S. Korea

[rffrydr]

That other thing about SK:

Economist Oct. 6


IT IS a place of mythical beauty—its peaks and pine forests the stuff of songs and scroll paintings—but Mount Kumgang, just on the northern side of the divided Korean peninsula, has become a symbol of all that is troubled about South Korea's policy towards its bad neighbour. Since 1998 the South has run a tourist resort at Mount Kumgang, which 1.4m South Koreans have visited. For Roh Moo-hyun, South Korea's president, this (along with a miserable light-industrial park at Kaesong) was proof that his strategy of engaging with North Korea, known as the “sunshine policy”, was bearing fruit. But since North Korea exploded a nuclear device on October 9th, if not before, the fruit has been foul.

The point of engaging North Korea was to coax Kim Jong Il and his regime to behave better. Engagement was supposed to bring economic benefits to the benighted North; a modicum of mutual trust was meant to lessen its threat. These assumptions were badly upset in July, when Mr Kim conducted missile tests; his nuclear test has blown them away. Mr Roh's administration, which has another year to run, is discredited, its popularity rating in the teens. This week both the defence minister and the minister for unification offered to resign.


Quite right too, say Mr Roh's opponents. In particular, the nuclear tests have stirred anger at the money given over several years to a foul regime: public and private money, above the table and under it. More thoughtful critics say the sunshine policy was originally a sensible one, meant to transform the North with a view to reunification. But engagement, particularly under Mr Roh, became an end in itself. Thereby, it can be argued, the policy changed the South more than the North.

How much money it has cost the South may never be known. At the government's urging, Hyundai, a family-held conglomerate, sent some $500m discreetly to Mr Kim to secure a historic summit in 2000 between the Dear Leader and the architect of the sunshine policy, the then president, Kim Dae-jung (no relation). The opposition Grand National Party (GNP) claims that, officially, some $1.2 billion of government cash has gone to North Korea since 1998 (not counting lashings of humanitarian aid, now temporarily suspended). The government disputes that figure but, amazingly, no full audit trail exists.

Among other things, the South Korean government has subsidised visits to Mount Kumgang. These subsidies, it promises, will now stop, but a big chunk of the revenues from the resort—the 40,000 visitors in a usual month pay up to $500 each—will continue to go straight into the regime's pocket. In all, Hyundai, which built the resort and runs it, has sent $850m in royalties to Mr Kim and his cronies.

America's secretary of state, Condoleezza Rice, and its envoy for North Korea, Christopher Hill, who visited South Korea last week, are critical of the Mount Kumgang resort, which they believe generates cash for weapons of mass destruction. In addition, in talks this week over a proposed free-trade agreement between South Korea and the United States, American negotiators made it plain that imports from North Korea through the Kaesong zone could play no part in such a deal—thereby undermining the zone's rationale. The GNP has criticised both projects.

Yet Mr Roh and the ruling Uri party continue to defend them. They are, after all, the only fruits of engagement. During Ms Rice's visit, Ban Ki-moon, South Korea's foreign minister, who will soon become secretary-general of the United Nations, emphasised the “positive aspects” of the industrial park, as well as the “symbolic” importance of Kumgang in reconciling the two Koreas. The Uri party's chairman, Kim Geun-tae, goes further, claiming the Kumgang tours are needed more than ever.

Though Mr Roh's government has given its approval to stiff American-led sanctions against North Korea, which were passed by the UN Security Council on October 14th, it in fact shows little appetite for confrontation. That is partly because many South Koreans share a blind faith in the ultimate benign nature of the North's brutal regime—about which they are remarkably ill-informed. On October 25th North Korea said the South's participation in the sanctions would be a “declaration of confrontation” for which it would pay “a high price”.

Most Southerners think the North's crude nuclear capability does not represent a big new threat to them. North Korean artillery, after all, has long been positioned within range of Seoul's northern suburbs. Meanwhile, South Korea's predominant political consensus, says Andrei Lankov of Kookmin University in Seoul, is to seek gradual change north of the border in ways that might eventually narrow the vast income gap between the two sides. Tightening the screws too far risks goading Mr Kim to strike back. A collapse of the regime, followed by reunification, would impose unbearable costs on the South. Even the opposition GNP, says Park Jin, a member of the party, believes in maintaining dialogue with the North, while adding some pressure.

It is a path that is likely to lead South Korea increasingly into conflict with America, which wants stiffer confrontation with the North. In annual bilateral defence talks last week in Washington, DC, America's secretary of defence, Donald Rumsfeld, pressed South Korea to join the American-led Proliferation Security Initiative, which is designed to interdict ships carrying material for weapons of mass destruction. The South Korean government is vacillating, fearing that this would rile the North and so increase the nuclear threat.

[rffrydr]

That's a little different tack:

http://www.nytimes.com/2010/08/16/world/asia/16korea.html?_r=1&hp

[HenryTo]

Morningstar on POSCO's 2Q earnings, as well as its views on the Korean economy and global steel consumption:

[rffrydr]

S. Korea makes Honig proud. Raises rates:

http://www.cnbc.com/id/38158049

In the current context I'd call that bullish.
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Well I had it half right. Looks like last time we got this scared was Korea--if only it wasn't "over" by the time I got scared.



http://online.wsj.com/article/SB10001424052748704067504575304740232216102.html?KEYWORDS=korea+invasion
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Well...if the japanese aren't scared,

http://www.bloomberg.com/apps/news?pid=20601087&sid=a8HwKqnu6YCo&pos=8

and the Korean kids aren't scared I guess I'm not scared. Big hole in my theory of resurgent US, globally.
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Five ways conventional wisdom decays into conventional war:

http://www.nytimes.com/2010/05/30/weekinreview/30sanger.html?src=un&feedurl=http%3A%2F%2Fjson8.nytimes.com%2Fpages%2Fweekinreview%2Findex.jsonp


http://www.economist.com/displayStory.cfm?story_id=16214349&source=most_commented
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Yes, this too can be an opportunity. I don't exclude the possibility of coming out of this better than when we went in. This is an historic (and perhaps only) opportunity for china to step up to what it says it will be, first world.

http://www.nytimes.com/2010/05/30/world/asia/30korea.html?hp

Still looks like delay is the strategy while our dangerous little talking head, Kim, sees time only as his enemy. Fingers crossed...no direct bets.
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

It's so not a Gen-X thing:

http://www.latimes.com/news/nationworld/world/la-fg-korea-mood-20100528,0,7727576.story
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

I hope the general assumptions about N. Korea as china's puppet, prove out:

[rffrydr]

Cuts what trade there is...which could be taken bullish since there is none to speak of.

http://www.nytimes.com/2010/05/24/world/asia/24korea.html?hp

Sanctions can still put on the squeeze:

http://www.ft.com/cms/s/0/f07b8178-66ca-11df-aeb1-00144feab49a.html
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Read above: we could be setting up a major realignment to the old alignment.

Best outcome: Coup...china driven bloodless.

Kim Jr. is being trotted out on the stage recently but you know asians....they have very extended families.
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Alright china, let's see who's "first world" now:

http://www.nytimes.com/2010/05/19/world/asia/19korea.html
_________________
Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Analysts looking for the Bank of Korea to be among the first central banks in Asia to start tightening:

Bank of Korea flags rate rise on higher inflation

* Central bank chief says will adjust easy policy in 2010

* Provides no word on when tightening to begin

* Dec inflation beats forecasts to hit 8-month high

* Money market rates price in over 40 bps rate rise in Q1

By Cheon Jong-woo and Yoo Choonsik

SEOUL, Dec 31 - South Korea's central bank will start to raise interest rates in 2010 "at an appropriate speed and by an appropriate margin", its chief said on Thursday, without elaborating on the timing of the first rate rise.

Data later in the day showed that consumer inflation had picked up to an 8-month high, highlighting the dilemma of policymakers worldwide as they look to shift their focus in the coming year from supporting economic recoveries to reining in price pressures by tightening policy.

The Bank of Korea "needs to adjust the magnitude of monetary policy easing at an appropriate speed and by an appropriate margin while taking into account the domestic and overseas economic and financial conditions," Governor Lee Seong-tae said in a New Year's message.

Money market rates have already priced in a rise of about 40 basis points in South Korea's policy interest rate, the 7-day repurchase agreement rate <KROCRT=ECI>, over the next three months from a record-low 2.0 percent at present.

Treasury bonds due in three months yielded 2.34 percent on Wednesday and the same-maturity central bank bonds yielded 2.43 percent, official data shows. Local financial markets were closed on Thursday ahead of the New Year's holiday.

Statistics Korea said the consumer price index in December rose 2.8 percent over a year earlier after an 11.9 percent spurt in oil product prices, the fastest pace in 11 months. [ID:nSEV002935]

Analysts surveyed by Reuters had predicted the inflation rate would grow to 2.6 percent in December from 2.4 percent in November.

"Oil and other commodities prices will certainly rise faster once the recovery in advanced economies becomes more visible," said Park Sang-hyun, chief economist at HI Investment & Securities. "The time is approaching."

For a graphic on inflation, double-click: http://graphics.thomsonreuters.com/129/KR_CPIA1209.gif

RATE RISE MAYBE NOT ON JAN 8

The December inflation rate was still within the central bank's target band of 2.5 percent to 3.5 percent but the rising trend is expected to draw the attention of both the central bank and investors.

The Bank of Korea is widely tipped to become the second G20 central bank to begin raising rates from early next year as Asia's fourth-largest economy recovers much faster than expected from the global downturn.

But Lee hinted that rates would be left steady for an 11th consecutive month at its next meeting on Jan. 8, saying that its easy policy would remain in place "for the time being" to help support a sustained economic recovery.

President Lee Myung-bak said on Wednesday gross domestic product in 2010 would probably grow by more than the government's official target of 5 percent, above the central bank's forecast for 4.6 percent gain.

The central bank estimated this month that the economy, which relieves heavily on exports for growth, would expand by 0.2 percent this year -- much better than earlier expectations for what would have been its first contraction in a decade.

Governor Lee said inflationary pressure would gradually rise from the second half of 2010 as the economy accelerated and oil prices continued to recover.

A top financial regulator said early on Thursday it also planned to gradually normalise measures taken to protect the economy from the global financial crisis.

Poliymakers fear that withdrawing emergency stimulus measures too soon could endanger nascent economic recoveries, while leaving them in place too long could fuel inflation.

[HenryTo]

South Korea actively intervening in the forex market to prop up the US Dollar. I seriously doubt the Japanese will let the Yen continue to "float" at these levels and given the intervention by the Koreans:

S.Korea spotted buying dlrs to check won's rise -traders

Reuters - Wednesday, October 7

SEOUL, Oct 7 - South Korea's foreign exchange authorities were spotted buying dollars early on Wednesday to check the won's <KRW=> gains, traders said.

The won was quoted at 1,170.1/0.4 per dollar as of 0052 GMT after strengthening to as firm as 1,166.5, compared with Tuesday's domestic close <KRW=KFTC> of 1,170.3.

[rffrydr]

Industrial Policy is live and well in S. Korea--but you can only build walls so high:

http://online.wsj.com/article/SB125367616595333125.html
_________________
Today is the Tomorrow you worried about Yesterday!