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thepeel
Joined: 08 Aug 2004
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 Posted: Wed Nov 21, 2007 6:40 pm Post subject: Credit "heart attack" engulfs China and Korea |
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The global credit crisis has hit Asia with a vengeance for the first time, triggering a massive flight to safety as investors across the region pull out of risky assets.
Yields on three-month deposits in China and Korea have plummeted to near 1pc in a spectacular fall over recent days, caused by panic withdrawls from money market funds and credit derivatives.
"This is a severe warning sign," said Hans Redeker, currency chief at BNP Paribas. "Asia ignored the credit crunch in August but now we're seeing the poison beginning to paralyse the whole global economy," he said.
Korean and Chinese three-month yields have fallen from 4pc to 1pc in a matter of days in a eerie replay of events in late August when flight from banks and the US commercial paper markets caused yields on three-month Treasuries to falls at the fastest rate ever recorded. Asian investors appear to be opting for deposit accounts with government guarantees.
It is unclear what prompted this latest "heart attack" in the credit system, though rumours abound that Asian banks have yet to own up to their share of the expected $400bn to $500bn losses from the US mortgage debacle. |
http://www.telegraph.co.uk |
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bacasper
Joined: 26 Mar 2007
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| Posted: Wed Nov 21, 2007 6:47 pm Post subject: |
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| What does this bode for the Korean economy more generally and for the average E2 holder? |
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thepeel
Joined: 08 Aug 2004
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| Posted: Wed Nov 21, 2007 6:52 pm Post subject: |
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For the average E2, you're probably immune. Koreans have an amazing thirst for education. I don't see inflation as a possibility in a country whose goods are already so expensive relative to wages.
The Korean economy may be in some trouble. This dude, who seems to know what is going on, had this to say:
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Korea is commencing a repeat of Japan�s deflation-led �Lost Decades�, where policymakers caused, then prolonged, an unprecedented period of economic hardship for the Japanese people. |
http://www.korealawblog.com/entry/more_property_fallout_kwangju_regional_construction_group_foundering/
But I don't know. I don't follow the Korean economy too much anymore. |
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matthews_world
Joined: 15 Feb 2003
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| Posted: Wed Nov 21, 2007 7:49 pm Post subject: |
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Surely this will trickle down to the hagwon as more families won't be able to afford Min Jung's monthly tuition.
I wouldn't panic yet, though. In my eyes, things are looking up for the Korean economy. |
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thepeel
Joined: 08 Aug 2004
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| Posted: Wed Nov 21, 2007 8:50 pm Post subject: |
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| matthews_world wrote: |
| In my eyes, things are looking up for the Korean economy. |
Care to elaborate? I don't follow Korea much anymore and it doesn't often register in the major financial papers. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Thu Nov 22, 2007 12:46 am Post subject: |
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The KOSPI has dropped more than 200 points in two weeks. Around that time, the Won was flirting with breaking the 900 barrier (to the US dollar). It closed today at 933.
The presidential election is less than a month away. |
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