11 December 2008


I get most of my news from the New York Times and it was nice to see today on the front page of the online edition that South Korea's central bank has announced yet another massive cut in its prime rate. I am not an economist and I know very little about monetary policy and I am not going to sit here and bitch about how this downturn is affecting poor little me, but from reading the article it has become apparent to me that things are worse than even I thought.

The whole premise of the American bailout is that they can get money from Asia and Europe to plug up the holes. But according to the Times, the double-digit growth period enjoyed by the Chinese economy is a thing of the past. The growth rate in China is expected to drop to as little as 8% next year. This credit crunch will eventually affect the dollar as foreign funds become more and more pricey. That is one side of the Won/Dollar coin. The other is this: for two thousand years South Korea has been the ground meat of a cultural and economic sandwich between Japan and China and that has never been more true than today. Korea also needs capital as an emerging economy and far worse. To compound things, the Korean export economy is far more dependent on Asian demand that of the US.

My complaints about income erosion led my boss to tell me what has become a mantra in South Korea: now is the time to save money. It will bounce back. Wait it out. But what if you have no choice? What if you have to turn your hard won Won into dollars? You want to see grown men cry? Go sit in the waiting room at a Korean exchange bank. As of today the exchange rate is $1/1393. It was sitting at $1/950 when I signed in June. That is a drop of something like a rather large number in front of one of these: %.

So ok. I lied. I am complaining a little. Sorry. But I have a readership (and I really appreciate both of you) and I ultimately have to say how I really feel. People email and ask if coming to Korea is a good idea and I am responding with a resounding "IF." If you don't have to send it home right now. If you are good at saving money and can live frugally. If you enjoy working really, really hard and like teaching for teaching's sake, then by all means get your butt over here. If not, go work at Walmart. You can save a lot of money with your employee discount.

The real problem, of course, isn't the world's economy, but my own personal lack of fiscal discipline. I put off sending anything home as long as I could but I can wait no longer. And IF I would have save more this wouldn't have been as painful but... The economy, the paraphrase the poet who wrote it, is a big shit pie and everyone gets a bite.

So if it is time for dinner, lets look at the entire meal and not just desserts. I have said before and I will say it again: I love this place. The food, the city life, the people. And if you have to live on the cheap somewhere, this is a pretty good place. I could be getting paid in pesos or godforbid American dollars. The inflation rate in Korea is so low that it is actually too low. This is a two-edged sword as well: while the local buying power of your income is steady there is little justification for employers to increase salaries. I am wondering how this currency situation is going to effect salary offerings for foreign teachers. We could, after all, go teach elsewhere. But I predict that as the unemployment rate continues to climb in the US many young people might see this as a great option regardless of the economics and thus serve to hold down demand over here. Or maybe blogs like this one will influence people to take a good hard look at the realities of thier finances before making the jump. This, of course, would have done me little good in June. And I did look at the exchange rate and show it to my friends and go: "Look, it's a goldmine." A goldmine with some serious structural issues maybe, but how was I to know?

The other way to look at it is that there is probably no where to go but up. And the action by the ROK central bank yesterday bears out that they are going to do everything they can to stop the skid. Short of a worldwide economic collapse there has to be a light at the end of the tunnel so coming over here now really wouldn't be all that bad of an idea. If....