Korean Job Discussion Forums

Jimskins · Joined: 07 Nov 2007

Getting back to the topic...

Of course no government can be completely in control of inflation but the 2MB government has arguably made the situation much worse by its reluctance to raise interest rates to curb borrowing. And there is a clear motive for this- it doesn't want to bankrupt or push into negative equity the millions of families it has actively encouraged to take out loans to invest in property.

2MB has bailed out the construction companies time and time again and even encouraged them to keep building. In a country with tens of thousands of unsold homes and a flatlining birthrate, this is utter madness. I'm not saying a Minju Dang government would necessarily have done any better, but it seems the current administration are sticking with the pains of inflation because it easy to present it as something beyond their control.

If they raise interest rates however: 1. Millions go bankrupt or fall into negative equity 2. Those millions turn around and ask, hang on, it was this government who told us to keep buying and not to worry, house pices will continue rising forever.

Of course, that is the risk you take with investing, but my point is that the 2MB government has made the housing bubble much, much worse.

So it is essential for them to keep riding this bubble and let it pop under a Minju Dang administration and blame them for it, inflation be dammed.

That is how I see the situation anyway.