so much for crossing fingers

instead of the revised US-korea beef deal making those protesters in seoul any happier, it just got them violent.

The rally turned violent after some protesters used ropes to try to drag away police buses used as barricades to prevent them from marching into the presidential Blue House. Riot police immediately fired water cannons and sprayed fire extinguishers to repel them.

Angry protesters attacked police with steel pipes and stones, while police used clubs and shields against the crowd. Several hundred protesters were hurt during the rally that continued until Sunday morning, according to a coalition of civic groups that has organized weeks of demonstrations.

Police said the clash left more than 100 riot police injured and about 50 protesters were arrested on charges of assaulting police and illegally occupying streets.

how are we gonna fix this problem???

meanwhile, in korea

fingers crossed on a korea/US beef deal?

it seems like no one's particularly happy about the deal, which involves such appetizing details as...

Seoul will be allowed to return any packages containing skulls, brains, eyes and spinal cord marrow, and has the right to ban imports from US meat packing companies that fail to meet new import guidelines.

the question, of course, is this: will the protesters in the street care? aren't they going to be pissed off, no matter what kind of beef is coming from the US?

ugh. here's hoping that the deal works out. if not, the FTA is in serious danger, as is the lee administration. and if the lee administration gets a vote of no confidence, korea's fragile political system could be at risk.

more bad news in the korean market

as i was writing yesterday, it's getting hard out there for korean banks. the FT and forbes are reporting on HSBC's threat to back out of a deal with the Korea Exchange Bank if the government won't speed up its regulatory vetting process.

boy, president lee myung-bak is between a rock and a hard place right now. the korean public basically elected him on a have-your-cake-and-eat-it-too platform: make korea an economic giant, but maintain korea's unique identity by preventing foreign meddling. ergo, the horrible debacle about korean imports of US beef.

the korean public is going to have to get over its fear of mad cow if it wants to get this FTA with the US going, and it needs to get over its fear of the FTA if it wants to get the economy revved up for another leap in the international rankings.

president lee sort of has his hands tied! he clearly wants to cut down the regulatory agencies (hell, he was trying to avoid them for years when he was a semi-corrupt businessman), but he can't do it without regaining the political capital he's losing out in the streets. and if he doesn't move soon, HSBC's gonna back out. and as goes HSBC, so go a number of other firms.

then again, maybe i'm underestimating the power of mad cow disease.

(btw, i'm mainly joking about that last sentence, and should be clear about that. koreans have been protesting the US-korea FTA since well before the mad cow scare. it's largely a symbol of deeper fears about losing control of the economy, as far as i can see. it's too bad that the US press has mainly been portraying the protests as being about mad cow—it makes koreans look paranoid and superstitious. but then again, ain't that always the way with portrayals of asians?)

the east asians of last resort

the FT is reporting that lehman brothers almost made a huge set of deals with various south korean firms, and may still do so in the face of its now-infamous losses.

what's especially interesting about this story is the fact that a strategic partnership with the korean development bank and first korean bank and so on was probably seen as something of a desperation maneuver, given what lehman execs knew at the time of negotiations. why korea? why not, say, china? or any number of other locations?

my relatively uninformed theory is that korean financial institutions are in an unfortunate position—one made clearer by this story.

there's a korean saying—"korea is a shrimp in an ocean of whales." the whales, of course, are the PRC, japan, and the US (and to a lesser extent, taiwan). korea may be the 11th or 12th (depending on your measurement) biggest economy in the world, but it's in a part of the world where all you care about is the runner in front of you—not the ones behind you.

so basically, my guess would be that the banks were just as desperate as lehman was. right now, very few major US institutions are investing in korea, and it's losing its comparative advantages in virtually all sectors. it still has a leg up in telecommunications, but other than that, china and japan have made much of its economy redundant since the late 1980s. as the workforce gets older and the totally under-reported korean educational exodus of the past decade continues, korean banks are wising up and realizing that they need all the help they can get.

as an amateur korean nationalist, i hope that korea doesn't remain in this position for long. things are grim right now, given that lee myung-bak is under huge pressure to go back on his commitments for the US-korea FTA—a setback that could be devastating to the korean economy in the long-run.

anyway, the point is this—i think the lehman brothers desperation move, when taken alongside the recent street protests, is indicative of where korea stands, these days, in the power-politics of international investment. if it's going to remain significant, significant structural changes need to happen. but this blog isn't about policy recommendations, so i don't really have any.

i just hope people see this story about the lehman brothers deal as part of a story about korea, and not just lehman brothers.