Volume 8 Final Chapter Chapter 1102 National Interests
"Women's Times" is a radio program under MBC. The type of the program is difficult to determine. Listeners can call the radio station and share their troubles. The host will share them with all the listeners in the form of complaints. Every once in a while, the radio station will invite people related to the issues that the listeners are more concerned about to enter the live broadcast room for the listeners to complain.
Simply put, this is a radio program that can raise questions but basically cannot solve them. It can be classified as current affairs or emotions.
Cheongnyangni 588, a red-light district with a long history, has survived the era when there were many red-light venues in South Korea and has become the first of the three major red-light districts in Seoul.
In the 1980s, with the rise of South Korea's economy and the end of curfew, South Korea allowed residents to go out at night, and Cheongnyangni 588 became a must-go place for many (men) to travel at night.
There are more than 200 red-light venues in Cheongnyangni 588, with hundreds of practitioners doing business here. They are also the most beautiful among all the red-light districts, making it one of the most attractive red-light districts in Seoul, on par with the other two major red-light districts, Cheongha-dong Itaewon and Miari.
During the 1988 Olympic Games, in order to improve the city's image and facilitate visits by foreign tourists, Seoul also borrowed from Amsterdam's approach and installed display windows in stores. The store signs would stand in the windows and pose to attract customers.
Nan Yi was sitting in the car, which was parked at an intersection in Qingliangli. On the right was a brothel in operation, and on the left was a film crew filming. After a few glances, Nan Yi associated the set of the crew with a movie called "Prostitute".
After confirmation from Ms. Hye-soo, it is true and the leading actress is Shin Eun-kyung, an actress who looks somewhat familiar.
In the car, in the front seat was the monkey driving Wei Houdong, the co-pilot was Tianxian, and in the back seat were Nan Yi and Kim Hye Soo. At this moment, Kim Hye Soo appeared very calm on the surface, but a volcano was erupting in her chest.
She is sick, absolutely sick. The man sitting next to her is seriously ill. The man that President Bai solemnly ordered to accompany him actually brought her to a place like this. So he came. Instead of sitting in a bar, he just acted as a peeper on the street. A healthy person would not do such a thing.
Nan Yi: "Monkey, what's the market here?"
Monkey: "The cheaper one is 50,000, and the more expensive one is 300,000."
Nan Yi: “Have you been here before?”
Monkey: "No, there are many customers in the store who come here frequently."
Nan Yi: "Is the business in the store not as good as before recently?"
Monkey: "Not only are there fewer people eating, but there are also fewer people sending money home. Work is not as easy as before."
Nan Yi: "Leave two of your men to protect the woman next to me."
Monkey: "Okay."
After finishing the brief conversation with the monkey, Nan Yi turned to look at Jin Huixiu, "Huixiuxi, did President Bai tell you that you will be paid for being my travel companion?"
"Inside."
"You will be the heroine of a movie co-produced with Xiang Yuan. You will have a big role to play and a lot of room to play. This is the compensation I give you. Are you satisfied?"
After hearing the reward Nan Yi promised, Jin Huixiu did not show happiness, but was alert, "Just accompany you for fun?"
"Of course not. If you are just a companion, the compensation I give you is too high. You need to do something for me." Nan Yi had no interest in leading Jin Huixiu to think in the wrong direction. He pointed directly at a sex shop and said, "I'll borrow your time for two days. You can talk to the practitioners here in the name of experiencing life. I need to know the changes in the business here. Are there fewer customers this year than last year? Are the customers becoming stingy? Are their tempers becoming violent? Are they becoming difficult to serve because of the high workload and low pay?
Also, find out the time required to entertain a guest now and the changes before..."
Seeing the word "abnormal" appear on Jin Huixiu's face, Nan Yi explained directly: "Ah, don't get me wrong, I'm not abnormal. Life is stressful and irritable, which will not only affect appetite, but also affect that aspect.
The role you will play is related to this kind of place, so experiencing life is not an excuse. If you agree, get off the car and start working immediately. Someone will follow to protect your safety. "
There are no naive people in the entertainment industry, let alone in South Korea's entertainment industry. Kim Hye-soo has been in the industry for many years and has seen all the things in the dye vat. The exchange conditions proposed are simply VIP exclusive promotions. She did not hesitate or struggle at all and just pushed open the car door and got out.
When the economy is good, it will be reflected on the lower-class people quite slowly. When the economy is bad, it will be reflected on the lower-class people at the speed of light. The sex industry is a relatively sensitive barometer of the economy, and observing its scale is more accurate than looking at economic data reports.
Of course, this kind of investigation work does not require Nan Yi to do it himself. The intelligence team has already started doing this kind of data statistics and is constantly updating it. Nan Yi is not doing it in vain. Doing the investigation is fake, and picking up girls is real.
Life needs to be spiced up, and the ways to pick up girls need to be diversified. This is a joke that Nan Yi gave to Jin Huixiu, but it is not a joke. The investigation is fake, but the experience of life is real. Nan Yi wants to give Jin Huixiu a role of a woman who is willing to fall into prostitution in order to support her boyfriend's study abroad. At the same time, in order to create conflict points, the situations of the second male and the second female in the film are exactly the opposite.
In order to send his girlfriend to study abroad, the second male lead became a loan shark and a thug. The story develops that the first male lead who was studying abroad and the second female lead who was studying abroad got together. The male lead became the director of the criminal department of the Seoul Prosecutor's Office. When handling a case, he cleverly turned the second male lead into a scapegoat for a chaebol son.
In order to seek revenge, the female lead hid her identity and took her posthumous child with her. Eighteen years later, in order to avenge her father, the daughter became an idol and deliberately seduced the male lead and his son, attempting to play the role of Diao Chan to make the father and son turn against each other and kill each other.
Unexpectedly, before she seduces the male lead into bed, he has already obtained all her information, abused her all night, and sent her to be a scapegoat for the chaebol princess who happened to be in trouble. On the same day, the female lead is regarded as a high-risk agent lurking in North Korea, and the house where she lived in seclusion is bombed. The film ends here, and when the subtitles pass, there is another easter egg. The female lead is reborn to the day when she first met the male lead.
In this way, the foreshadowing of the sequel is laid. The first part can be called "The Superior People" and the second part can be called "People's Justice".
After leaving Cheongnyangni, Nam Yi went to Yeouido Han River Park and found a better spot for lure fishing.
Fishing is allowed in the Han River, but it depends on the river section. The section of Han River Park is where platform fishing and lure fishing are allowed. I heard that you can catch bass and grouper.
Bass fish is the name given by South Koreans. It is called largemouth black bass in China. In the early years, South Koreans had a hard time, so they introduced the species from North America. Now that life is better, bass fish is regarded as an alien invasive species. Anyone who catches/fishes a bass fish must deal with it by themselves and are not allowed to release it. Once discovered, they will be fined.
The place where Nan Yi was should be frequented by anglers. As soon as he threw the bait into the water, a group of wild cats came to him. They didn't make any noise, but lay quietly by the side, waiting for the catch.
Seeing this situation, Nan Yi's mentality of killing time changed and he became serious. If he didn't catch a few fish to feed these wild cats, he would easily be despised by them.
He was serious about his work, but the fish in the water did not give him any face. After an hour, there was no smell of fishy smell. The wild cats next to him began to get restless, meowing and shouting in protest.
Nan Yi didn't know if he could catch any fish next. As the saying goes, a sword that has been humiliated cannot be sheathed. He quietly sent the monkey to buy cat food. It had to have a fishy smell and preferably in the shape of a fish.
While Nan Yi was fishing, the Blue House was holding a financial reform meeting headed by the Chief Economic Secretary. Participating in the meeting were the Vice Minister of the Ministry of Finance, the Director of the Financial Affairs Office, the President of the Central Bank and other heads of economic-related departments.
There is no doubt that people who reach high positions are definitely not stupid, and South Korea is no exception.
If we conduct an in-depth analysis of any of South Korea's chaebols, we can see a strange phenomenon - the degree of corporate diversification is very high.
The top five conglomerates have an average of 40 subsidiaries, for a total of 210, while the top 30 conglomerates have about 616. This extraordinary diversification is mainly achieved through the establishment of new subsidiaries.
The conglomerates' large, unusually diversified business structure and public calls for Blue House intervention in lending to the conglomerates are critical to South Korea's success in gaining market share globally, as losses at one enterprise can be offset by profits at another.
This extensive diversification is one of the main public criticisms of the conglomerates, but these criticisms should perhaps take into account at least three points.
The first point is quite obvious. Although conglomerates have been accused of not developing core competencies, there are valid reasons for diversifying into a wide range of sectors in order to more fully exploit the benefits of economies of scale, economies of scope, and dynamic synergies between enterprises. Moreover, there is no doubt that asset diversification reduces risk.
The second point is one that is easily forgotten: diversification is usually inseparable from division of labor. Of Samsung's 50, Hyundai's 49, LG's 53, Daewoo's 25, and SK's 33 subsidiaries, only a few companies in a few departments account for a large share of total sales.
Sales of three subsidiaries of Hyundai account for 67% of total sales. Although Hyundai is more evenly distributed in different sectors of manufacturing, sales of five subsidiaries still account for 70% of total sales, and sales of four Daewoo companies account for 85% of total sales.
The third and final point about the pros and cons of diversification relates again to corporate governance structure.
Once the structure of the chaebol changes due to the separation of enterprises from the group, the company will immediately be specialized. In the past few years, the Blue House has tried to use an elaborate credit control system to restrain the trend of chaebol diversification and induce the group to specialize, but with little success.
Such diversified operations have left the conglomerates heavily in debt, with the highest reaching over 2,000 percent. Hyundai and LG's debts exceed 500 percent of their equity, and the other three are not much lower.
High debt and low profitability inevitably lead to a large number of companies on the verge of bankruptcy. It can be said that even if there is no global financial crisis, South Korea will also experience a financial crisis. Its internal contradictions have accumulated to the critical value of the outbreak and cannot be suppressed.
Fast forward ten years ago, only a few conglomerates in South Korea could clearly explain what their main business was. Take Daewoo as an example. In 1967, when it was established, Daewoo was just a textile trading company. It was not until 1972 that South Korea began to implement its third five-year plan and vigorously supported the heavy chemical industry. Daewoo then began to expand with the help of this favorable trend.
Its expansion was not due to the expansion of Daewoo's own development needs, but was done according to the will of the government. The Blue House waved its hand, pointed at the poorly managed companies such as Shuangmei Industry, Sanzhou Building, Xincheng Tongshang, and Dongyang Securities, and said to Jin Yuzhong kindly: "Xiao Jin, you will take care of the bottom line."
Kim Woo-jung was not happy at the time. Firstly, he looked down upon some of the companies, and secondly, he did not have that much money in his pocket. However, the Blue House felt that if he looked down upon them, then they must look up to them. Kim Woo-jung had no choice but to accept the offer. He thought, if they looked up to them, then they could look up to them, but what about the money?
South Korea's strategy of supporting the development of conglomerates was not something that was thought up on the spur of the moment. During the decades of Japanese colonization, many senior government officials were influenced by Japanese culture and had a better understanding of Japan's economic system.
When moving forward, there were two forks in the road. The first one was a road that had been walked by previous people and the traps were already marked. The second one was an unfamiliar road with no experience to draw on. Undoubtedly, South Korea chose the first one and crossed the river by following the lead of Japan.
Support cannot be blind. It must be targeted and kept under control at all times. For this purpose, the Blue House has designed a credit-based industrial finance system to establish consortiums. In a country with a capital shortage, consortiums have to rely on loans from banks controlled and owned by the Blue House.
As the corporate debt ratio is high, even higher than that of Latin American and Southeast Asian companies, the chaebol has to maintain a good relationship with the Blue House to avoid bankruptcy. The Blue House controls the credit-based industrial financing system, which can influence the investment pattern of the economy and guide the direction of the sector.
The highly indebted nature of South Korean companies, which has always been the case throughout South Korea’s history, means that even small changes in discount rates or prime lending rates between sectors can have a huge impact on resource allocation, as these instruments have a large impact on corporate cash flow at high debt/equity ratios. As a result, the foundation is highly aligned with the Blue House’s macroeconomic policy goals.
In fact, all South Korean chaebols have their shares held by South Korean banks, which are controlled by the Blue House.
From 1962 to 1972, South Korea formed a trickle-down effect in the process of economic development. It did not give special treatment to the poor, disadvantaged groups or poor areas. Instead, it focused on developing conglomerates, which in turn led a large number of wealthy groups to benefit the poor or areas through consumption, employment and other aspects, thereby driving their development and prosperity.
The supported conglomerates have a huge number of employees. In an era when a social security system is completely missing, the welfare level of the conglomerates directly affects the living standards of the entire Korean people. Since South Korea's arable land is barren, it is impossible to resettle too many farmers, and there are no state-owned enterprises that can accommodate too many workers, so it is difficult to resist the impact of unemployment.
Even if the chaebols keep committing suicide, it is difficult to cut off their credit and make them bankrupt. The chaebols are always under the supervision of the Blue House, which in a sense makes them "never bankrupt."
On the one hand, the Blue House had to constantly save the troubled chaebols to prevent the collapse of the banking system and large-scale unemployment. During the debt crisis in 1972, the Blue House allowed the chaebols to postpone debt repayments and provided them with rescue loans.
Between 1979 and 1993, the Blue House provided financial subsidies to heavy industry and chemical industry enterprises; between 1984 and 1988, it restructured the debts of overseas construction, shipbuilding, textile, and machinery manufacturing enterprises. The Blue House became an insurer and liability bearer, providing guarantees for the consortium and its own investments.
The Blue House has formulated countless rules and regulations in an attempt to control and tame the chaebols through regulation. The Blue House has always been strict and constantly urged companies to reform.
After the 1972 financial crisis, the Blue House saved the chaebols by urgently suspending the chaebols’ repayment of debts in the over-the-counter market. The Blue House selected what it considered “blue chip companies”, forced them to go public, and threatened to impose a 40% corporate tax on chaebols that did not comply (the normal rate was 27%).
The Seoul Stock Exchange was suddenly flooded with a large number of new public offerings worth up to $48 million, and the number of listed companies suddenly increased by 50%.
In 1974, the stock market received another boost when Park Chung-hee issued a special order, strictly instructing banks to strengthen the audit and supervision of loans to non-listed companies. Many such policy measures were issued in one go in the 1970s.
The consortiums are now in a dilemma. On the one hand, there are punitive measures, and on the other hand, there are huge losses from listing, such as autonomy, cheap loans, and severely undervalued equity, making it impossible to raise much funds.
In this situation, their reaction is predictable.
Some conglomerates believed that defying the Blue House's orders was the best strategy and would rather pay 40% tax than enjoy the preferential treatment given to listed companies by the Blue House. Other conglomerates pretended to obey but actually bought back most of their stocks from the secondary market. As a result, the scale of South Korea's securities market was very small.
Under such circumstances, the Blue House also tried to use a set of the most difficult to implement "credit control" methods to restrict the conglomerate's access to bank credit.
This credit control system originated in the era of industrial policy. In a system where bank credit is issued not based on economic feasibility but on the requirements of government industrial policy, the only way to prevent corporate defaults is to continuously strengthen supervision and control, including constant supervision of loan use, supervision of the reform of consortium financing structures, and formulation of a complete set of loan ceiling restrictions.
To prevent the concentration of lending, the Blue House has drawn up complex regulations that limit the amount of lending to the same lender, restrict the amount of lending to a single bank to a large lender, and set lending caps for companies affiliated with conglomerates.
To prevent defaults, the Blue House has established an early warning program, a modern credit assessment procedure, and complex default management rules; the Blue House has issued a set of special laws that apply only to conglomerates to regulate the equity and debt ratios of various industrial sectors and encourage companies to go public from a financial perspective.
Since 1980, the Blue House has closely monitored the use of bank loans by the conglomerates and expanded external audits; by the mid-1980s, it had also formulated a series of policies under the Fair Trade Act.
In 1992, the Fair Trade Act was further strengthened, loan guarantees between subsidiaries were restricted, and the Blue House relaxed loan ceilings to encourage conglomerates to develop core industries.
The result of the Blue House's actions was to create a regulatory albatross that ultimately failed to achieve its goal, but the Blue House had to enact regulations to offset the worst effects of its development strategy.
For most of the 1980s, the Blue House chose to constrain the chaebols through bureaucracy rather than the market, resulting in the expansion of regulations, the prevalence of nepotism, and a number of mothers-in-law squatting over the heads of the chaebols.
In the 1990s, South Korea's military rule ended and entered an era of cultural control. The newly elected Kim Young-sam tried to break the confrontation and economic stagnation caused by the Blue House's dual role as both a guarantor and regulator of the conglomerate. Therefore, the Blue House decided to downplay its role as a regulator.
In order to eliminate confrontation and join the Organization for Economic Cooperation and Development (OECD), the Blue House greatly relaxed the regulation of the banking sector and lending practices, opened up domestic financial markets between 1993 and 1994, and removed the Ministry of Finance's direct intervention in credit allocation and its privilege of appointing bank leadership.
The division of financial regulatory powers between the Ministry of Finance and the central bank (Bank of Korea) has resulted in large regulatory gaps. In other words, the pendulum has swung too far in favor of the chaebols.
If bureaucrats had retreated into the background in the 1990s, politicians had not. Political power was strong, and members of the main parties or those close to the president could still veto the appointment of commercial bank presidents. Bank leaders had to listen to politicians and lend money to their campaign donors.
The Blue House also removed entry barriers and other restrictions on the financial sector, which had long been divided into several parts, and at the foundation's call, it lifted asset limits and reduced reporting requirements for banks and non-bank financial institutions.
As a result, non-bank financial companies were quickly deregulated and no longer subject to supervision by the Blue House. Instead, they were controlled by conglomerates, and loans were no longer supervised, causing chaos within South Korea's credit system.
For the Blue House, the biggest challenge is that the government has to both guarantee the conglomerates and restrain them. The real miracle created by South Korea in the past 30 years from 1962 to the present is not the Han River Miracle, but the fact that it did not become schizophrenic due to two conflicting identities while walking on the tightrope.
After the 1990s, the reason why God stood behind the chaebols was related to the chaebols' self-liberation. In order to get rid of the Blue House's control and gain more autonomy, the chaebols began to rush abroad in the 1980s, build new industries, mortgage them to the South Korean credit system, build new ones, mortgage them again, and so on.
In the process of the cycle, the consortium divests high-quality assets, uses the high-quality assets to borrow US dollars from foreign banks or attract investments, and in the process, establishes connections with controlling shareholders through cross-holdings or chain ownership.
Traditional interlocking ownership models can be Byzantine in order to circumvent regulations on ownership, including prohibitions on controlling stakes in companies, prohibitions on direct interlocking ownership (Company A owns Company B, which owns Company A), and various caps on consortium equity investments.
The result is a circuitous pattern in which several holding companies actually own significant amounts of stock in subsidiary companies.
It is through this confusing shareholding method that the consortium has gained more say, which is why the consortium has not lost the upper hand in the ongoing confrontation with the Blue House and has even begun to fight back.
During the era of military rule, the Blue House naturally saw all the small actions of the chaebols, but it was trapped in its own web and was helpless - the chaebols owed the government a lot of debts, and they also had a lot of debts abroad. The government held the chaebols' claims in its left hand, and it also had a lot of debts abroad in its right hand. Under this situation, facing the disobedient chaebols, can the Blue House still kill them with one blow?
If the economy is hit hard, what will happen to it? What will happen to the unemployed people? Who will shoulder the huge foreign debt?
Moreover, for the president in the Blue House, he has to face another major problem, a more personal problem, which is that the general election is coming soon, what should he do with his personal interests?
National interests, family interests of consortiums, personal interests of bureaucrats, and the interests of the people are all intertwined. It is difficult to sort them out, but no matter how difficult it is, we have to sort them out. If the danger is not eliminated, explosion is imminent.
What is the danger?
South Korea is facing a huge foreign debt and its lifeline of "export" is no longer viable.
How to repay the debt and how to increase exports are issues that South Korea’s economic departments need to discuss and resolve.
In the meeting room of the Blue House, the heads of various departments were arguing fiercely. The multiple interests on their shoulders made them hesitant and cautious when choosing strategies.
