Korean Job Discussion Forums

ytuque · Joined: 29 Jan 2008 Location: I drink therefore I am!

http://www.cnbc.com/id/15840232?video=924836270&play=1

Bigfeet · Joined: 29 May 2008 Location: Grrrrr.....

Nice video. So instead of paying down their debts when times were good SK just kept on borrowing. Now they'll be forced to pay down their debts, in the worst of times not of their own choosing. Guess I now know how they became the world's 13th largest economy, on a mountain of debt.

Ginormousaurus · Joined: 27 Jul 2006 Location: 700 Ft. Pulpit

What do they mean when they talk about 'de-leveraging'?

justaguy · Joined: 01 Jan 2008 Location: seoul

These "experts" are a joke. They were wrong about so many things. They lost so much money on bad bets and yet they still expect people to believe them.

The_Source · Joined: 09 Oct 2008

ytuque · Joined: 29 Jan 2008 Location: I drink therefore I am!

Bigfeet · Joined: 29 May 2008 Location: Grrrrr.....

Leveraging is using borrowed money to invest. The principal doesn't belong to you but the gains made on it does (minus interest you pay on the borrowed money).

When things work out you make more money than you would have if you had only invested your money. But when times are bad you lose more money than you would have if you had invested only your money.

De-leveraging means having to liquidate your position to get money to pay back the amount that you borrowed.

GoldMember · Joined: 24 Oct 2006

Don't be fooled Korea did not really pay of the IMF loan in record time. What they actually did was pay off the IMF loan by actually borrowing a lot of money elsewhere.
At the time of the IMF bailout average Korean households actually were cashed up and so had the means to ride out the storm, this time like households in many other countries, they are up to their eyeballs in debt.

denistron · Joined: 21 Oct 2006 Location: Busan

Thanks for the link.

Ginormousaurus · Joined: 27 Jul 2006 Location: 700 Ft. Pulpit

The_Source, ytuque, and Bigfeet, thanks for the explanation. I think I'd like to take an economics course to help me get a basic understanding of the problems the economy is facing.

earthbound14 · Joined: 23 Jan 2007 Location: seoul

nice post, thanks

earthbound14 · Joined: 23 Jan 2007 Location: seoul

On that note I'll provide this little link: Money as Debt

A nice little video that explains the nature of interest and bringing money into the economy through the fractional reserve banking system.

http://video.google.com/videoplay?docid=-9050474362583451279

I'd love to hear other's comments on it and other interesting links. Possible links on using leverage in business would be of interest.

wanderingross · Joined: 13 Oct 2008 Location: Incheon

I seem to remember reading a few months back that a substantial amount of Koreas short term debt (~40%) is actually wrapped up in the ship building industry. This debt will be paid down upon delivery of the ships and receipt of payment. So I think this anaylsis might be slightly flawed... Then again, what do I know.

Bigfeet · Joined: 29 May 2008 Location: Grrrrr.....

Gatsby · Joined: 09 Feb 2007

Paying off debt for the shipping industry may not be so easy. The shipping industry works in more than one currency, typically dollars and won. I have heard that at least one company took dollars, converted them to won, bought there own stock presumably to push the stock price up, and now must pay the money back in dollars.

Do the math.

If you can figure out what this reporter is saying, perhaps the story would be informative:

http://www.koreatimes.co.kr/www/news/biz/2008/11/123_34603.html

Look at it this way, if foreign companies stop ordering ships, the ship builders will go out of business.