Plain ineptitude --EDITORIAL from the Korea Herald on Oct. 30)

Yonhap - It would be an outright mistake to lay Korea's current financial breakdown at the feet of President Lee Myung-bak and his administration.

Korea, like many other countries in the world, has been drawn into a global financial crisis of U.S.

origin that began with the subprime mortgage market.
Even so, President Lee will ultimately have to hold himself accountable if
households and corporations are feeling the increasingly acute pinch. As a
consequence, public criticism is heaping on him. They are demanding he exercise
his leadership in restoring stability to the financial markets.
With public patience thinning rapidly, time is running out for him. He has to
watch out -- his critics are already pointing the finger at him, claiming that he
has made quite a few blunders that have worsened the crisis.
But in fact, it is Lee's economic team, rather than Lee himself, that is to blame
if its prescriptions are not working. At the team's behest, the administration
and the central bank have committed themselves to injecting as much as 195
trillion won into the financial industry, an amount equivalent to 90 percent of
the 2008 national budget.
Moreover, the administration is planning to add 5 trillion won to 6 trillion won
to its 2009 budget request. It is also planning to implement the proposed tax
cuts ahead of schedule and take other measures to boost aggregate demand.
The administration is also being assisted by the central bank in fighting the
looming recession. The bank, which slashed its benchmark rate by 75 basis points
Monday, its largest ever cut, is hinting at another rate cut next month.
Simply put, the administration and the central bank are considering all options
conceivable to shore up not just the financial industry but the real economy --
that is, growth, manufacturing and job creation.
Nonetheless, the market's response has been far from favorable. Stock prices
plummeted until pension and other funds massively intervened, apparently on the
instruction of the administration. The Korean currency also fell sharply against
the U.S. dollar.
These market reactions must have been shocking to President Lee, who, in his
budget address to the National Assembly on Monday, had promised to provide
liquidity sufficiently preemptively and decisively until the panicky markets
became stable again. If he was correct in diagnosing that market volatility was
mostly a matter of psychology, his promise that there would not be anything like
the 1997-98 financial crisis was no psychological boost for market participants.
One of the problems lied with Lee's economic team. Though Lee promised
"preemptive and decisive" liquidity support, his economic team has no sense of
such urgency.
A case in point was a delay in the provision of $100 billion in debt guarantees
to domestic commercial banks that had borrowed money in U.S. dollars and other
foreign currencies.
Early last week, the National Assembly's standing committee in charge demanded
the government and each commercial bank sign a memorandum of understanding on
self-help measures as a condition for a debt guarantee and that a copy of it be
submitted. When the committee opened a session shortly after Lee's budget
address, it had received no such document. The committee could not start
deliberations on the debt guarantee at a time when it was urgent to stop the
Korean currency from falling against the U.S. dollar.
It was not the first bungle by the economic team. Its key members have made
reckless remarks regarding the financial crisis and the government policy to
tackle it with such frequency that they were accused of committing "oral hazard."

Can President Lee afford to tolerate his economic team's proven ineptitude when
the nation is in crisis? He may have much to learn from Julius Caesar, who
divorced his wife merely because she was under suspicion of being seduced.
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