Financial Woes, Deaf Ears

[Jay]

Following the events in Russia, the United Kingdom, and United States, the Korean Presidential Economic Advisory Committee was summoned over currency fears, economic recession, and threat to trade. The President beginning to worry that the issues in these countries were not isolated, only exacerbated by opposition rallies that continue to intensify against the current administration demanding economic results.


Park Iewon [Chief Economic Presidential Secretary]: “Thank you for all coming today, I understand it was not most convenient.

Shin Shinyoung [Minister of Economy and Finance]: “The economy doesn’t wait for us Secretary Park. Let’s get this underway. To be honest. We’ve been raising this red flag over government spending for the past three months, and continuously we’ve been ignored. At 7:50 AM, the British Nexus Group officially requested a bailout after their murky Russia acquisition. They had to have known it was toxic, the high IPO with government debt skyrocketing and inability to cover its debt, this was a dumping scheme…an expensive dumping scheme. SEC in the US closed trading after 20% dips in the New York Stock Exchange, we are still waiting to see what happens in Berlin, Paris, Hong Kong, and London, but, if the NYSE took a hit, we should expect small dips in Hong Kong and Berlin. Probably spooking Tokyo and London, but we don’t know how significant it can drive fears. Chief Han, has been monitoring the situation since August, and…unfortunately no one took her seriously. He gave a glare to his Vice Minister. At this stage Secretary Park, we need to consider the real possibilities a global economic recession is looming…and

Kim Syekyung [Vice Minister of Economy and Finance]: “Minister, Secretary, I believe this is an unnecessary overreaction to the situation in Europe. European Markets act like this all the time because major acquisitions are very uncommon, yet, they always calm. They’re reasonable people, they don’t do things rashly. They have good people in their ministries.”

Park Iewon [Chief Economic Presidential Secretary]: “I feel as though I concur with Vice Minister Kim. After all, this isn’t a crisis, our export levels are rising, tourism and healthcare are improving, economic growth is still high according to BoK figures. I am still failing to see the big issue here.”

Shin Shinyoung [Minister of Economy and Finance]: “Chief Secretary, this is exactly the issue. Even if economically we are doing well, it is largely based on our guarantee for exports and imports, the stability of the won at its current rate to the dollar, global economic stability, and accessibility for trade. Our debt levels are rising, and we are in a negative debt to credit ratio in terms of inflow v. outflow over the past two quarters, we are continuing high levels of purchasing and expenditures only balanced by tax revenue. The National Tax Service estimates ₩26.11 trillion in yearly tax revenue, which, is considerable, yet, government spending and purchases slowly chip away without foresight.”


Park Iewon [Chief Economic Presidential Secretary]: “Yes, but most of the spending is domestic, and the money ultimately returns in the form of future taxes. High government spending boosts public facilities, such as roads, schools, etc…these facilities in turn improve economic productivity. With high spending we put our bet on future taxes that will raise the capital spent alongside PIP with the private sector over certain projects of profitability to the Chaebols. The Chaebols have an intricate web of outsourced resources and personnel that ultimately feed the stability of our economic progress. Our export-orientated model means we must continue to produce to continue to export. We need to invest in human capital and infrastructure to develop the local supply chain and maintain competitiveness with the Europeans, Japanese, and Americans.”

Kim Syekyung [Vice Minister of Economy and Finance]: “Exac….”

Han Sihyun [Bureau Chief of BoK Monetary Policy]: “Chief Secretary, Netherlands, Spain, Ukraine, and even South Korea all have negative credit to debt ratios in the past two quarters. The Netherlands was also unable to fully repay its debt for the last quarter, this trend is continuing with other European countries with high spending and capital outflow with no capital inflows…

Kim Syekyung [Vice Minister of Economy and Finance]: “Yes, the Netherlands was unable to fully repay its debt from purchases this quarter, however, their government revenue services also was not strong this quarter. Additionally, their current credit to debt ratios still give them the ability to repay the current debt by the end of this cycle. Minister, Germany and the Uk both have positive credit ratios…”

Han Sihyun [Bureau Chief of BoK Monetary Policy]: “Yes, Chief Secretary, Germany has had a positive credit-debt ratio over the past two quarters, but they’ve kept capital inflow sustained through regular foreign government purchasing, and the UK credit-debt ratio is unable to cover Nexus Groups’ complete bankruptcy…”

Kim Syekyung [Vice Minister of Economy and Finance]: “Mrs. Han. Stop interrupting me…he looked at the the Chief of Monetary Policy as she stared back at him…Chief Secretary if we overreact, we will shake public confidence. A shake up in public confidence will cause panic, what do we say? Oh sorry, we have a possible economic crisis, go home and store the kimchi? They’ll stock up on dollars, removing the follow of dollars in the country, they’ll dry up the won and crash the Central Bank’s currency stability efforts. I am not saying this like I don’t have a degree from Seoul National University in Economics.

Han Sihyun [Bureau Chief of BoK Monetary Policy]: “Chief Secretary, I am urging you to be cautious with how you proceed. Yes. There is no current bursting bubble. But if we keep ignoring the red flags, what will happen? Look what is happening in Europe and its effect in the US and beyond. The Netherlands may be able to repay its debt, but its because the Hot Rollover is containing. If the rollover stops, guess what will happen? The country will default. We know how unreliable the US will be. There is no longer an IMF to bail us out, much less with their controlling mechanism. There is no friend we can ask to help us do currency swaps to shore up the won when it free falls. We need to be…

Park Iewon [Chief Economic Presidential Secretary]: “What do I tell the Boss?The chief secretary looked around, slowly getting angered by the bickering. I am incline to say Vice Minister Kim is correct in his assessment. We do not have any substantive things to deliver. And quiet frankly we’re creating a crisis that the opposition will use to torpedo us both in the midterms and next presidential. I don’t think this is big enough of an issue to be doing this.

Minister Shin, I expect the Ministry to be on top of its games and Bureau Chiefs, the BoK can not go making rash policies like this. You are undermining the administrations efforts to deliver on a strong and sound economy. Please tell the Governor of the BoK the Blue House is not satisfied with the efforts currently underway.”

Kim Soomin [Bureau Chief of BoK Fiscal Policy]: growing likewise irritated with the muring political interference in the independence of the central bank, Bureau Chief Spoke up “Minister, Secretary, currently we’re borrowing water while our wells are growing dry. Eventually we will not have any water left. Where do we get the water from tomorrow? The Bank of Korea has a mission, stabilize the won and ensure that the money roll over and dollar injections do not depreciate the won. However, if the rate of extension for money borrowed abroad abruptly stops, we will have bigger issues than price stability. We’re talking about defaulting on our sovereign debt. If we default, what happens? We can not guarantee export & imports, that kills the economic bloodline of our economy. That forces the conglomerates to shut down and go bankrupt. When the foreign investors begin pulling out, they will declare bankruptcy and all the SMEs will be destroyed from piling of debt. We’re holding off from raising interest rates, as Bureau Chief Han has been indicating. However, if required, we will do what is necessary to maintain the stability of the economy.”


Kim Syekyung [Vice Minister of Economy and Finance]: “Bureau Chief, stop acting like we’re preschoolers. The bloodline of this economy is the market economy, and you know very well as fiscal policy chief that government spending and policies continue to drive up capital inflow investment, support SME and conglomerates, develop local goods, and push a consumerism.”

Shin Shinyoung [Minister of Economy and Finance]: “Stop it. We are getting sidetracked. At this stage, let’s set up a control tower under Chief Bureau Han and Vice Minister Kim. Let’s monitor the situation. Begin cracking down on Chaebols for their fiscal irresponsibility. We’ll squeeze their belts so that they don’t become liabilities in the event the Europeans are hiding the true extent of their economic slowdown.”

Park Iewon [Chief Economic Presidential Secretary]: “Minister. We both know why the President can’t go after the Chaebols. It’ll…make the politics complicated.”

Shin Shinyoung [Minister of Economy and Finance]: “Chief Secretary. You know as well as I do how the Chaebols will become major liabilities.”

Han Sihyun [Bureau Chief of BoK Monetary Policy]: “Chief Secretary, the Chaebols are outsourcing their debt to the subcontractors, merchant banks give Promissory notes to subcontractors without the real ability to pay it off, when the subcontractors get paid, the merchant banks get paid, and everyone benefits. However, The scheme extends deep lower and lower to the subcontractors and if it all fails, the subcontractors bear the brunt of the failures. The process is basically outsourcing debt”

Kim Syekyung [Vice Minister of Economy and Finance]: “Yet, the Chaebols also provide significant economic opportunity with their financial adventures. They provide capital and financing to millions through their subcontracting. Are you suggesting next we just make them cut these subcontracting?”


Park Sungrhee [Director of Currency Stability]: “If I may, we need to identify the numbers we’re speaking about in this discussion. South Korea’s current balances are 9.6 billion, the Netherlands in deficit of 1.7 billion. Russia’s credits this quarter were at 217 billion, but its debits were 311 billion, in the previous to last quarter it was 163.9 billion in credits and 269 billion in debits. Meaning Credit funds rose by 75%, but debt rose by 86%, a smaller margin, but still, a woe for caution. The United States government balance held at 5.2 billion, however, it fell by what we suspected as $20 billion in Q2-Q3 sheets.. The United Kingdom’s current government balance is at $25.9 billion, and Russia in debt of $78.3 billion. The BoK is significantly worried because these indicators are showing us that the economic stability of the financial system is currently struggling over basically toxic asset acquisition by Nexus which drove it into debt, without currently being able to pay it off, with returns to move in slowly. Bankruptcy is attempting to cushion their economic situation and keep them eligible for protection from liability to their shareholders. Yet in Korea, all the Free Trade Agreements, Visa Programs, etc… being signed are happening when we are all considered with currency stability. People are buying up foreign currency and selling the won. Forcing us to finance and artificially keep the won at its current rate to the Dollar. So, yes, all the economic jargon is cool to throw, however, as Chief Han has indicated, there are significant indicators and future trends that people aren’t putting together. Ultimately, vigilance is duly needed, not the policies of overlooking the efforts by our staff by the Ministries and Blue House.”


Park Iewon [Chief Economic Presidential Secretary]: “I don’t hope you are saying we should roll back on our efforts to raise the comfort and dignity of our people by giving them the ability to travel abroad. Just do your jobs and we won’t have any problems. Don’t convene another meeting unless we have too.”

 

[Jay]

Park Iewon and Kim Syekyung walked out of the meeting and began discussing the contents afterwards. Both men not extremely interested in taking the measures Chief Han had suggested, rather, hoping that this would be an opportunity to make some bigger reforms…build a new Korea on the cusps of the old regime.

Park Iewon: “Syekyung-ah, do you really think we could go under as Mrs. Han says so?”

Kim Syekyung: Vice Minister Kim lit a cigarette as they walked outside, listening to the Chief Secretary as they walked through a garden “Chief Secretary. I think she is just being emotional and making rash decisions. We can make speculations all we want, but still. I doubt the Americans would let their biggest companies go under, same with the British. Too much will be lost, the companies, then the jobs, and eventually the elections. They’ll all pull through in the end. The Russians, they’ve never been economically stable, since the imperial age, to the communist age, they’ve been bad with money. Nothing new.”

Park Iewon: “They say Nexus is not doing well, in big loses across their stock market. I am really worried Skekyung-ah. Especially our alumnus comrades…they are worried too.”

Kim Syekyung: “Chief Secretary, he put out his cigarette nearly done with it anyways I’ve never purposefully lied to you or misled you. You know as well as I, Mrs. Han is not credible enough. He sighed Anyways. Even if the market crashes here, we will have a stronger mandate to make the tough reforms needed. Every damn time we try to do something, the unions march up and stalemate us, the opposition gets a few key wins and torpedos us, every time…I am tired of it. Sure Nexus is doing bad, but honestly, they will just cut their subsidiaries lose, fire people, and when the losses become too big, the British Government will have to intervene before their lucrative defense, aerospace, and equipment producers go out of business with Nexus can no longer fund their sub-contracting. Just like here Minister. Regardless, change hurts. Rome was not built in a day sure, but it wasn't built holding hands and singing hymns.”

Park Iewon: “I knew you had a big eye Syekyung-ah…I’ve been telling the Boss we should’ve put you in charge instead of Shinyoung…Yet, the President was determined to have the best available…unfortunate really. You wouldn’t be a problem like Shin, both Baeks, and Park are. They’re all just roadblocks. They lack vision Syekyung-ah…They lack the bigger picture. They all think here and now. They think how do I get from A to B, but you Syekyung-ah…you think about the entire alphabet. I only wish the others had just a glimpse.”

Kim Syekyung: “You’re going to make me blush Chief Secretary, the two men laughed, It is true. They lack the real vision of turning Korea into a new nation. Today’s Korea is sick, and only the remedy can save us. That remedy will hurt, but it will eventually heal us. Tomorrow, we can build a better Korea. I don’t know why the President surrounded himself with these incompetent Ministers. He should’ve fired them when he had the chance…alongside that Prime Minister of his. I know you’d make a strong Prime Minister Chief Secretary, much better than the spineless one we have now.”

Park Iewon: “Come now Syekyung-ah. The ministers are not incompetent…merely, lacking vision. We need them pushed to take the dramatic steps we all expect. The Prime Minister…is serving our mission well. But…we all know how he is going to inevitably become a problem…we will need to deal with.”

Kim Syekyung: “Chi…”

Park Iewon: “You should join us at the Alumni event today Syekyung-ah. It would be nice to see you there. Perhaps, you could give some advise to our good friends there.”

Kim Syekyung: “I will make sure the evening is cleared Chief Secretary.”

As the two men began to depart, the Senior Secretary stopped

Park Iewon: “Syekyung-ah…if you had dirt on the opposition…very big dirt. Would you use it?”

Kim Syekyung: “No sir. I would not. I would keep it, eventually, the time will come when it will be most effective and most useful, in politics optics is everything.”

Park Iewon: “I see...Thank you”

The Senior Secretary picked up the phone, calling a friend from Enwoo, reminding him about the Alumni meeting today, he closed his phone as his private vehicle arrived, and he departed for the Prosecutor Office in Seoul. Enough trouble was coming than he liked...stressed from both his public and private work. He merely began to wrack his brain on how to proceed with the Prosecutor General...

Chief Prosecutors Office

The Senior Secretary for Economics arrived discreetly at the Chief Prosecutor’s Office, entering through the employee parking, and going straight to the Prosecutor General’s office without any aides or staff. Officially the meeting was not transcribed, and the Prosecutor’s office vacant of all staff. Kim Kisoo greeted the Senior Secretary as they both sat down.

Kim Kisoo: “Please have a seat Senior Secretary. What has the SPO uncovered today that the Blue House wishes for to look away from. He smiled as Park Iewon took his seat next to to the Prosecutor General.”

Park Iewon: “Haha ha ha, Prosecutor General, please…the Chief Presidential Secretary sends his regards. I hope you are enjoying the office?”

Kim Kisoo: “The view is nice. However, keeping the prosecution stable and independent is a challenging task at times. The Blue House has a habit of requesting these meetings when there is something illegal happening, going to happen, or has happened…and you want the SPO to look away.”

Park Iewon: “Haha ha ha, Prosecutor General, you seem to be well versed in the office politics then…”

Kim Kisoo: “My predecessors left me good advice Senior Secretary.

Park Iewon: “You are a difficult man to catch Prosecutor General. You understand what we is being conducted right now in an extraordinarily complex way. Official channels often has a way of becoming public. So, I hope we can keep this discussion private. Enormous amounts of posturing, political pandering in the press, and no real progress, because legal cases tend to dominate the press coverage over substantive action. In matters of concern, the Blue House channel has been engaged directly. This anti-graft case you are mustering will die as soon as it is announced…as a political ploy. There must be a great deal of discipline on both sides, the opposition to be honest with respect to your efforts, will blow this as a political sabotage and a threat to democracy. Because even if your case is solid, the political narrative will take center hold. This isn’t about brand loyalty, its about political ideology, it will blow up. And in this case it would be doubly dangerous.

Kim Kisoo: “I feel as though the Blue House is stalling, the work that has been done in six and a half months is being put aside. We are not just starting from scratch. There have been investigations by the Finance Ministry, even the National Police Agency conducted investigations before we took over, and witnesses have been interviewed by the prosecutions office, and there have been certain statements made by the previous government officials which we consider to be very serious implication of a bigger bribing scheme underway. Here we find ourselves…the current government seemingly protecting the opposition, telling the SPO instead of confronting a very complicated problem, involving major people in the government but instead to stall for the meanwhile. I am concerned, because, if we allow this to continue, you as well as I know the flak will hit the SPO, and not the Blue House. It looks like you guys are attempting to maneuver responsibility from the Blue House staff and push it onto agencies. Although I speak as the Prosecutor General, I must say frankly say that the integrity of the SPO is at stake if we fail to prosecute this corrupt scheme by government officials. We cannot think in terms of a separate exemptions and settlement for politicians because they are politicians. It is in the context of the military regime that the prosecution was merely a symbolic position as corruption became a tool of political coverage for the regime. Why I say so is because unless we can take real change, we will never be able to clean Korea of the disease of corruption and the origin of the problem is this exact politicization of the SPO. If people believe the SPO is not independent, they will never believe our findings, and then they will continue to see us as a political and therefore a threat to their parties.

Park Iewon: “I must speak candidly Prosecutor General, we both know this is not about the SPO, but your own ambitions. No one comes to Seoul from Jeolla and is just content with their small cubical...they all try and rise to the top.”

Kim Kisoo: “If we are speaking candidly Senior Secretary, it is because the investigations will reveal that the former President’s son embezzled government funding to award contracts to Hanbo, securing government funding for them, while Hanbo gave large amounts of bribes to him that the Blue House is worried the investigation will trail back to them. Afterall, the former President’s involvement is…unknown? The Finance Ministry began looking into the Hanbo collapsed in early 1997, in this administration and how the Government unintentionally lost $2 billion in loans because Hanbo could not pay them back when it went bankrupt. Of course, the Blue House, would be worried, because you’ve been stalling the SPO and Finance Ministry, perhaps because there are suspect for the uncovered number of slush funds.”

Park Iewon: “There is no sense in going public, when this will merely become a political shitshow that will drag on and ultimately…you’ll be kicked out for your incompetency. The Blue House can’t get involved, if it is just going to end as it always does. Just continue the investigation quietly. More evidence is good is it not?”

Kim Kisoo: “I know you’re waiting till the midterms to flush this out. I am not going to undermine the institutions of the agency, we will be moving forward, I suggest, you make the necessary preparations for your political battle. The SPO has a commitment, and I will not become a satellite for the Blue House. The SPO is not going to become complicit with the current plans. You said to me just before, Just continue the investigation quietly. More evidence is good is it not?” Senior Secretary, I know very well President Kim would not even entertain the notion of being complicit with corruption. I know the Blue House is not sanctioning this either. The Prosecutor General stood up, I will do my job as required…cleaning Korea up from all corruption. You are right, people from Jeolla don’t just sit in their cubicles. They get up and make change. The Korean people want it and they need it. The Korean people may not trust us, but they will eventually. I will make sure, so long as I am in this office, that every ounce, even a small whiff of corruption, the SPO will investigate. I will make sure that this Republic and its citizens feel re-assured, the same SPO that prosecuted the case of the murdered students by the military regime, the same prosecution that everyday stands outside ensuring criminals get locked up, will make sure even the golden spoons of society are put back in their utensil set. No one will get a free pass as long as I am Prosecutor General. I know that a lot of other parties involved once we begin proceedings, , because of the complexities of the interests and the very high stakes involved. I know that the Blue House is worried of its implications, the questions to be asked of the current administration, and the political repercussions. However, I am not a politician Senior Secretary, I am a lawyer.

Park Iewon: “Wonderful speech Prosecutor General. I hope you wrote that down for the cameras. As I said, this is not your cow ranch, in the small village, and I came here to reiterate that you will be an agent in torpedoing this administration and forestalling the economic, political, and social growth of Korea. All it took was one man in the 1980s to spark a flame that nearly crushed Korea, now, you will become another footnote in history as an agent of traditionalism. The SPO in its quest for identity will cause a political confrontation neither we nor the opposition are ready for. Our entire agenda will grind, and the political stability of Korea will be further thrown into instability. Because, you do not see it as a political problem, but I do, I see it as an economic, political, and many other governmental problems, the present Korean political balance of power is on a thin thread, we just escaped a hung parliament, and we continue to battle daily with a ferocious opposition hellbent on stalling us for the sake of political capital. There are protests everyday, and with this news they will only mount. Eventually, the dam will become like a cascade with water flowing uncontrollably. Therefore, Mr. Prosecutor General. You are right, the President would not approve of my actions. But here I am. I protect the President, because I protect the Blue House. I protect the Chief Secretary, and I protect Korea. My protection is conducted in quick and discreet actions. I mean, to say, that the SPO will eventually be another area of failed opportunity for reform…You are really worried that the Presidential reforms for judiciary will undermine your authority as they seek to push power back to the police and give them greater autonomy…in fact, the relevancy of the unpopular SPO is always being questioned…Your backers in the Blue House like the Justice Minister come and go…but I will always remain there…keep that in mind.

 

[Jay]

Following the events in Russia, the United Kingdom, and United States, the Korean Presidential Economic Advisory Committee was summoned to the Blue House after it became clear Europe as a whole was poised to enter a recession. Korean investors had been warned to pull out of European countries prior to the crash, at least allowing for most Korean businessmen who had listened to avoid large losses, however, still, a large number of Koreans had lost money overseas in Europe, over purchasing with rumors of numerous free trade agreements to be signed. The President summoned the council to address the situation, take measures to assist European allies, and how to address the crisis. On a secure video-call, the various government ministers assembled from across the globe, from Rome, The Hague, Bangkok, and Seoul. The Vice Minister for Economy and Finance was sent to The Hague to join Ambassador Oh to prepare a resolution to raise capital for Russia, while plans were being made for the Finance Minister to go to Russia, the National Intelligence Service Director had been ordered to prepare to discuss the arms sales Russia was making. Seoul significantly feared North Korea would buy high grade weapons, adding to Seoul's urgency to get Russia a credit line.


Kim Daejung [President of the Republic of Korea]: "Let's not waste time. Secretary Park, please, begin."

Park Iewon [Chief Economic Presidential Secretary]: “Thank you for all coming today, I understand it was not most convenient for us all, and we did not expect our various overseas trips would be caught in the economic crisis. Yesterday, the Economic Intelligence Unit and the Russian Crisis Task Force set up two months ago made an emergency analysis on the impending European market implosion. Today, we witnessed the biggest drop, Russia's economic crisis has spilled over into Europe's largest economies, the United Kingdom and Sweden. We expect continuing declines to strike the rest of Europe in the coming days as investors begin to react. However, at least for now, some European investors are holding still with Germany's quarterly performance performing higher than expected and the GA resolution brought to the table. However, most of that confidence was lost when Russia announced plans to basically destroy their currency and render it useless...the fallout...not fully fixed by their President's remarks. Speaking from The Hague, the 2nd Vice Minister, Ms. Park, please inform us of the situation."

Park Jiwon [2nd Vice Minister of Economy and Finance]: "Thank you Presidential Secretary. We've brought the resolution to the table, as discussed, we are prepared to finance up to $1 billion into the fund. It would be broken down into $600 million in loans and $400 million in Russian assets to reduce burden. We have also now, due to Nexus and Sparrow's tanking, discussing plans to diverge the $1 billion for Russia into $700 million and offer $300 million in credit to Sparrow...We anticipate Nexus will get the bailout from the British Government...however, it will be at a heavy cost to the Government. The Americans have been quiet...however, they have not announced it publicly that they just saw a withdrawal of over $20 billion in capital outflow this quarter, and they are no longer in a financially secure position as they were at the start of this crisis. However, they seem to be some maneuvering at the FED...which we are concerned about. If the Americans, as they have always done, begin limiting the dollar flow abroad and begin using more dollars domestically and inflate the prices slightly...our strategy will require readjusting. Ambassador Oh is keeping me up to date, however, we have noticed the Americans and Russians discussing...and there may be a rapprochement under the guise of economic leverage from Washington over Moscow. However, being realistic, America is no longer in a financially stable position. Minister Shin has more on this regard."

Shin Shinyoung [Minister of Economy and Finance]: “Thank you Vice Minister, as Vice Minister Park indicated, the Americans no longer have the financial basis to be able in a significant capacity leverage the Russians. The fire sale means Russia is desperate and the terms of the GA resolution were not favorable to them. This is why they are attempting to draw capital outside the GA to prove they can alongside taxes restore financial order. However...this is not true. Russia's timeline and assessments are false.Russia’s strategy to repay its debt on its own is unsustainable. At least, from our analysis, Russia has not been transparent on the reality of its debt. We are aware and able to track government debt from the international economic overviews released by respected organizations. However, we do not know how household debt has been during this crisis, we don’t know how government asset values are worth. Vice Minister Park, please explain your findings with Chief Han."

Park Jiwon [2nd Vice Minister of Economy and Finance]: "Yes sir. It is widely reported Russia could with taxes repay their debt within 10 months. The timeline our economic intelligence unit indicates, and I believe these are the numbers Russia also uses publicly, is, according to the international norm for taxes collected monthly, Russia requires 10 months to collect its taxes, this timeline is simply unacceptable, but more importantly infeasible. To be able to be able to cover its debts in 10 months is based on assumptions which re not feasible. Firstly, the assumption is Russia will not spend anything on its budget, secondly, the assumption Russia’s investors will continue to roll over on Russia’s debt, thirdly, investors will not leave Russia during the 10 month duration, and fourthly, Russia is able to collect taxes when nearly 40% of its labor force is unemployed, which is 61.35% of its population, or between 76,530,000 to 88,279,920, of which, 29,532,927 to 34,067,221 people are unemployed. If you take this into account, only 60% of Russia’s labor force have an income supply that is taxable. Unless Russia would impose a new wealth tax to include the entire populations wealth value, then, Russia’s outlook is not 10 months, but much longer. Investors and analysts will also recognize this, and Russia’s inability to repay its debt will continue to devalue the ruble, see the dilapidation of the state infrastructure, resources, and services. The cycle will continue, Russia will have to print money to cover its basic running costs, depleting its foreign reserves, and eventually free falling the ruble due to lack of financial resources form the central bank. This will devalue the wealth and taxable income in Russia, reducing the effectiveness of its taxes. Russia will switch its rubles for dollars at weaker pricing and raising its costs to pay the principle and the debt itself. This is what is leading Russia to sell off of state military assets...some of which require more financial investment to just be useable by purchasing parties. We are extremely worried that if Russia attempts to drag out the crisis, Europes markets will suffer more, and Asia will be hit next with major Russian trade partners in the region susceptible to financial decline. If Russia fails to accept the GA resolution, we'd propose a re-directment of the $1 billion earmarked for Russia to an Asian Emergency Fund for Rattanakosin, India, and another asian nations."

Shin Shinyoung [Minister of Economy and Finance]: "With regards to nexus, a couple days ago, the British Nexus Group officially requested a bailout after their murky Russia acquisition. They had to have known it was toxic, the high IPO with government debt skyrocketing and inability to cover its debt, this was a dumping scheme…an expensive dumping scheme, as a result of fears the SEC in the US closed took a 20% dip, and over the past couple of months a significant capital outflow has occurred from the US. At this stage Mr. President, we need to consider that the GA will not pass the resolution because of Russia's antics and Europe's lack of desire to give them a bailout, and will have to prepare to defend Asia's economies. On a side of optimism, both Italy, Spain, and Germany pulled into the end of the quarter with strong economic success, and Sparrows even with losses pooled nearly $7 billion in earnings. Our trade routes are improving, and lowering costs in Europe mean we can export larger quantities at lower price amounts due to the tariff policy and take advantage of the markets. Additionally, it would lower the value of their exports and allow us to import at higher quantities."


Kim Daejung [President of the Republic of Korea]: "Why won't Russia accept the resolution as is?"

Oh Joon [Ambassador to the Global Assembly]: "Mr. President. The problem is the resolution domestically is hard to sell. Halting construction & infrastructure projects, opening Russian firms to foreign competition, reducing military and security spending, and labor reforms. It is hard to reform the labor market in non-crisis situations, however, this crisis will harden opposition to any reforms...and if Russia accepts the resolution, then, they will diplomatically have been submitted against smaller and weaker states comparatively in their eyes. Secondly, there is distrust, the Europeans are angry due to their crisis, it is simply Russia's fault. Thirdly, Russia is worried that the global community may seek to undercut them and crush Russia, a feeling maintained from the Soviet-era days. Considering most members of the GA are former American allies of the anti-communist world. However, we anticipate Russia will at most only be able to raise $10 billion from its fire sale, the GA can hopefully raise at minimum $4 billion, and hopefully reach $9 billion through contribution of member states. This $19 billion, alongside taxes will improve the odds of a quicker turn around. At the very least, investors will not flock out."

Kim Syekyung [Vice Minister of Economy and Finance]: “Mr. President, I also believe the Russians have significant concerns of the terms as they outline further privatization efforts that will be snatched up by foreigners, by the labor reforms which will raise their already rising unemployment levels, as well as if other Europeans contribute money to be used as a pretext to subdue Russia in the near future. The European Markets will recover, however, unlike predicted, they are taking higher hits. Yet, they calm. People will see low prices and think now is time to invest. The problem for Europe is not capital, it is just fear. People don't want to invest and lose their money. If Governments keep their spending for contracts they can resume investor confidence in government defense entities, and when the UK bails out Nexus, the other investors will feel reassured the European governments will not let them default on their debts.They have good people in their ministries, I can not say the same about the Russians.”

Baek Jeonghee [Minister of Foreign Affairs]: "The impact is now also geopolitically. If Russia's instability continues, just as the 1995 coup attempt shows, the communist hardliners or ultranationalist will attempt to seize control. Already Russia is exhibiting the conditions of a Failed State. The Foreign Ministry is extremely worried of political violence in Russia, which will spiral into Ukraine, Poland, the Baltic, and Sweden. Primarily, the role of armed militia groups to set up their own self-government administrations, the use of aggressive nationalistic rhetoric against Ukraine and Belarus, and targeting traditionally soft-spots such as Sweden, Finland, the Baltics, and Poland to raise of support for varying parties jockeying for power. We believe that within 3 months, and this is extremely generous, that if Yeltsin can not reverse the crisis, he will be removed by the State Security Services. The Armed Forces does not want ultranationalist or communists to gain control, and we will see a de-facto military/FSB autocracy controlling Russia."


Kim Daejung [President of the Republic of Korea]: "What can we do Minister...everyone here is telling me how bad the crisis is...however, we're all holding our tails between our legs, we must advert the calamity that is a civil war in Russia, or worse...a communist regime. If the communists return to power, they will upend the past year of progresss we've made with the North. If they embolden the North as they have done in the past, they will be more inclined to raise tensions. Unfortunately America has not been the ally we've hoped they would. We will have to deal with them alone...it will be war eventually."

Park Iewon [Chief Economic Presidential Secretary]: “Mr. President...I think we have to swallow the hard truth. Russia is a complete mess, any bailout we give if the conditions for transparency, accountability, and oversight are not met will be ineffective and used in the corrupt affairs of the government. This crisis was sitting on their hands for months and they did not act. Crime is a daily occurrence, with a crime rate of nearly 90%. Their healthcare system is basically on the verge of collapse. Their armed forces will be undercut in force projection with the selling of their carriers, troop transports, and strategic airlifts. What we are seeing is an aggressive rebuilding strategy imploding on itself."

Shin Shinyoung [Minister of Economy and Finance]: “Chief Secretary, this was not the sentiment many in our Ministry held months ago. We can not act like the Russians were completely incompetent...even the Europeans sat idle as the crisis built up. You even saw this as a non-issue. Even here, our debt levels are rising, and we are in a negative debt to credit ratio in terms of inflow v. outflow over the past three quarters, we are continuing high levels of purchasing and expenditures only balanced by tax revenue. Government spending and purchases slowly chip away without foresight. We are seeing this globally, and Europe is being forced to self-correct. I hope we do not look at Russia as an isolated case...but a case study for all countries. Mr. President, you said you were tired of just talk. What we need is capital injection, we've been storing $9 billion in foreign reserves, we would like to slowly ease that into circulation to strengthen the won. Secondly, we would like propose a stimulus package for all Koreans to raise consumer spending levels and boost the SME market. Lastly, we must make the leap forward in adjusting the debt-scheme at home. If we ever have the crisis Russia is suffering, the Chaebols will collapse...and the entire SME market under them will follow.

Park Jiwon [2nd Vice Minister of Economy and Finance]: "Mr. President, I concur with the minister, all the stimulus will eventually return as money returned in the form of future taxes. We will be able to raise short-term spending and keep a health consumption rate, December is coming and people will be taking advantage of winter deals. We will see high spending, let's capitalize on it. Additionally if we calculate it efficiently, highering government spending will boosts public facilities, such as roads, schools, etc…these facilities in turn improve economic productivity in the aggregate long-run. While we must be cautious, as too much short-term spending may raise inflation and reduce long-term benefits of these measures."

Kim Syekyung [1st Vice Minister of Economy and Finance]: "Additionally, we are in the position, if we are economically stable by the end of January 1998, we should consider making 0-interest loans to allied nations to help them weather the storm. The economic crisis is hurting them, and if we can help them...it'll be useful. We've been monitoring the situation and we do not need a panic. A shake up in public confidence will cause panic, if we say sorry, we have a possible economic crisis, people will stock up on dollars, removing the flow of dollars in the country, they’ll dry up the won and crash the Central Bank’s currency stability efforts. They will cause a crisis that was not looming over us. The Second Vice Minister outlined strong terms, and if we can capitalize on the winter sale season, and the increase in traffic over Seolla in January will be timely manner to propose a stimulus. I believe we should push the labor reforms while we have the political opportunity, and the cover of the economic crisis will cover us. Lastly, Mr. President, I believe we can take advantage of the stimulus for midterm elections.

Kim Soomin [Bureau Chief of BoK Fiscal Policy, acting as BoK representative]: once again seeing the Vice Minister as pushing a political agenda over the economic concerns spoke up...also irritated with the muring due its implication of political interference in the independence of the central bank, the Bureau Chief Spoke up “Mr. President, Ministers, and Secretary, currently we’re borrowing water while our wells are growing dry. Eventually we will not have any water left. Where do we get the water from tomorrow? The Bank of Korea has a mission, stabilize the won and ensure that the money roll over and dollar injections do not depreciate the won...I said these exact same words months ago when the Vice Minister dismissed the BoK warnings. Investors are already not allowing for an extension of the rate of extension for money borrowed from abroad. We've managed to forestall the issues due to our loan issuing and buying of foreign loans to Korean companies. We’re holding off from raising interest rates, however, increasingly, we may be required to increase them to hold investors in Korea.We must do what is necessary to maintain the economic stability of the country, not achieve political gains.” Yes. There is no current bursting bubble, what is happening in Europe will happen happen eventually. No one will bail us out, rest assured Mr. President."

Baek Jeonghee [Minister of Foreign Affairs]: "Mr. President, this is not just an economic issue...it is a national security issue. The NIS is working with us to monitor the situation in Russia, however, we may need to consider deploying spy crafts against the North to intercept their communications with Moscow if they attempt to purchase equipment. We will need to be prepared to take a hard approach against Moscow at the GA, but also offer greater resources to help them. We can not afford a communist realignment, the collapse of China has given us unprecedented opportunity to engage the Sunshine Plan, and eventually, end this division on our terms."

Kim Daejung [President of the Republic of Korea]: "This is firstly a humanitarian crisis everyone, don't forget of the millions suffering in Russia and Europe...let's not politicize this too much...Ambassador Oh...consider your benchmark limited at $600 million. I will approve the purchases of $400 million in state assets...however, we will not spend more than $1 billion on Russia. They must accept the oversight conditions. Minister Baek, inform our representing party section in the embassy in Moscow that we can offer to deploy medical personnel and donate medical equipment to Russia to help their humanitarian crisis...and let's consider re-routing Pakistan's $400 million to Russia for security and policing assistance. We will help Russia not because we require it geopolitically, we will help them because for gods sake they are humans too. I have to go to the President's Palace in Rome...let's move quickly everyone."

The President left the call, the different ministers broke the call into smaller sections, handling the foreign affairs portfolio, economic portfolio, and GA resolution. The Ministers began strategizing how to end the crisis...and avoid a calamity of greater proportions. Some feeling as some members were using the crisis as a pre-text for domestic political gains...to move out uncooperative ministers with the President's secretary's agenda and others making the crisis seem larger than it is to secure financial resources being limited...it is only true that Russia would either break global cooperation or reinforce it...at least until the next crisis.