[A-List] IMF: Korea and elsewhere

[Sabri Oncu <soncu@xxxxxxxxxxx>]

Dear Christian,

I don't disagree with anything you said except this: "Korea had a
strong (though vulnerable) banking system and
an excellent manufacturing base." And this is because I have not
been watching Korea's banking system that closely. I had been
focused more on KCFTU and its activities. And I made my statement
about Korea on PEN-L when I had been watching Kosdaq closely: in
the terminology of Schumpeter, a "creative destruction", or in
the terminology of A-List, a "destructive creation" had been
going on there at the time. In these days, I don't pay as much
attention as I used to pay to Korea, given what is going on back
home.

Surely Korea is not a Brazil, an Argentina or a Turkey. After
all, as you said, their foreign reserves are at more than $100
billions. As far as I know, this makes their reserves the fourth
largest in the world after Japan, China and one other country I
don't remember at the moment. Of course they can defend their
currency against speculative attacks more successfully than most
others.  But this doesn't mean that, borrowing your word, their
economy is not vulnerable.

My point at the time was that Korea was at risk and as you know,
risk is about possibility not about certainty. Especially with
their domestic credit bubble they created to pump the domestic
demand up in the face of declining external demand, they are more
vulnerable than before.

Best,

Sabri