dailies-editorials (2) (EDITORIAL from the Korea Times on Sept. 13)

-Seoul Should Fix up Economic Vulnerability to External Shocks-
Thursday passed without any financial turmoil, putting those analysts and
journalists who had fussed about another currency crisis to shame.

There was no mass exodus of foreign funds, as overseas investors rolled over the
bulk of $6.7 billion in matured bonds. Would it have made much difference had
they called in the debts, however? Hardly. Was it just much ado about nothing in
the first place? Not really, either.

One cannot know about foreign media but what was in the minds of some domestic
doomsayers, including this page, could be broadly-termed economic troubles,
rather than the outflow of a specific amount of foreign investment money on a
specific date.

And at least in that way, there still remains much room for concern. So it is too
early for government officials to say, ``We told you so.''

Even the possibility of a more narrowly-defined financial crisis has not
completely gone away, as cautioned by Bank of Korea Governor Lee Seong-tae, who
rightly pointed out that as long as the Korean economy and capital markets rely
heavily on exports and overseas investors as they do now, this country can't help
but continue to be vulnerable to external factors.

It is for this reason the Lee Myung-bak administration's stimulus package marked
by tax cuts and export growth still leaves much to ponder. Both benefit big
businesses and wealthy individuals rather than smaller firms and the working
class. A bigger problem is the benefits no longer serve as a catalyst for
corporate investment nor bring about ``trickle-down'' effects.

The government's economic policy should center on reinvigorating domestic demand,
which has come to account for more than half of the nation's economic growth,
too.

This time, Korea has managed to avoid a worst case scenario, thanks in
considerable part to the recent downturn in international oil prices the U.S.
government's bailout of two giant mortgage lenders. If the nation's domestic
demand remains in the doldrums amid a widening income gap, however, foreign
investors can leave here at anytime.

There are also more immediate, short-term tasks the government should tackle.

In some ways, the rumors about a ``September crisis'' were the Lee
administration's own making. President Lee made excuses in a televised town hall
meeting Tuesday that his frequent mention of a looming crisis was to keep
government officials alert. People know, however, that the repeated crying wolf
of the President and his aides was aimed at quieting down anti-government
protest.

These officials belatedly said the crisis was a self-fulfilling prophecy,
repeating the hackneyed ``the economy is psychology.'' The damage has long been
done, however, leaving big dents in the foreign reserves and the national pension
managers' investment funds.

This is a jarring reminder of the need for the government to tell the economic
truth and share information with the people instead of trying to scare or cajole
them into following its policy while withholding the correct data.

Secrecy, inconsistency and untimely intervention, when combined, constitute a
shortcut to breeding distrust in government policies among the people and on the
markets. It also provides a climate most favored by hot money, or short-term
speculative funds.

There was certainly a ``once bitten, twice shy" element deeply ingrained in
Koreans since the 1997-98 crisis in the latest fuss about a financial crisis.

The government should take the lead in curing this chronic fright with open,
consistent and predictable economic management.