the U.S. dollar this year--would make it harder for Japanese products to compete with Korean exports, from cars to steel to electronics. That in turn would plunge Japan deeper into...
...crisis is compounded by Seoul's paralyzed politics. The country will hold presidential elections this week, which leads the candidates to demagogue on the IMF deal rather than implement it quickly. Koreans who are not thoroughly disheartened by the implosion of their huge, highly industrialized economy are humiliated and resentful at the thought of a bailout from abroad. That makes it even harder for skittish politicians to impose the draconian remedies South Korea must swallow...
...main fire wall against a global financial crisis is still Japan. It has huge foreign-currency reserves and is the principal source of investment capital in the region. Seoul is looking desperately to Tokyo to roll over its credit. But Japanese banks, burdened with a quarter-trillion dollars of bad domestic debt, cannot easily risk more money in the South Korean sinkhole. Japan is also the origin of the very economic model that is causing the crisis. No one really knows, but many moneymen fear that Japan's own financial system could be as dangerously debt-ridden as South Korea...
...SEOUL: Investors continued to flee the South Korean ship Monday, which hardly bodes well for the country's new captain, president-elect Kim Dae Jung. But Kim, who likened his nation to "a man heaving his last breath" while meeting with visiting U.S. Treasury official David Lipton, is not letting the financial crisis scuttle his hopes for a kinder, gentler ? and unified ? Korea...