On Thursday, South Korea announced the arrest of a financial blogger accused of undermining the country’s financial markets with his doom-mongering. “Minerva,” as the blogger is known, gained instant fame for uncannily accurate forecasts on the fall of Lehman Brothers and the crash of the Korean won, which plunged 26 per cent against the dollar last year.
Instead of focusing on getting the economy on track, Korea has chosen to crack down on freedom of speech and civil rights. And we will have thought China will be the first to start rounding up bloggers, not just due to its deplorable human rights record, but because its economy is facing the sternest test in decades.
Unemployment has been keeping its political leaders awake at night. When China’s economy was expanding at a double-digit rate, creating gainful employment every year for 20 million new job seekers was easy. Now that GDP growth has dipped to around 9%, the undercurrents of social unrest is swirling.
The delicate social fabric is threatened by unhappy university graduates who have spent a fortune to get paper qualifications but end up jobless, and the millions of migrant workers forced to return home to their countryside homes.
Already, Chinese factories producing consumer goods are shuttered, bankruptcies sky-rocketed, and thousands of unemployed workers highlighted their displeasure with rowdy demonstrations. The situation is only going to get much worse in the next few months.
As 2009 marks the 60th anniversary of the foundation of the People’s Republic of China, and 20 years since the June 4th armed crackdown on pro-democracy protests at Tiananmen Square, this year is extremely sensitive for China political leaders but so far, they have shown admirable restraint in the face of criticisms.
In the case of South Korea, I will say that the indictment only serves to highlight the government’s sense of desperation amid mounting negative comments on the ailing economy. Being an export-dependent country, South Korea has been among the hardest hit in Asia by the global recession.
To say that the blogger has undermined South Korea’s competitiveness by commenting on the country’s currency and economic policies is really putting the cart before the horse. Did this blogger cause the mess engulfing the global financial sector today?
If anybody should be put behind bars, they should be the greedy pigs on Wall Street (special thanks goes to the Lehman Brothers) for flooding the world with toxic collaterized debt obligations and destroying the hard-earned wealth of many trusting investors.
In fact, the bankers have been causing another round of hardships by tightening their purse strings. Healthy businesses are in jeopardy because of restricted access to loans. We may be cheering the ‘good news’ headlines of base rate cuts, but the reality is that consumers are still getting raw deals.
The average rates on savings, credit cards, mortgage loans and overdrafts have all taken a turn for the worse. Maybe, we should place these bankers into a cell until they come round to the idea of increasing loans and dropping their exorbitant rates.
And speaking of imprisonment, why is Bernard Madoff who run a massive $50 billion Ponzi scheme and Ramalinga Raju who created fictitious assets in the balance sheet of Satyam still running around scott-free? And how about those analysts and auditors who produced misleading ratings and financial reports?
I am flabbergasted that prosecutors are still taking time to collate evidence of wrongdoing when so many innocent people have been hurt, yet a blogger has been sent to jail for writing about some economic predictions. Is this the right message to convey – that if you postulate bad outcomes, be prepared to go to jail, but if you are a self-serving cheerleader and encouraged investors to buy at inflated prices even when a bubble is about to burst, you are safe.
In the case of Singapore, we are the first Asian country to enter a recession and Prime Minister Lee Hsien Loong has conceded that we face years of slow growth after recession. As if the message of “doom” has not been reinforced sufficiently, we have the New Year’s Day message where we are reminded of a “difficult year ahead, especially the first half of 2009.”
PM Lee said: “Our economy will probably contract further. More companies will be forced to downsize. So far we have not seen many job losses, but I expect more retrenchments in the next few months. We must be psychologically prepared.”
That is refreshing honesty for me. Just call a spade, a spade. You can’t just window dress the economy by arresting people or shutting people up. Maybe South Korea should consider recruiting Bernard Madoff or Ramalinga Raju to bolster their state of affairs.
Is South Korea Desperate Already? Please share your thoughts here on the arrest of the financial blogger.