Korean economy had been in a stable growth ever since President Park Chung-hee, with a small slowdown in 1997, when conglomerate welfare system had collapsed and huge reforms were ordered to be implemented by International Monetary Fund.
Recently Korean Won is getting weaker and weaker. It already lost several hundred KRW in it's value year to year, however recently stopped losing.
But Korea is facing the very same fate as other countries do. Many countries in the world had believed that state investment can be endlessly covered by issuing bonds. USA believed that too, and foreign purchase of their bonds had more than doubled since early 1990's. According to the Strategy and Finance Ministry Sunday, the country’s state debt is estimated to reach 448.2 trillion won, which is about $380 billion, next year, up 25.5 trillion won from an estimated 422.7 trillion won in 2011.
The sad news for an average Korean is that about 222 trillion won of the government debt, accounting for 49.5 percent of the total, is to be repaid with taxpayer money, up from this year’s 48.5 percent to represent the highest level ever. The outstanding amount of government-guaranteed debt will likely reach a record high of 38 trillion won next year.
What an average citizen does not understand, is safe management of goods and income. Total amount of debts of all sorts cannot exceed 20% of monthly income of the household, otherwise if anything happens, they will be unpaid. Even in debt wise societies it is said that about 50% of mortgage loan holders won't be able to pay it after 15 years - half of a time of a loan.
What is not helping, is an obsession to obtain higher degrees. The country does not need everyone to be a PhD for it's growth, it needs equal treatment of Bachelor's and Master's Degree holders. In average country everyone is needed, from a toilet keeper through a cleaning lady and bus driver up till an engineer. And not everyone needs to be educated like a professor of a university.
I hope the best for Koreans, however I am afraid that we all have to reprioritise our lives globally. It is possible that there is no miracle ahead and unless new model of economy is implemented, nothing can be changed.
In these circumstances it is an interesting question, who is a likely candidate to win presidential elections in upcoming year 2012. My next post will be about it, in about 3 weeks, as I go to a hospital now.
Till then.
