Dear Comrade

Dear Comrade Leader, Episode 258

The first signal of the storm was the great earthquake that struck Sichuan, China on May 12, 2008.

When the 8.0-magnitude earthquake on the Richter scale centered on Wenchuan County, the epicenter of the outbreak, struck all parts of Sichuan Province, and hell descended on the earth in an instant.

The ground shook, cliffs rose from the ground, and everything from modern buildings such as highways, schools and hospitals to ancient ruins was destroyed.

Moreover, since Sichuan is an inland region with a concentrated population, including Chengdu, which has a population of more than 14 million, the damage was extremely severe.

The Sichuan earthquake was an unprecedented disaster in itself, with an estimated 80,000 official deaths and 400,000 injured.

-what’s this? Building interiors… … No concrete, only bamboo cans full of trash?

-The children’s school collapsed first! Building rubble shattered like plastic just by pressing it with your hand! What the hell is this country like, it’s only fun to build, and there’s not a single thing that isn’t bad construction, damn it!

– No, wait. So you mean no one knows how many things this guy has? What if the apartment I’m trying to buy now is a tin can?

One of the most common claims of economists is the so-called ‘black swan theory’.

The economic structure of modern society, especially the financial market, is so complex that no one knows that the second hand of a time bomb is ticking in it, and even most so-called experts strongly deny the existence of the bomb, but once the bomb is detonated, the existing It destroys all order.

And in the case of the collapse of the Chinese real estate bubble in 2008, it could be said that this black swan theory was perfectly proved.

As in any country, natural disasters act as bad news for the stock index to plummet and the economy to deteriorate, but no one knows whether it will act as a simple one-time bad news or a trigger for a large bomb.

– The Shanghai Composite Index plunged today. Several factors overlap and overlap, such as the raw material shortage caused by the earthquake in Sichuan, a treasure trove of natural gas and coal, and the rapid cooling of consumer sentiment in the real estate market as large-scale poor construction, a chronic problem in China, is revealed… … .

– The bubble in China’s real estate market is subsiding. All experts are predicting a catastrophe. China’s large state-owned banks, which lent money to individuals and local governments using real estate with uncertain asset values as collateral, quickly faced a business crisis.

-At the same time, the Shenzhen Composite Index and Hong Kong’s Hang Seng Index also plummeted… … .

And as May passed and June was marked by the earthquake and the real estate crash, it was revealed that the bomb was not just a bomb, but a very large bomb.

As the old saying goes, ‘Breaking a camel’s back is the last straw’, the Sichuan earthquake was the last straw to extinguish the bubble in the Chinese real estate market.

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Not only that, as the saying goes, ‘The market is a living thing’, a newer proverb, the cooling of consumers’ purchase intention that the real estate they want to buy may turn out to be garbage is a general feeling of skepticism about the market, and the skepticism is instantaneous. contracted the market and burst the bubble.

However, unlike the United States, which suffered a financial crisis in its original history, as China is a socialist country, government regulations on derivatives related to housing loans by state-owned banks were more stringent than in the United States. it was more serious.

This is because, unlike the financial crisis in the original history, tens of hundreds of provincial and provincial governments were the ones who were most directly affected by the 2008 real estate collapse in China.

The debt of the local government, which has long been pointed out as the hidden deterrent of the Chinese economy, has risen to a dangerous level due to this crisis.

-Professor, how could this happen?

– To explain, China is a socialist country, so all ownership of land belongs to the state, that is, the government, not individuals. However, in large cities such as Shanghai and Beijing, the local government can collect the tax revenue needed to build infrastructure such as railroads from the taxpayers, that is, the people, but it is a different story for local governments with no money in rural areas, which are mostly rural areas. In fact, it can be seen that this is a real serious problem now rather than the peasants.

-These rural governments sell land and leases to individuals or real estate development companies, or borrow money from state-owned banks, etc. The amount of debt held by local governments is incomparable to the amount borrowed by individuals such as farmers and workers. it’s so terrific. According to the official statistics in China alone, it is 10 trillion yuan (1,700 trillion won), and according to more reliable statistics abroad, it is more than 14 trillion yuan.

-I’m not kidding, but if the price of this property goes down… … .

-Local governments may be in a quasi-default state, although they will not officially admit or publicize them due to the huge fiscal deficit, China’s nature. Of course, the banks will suffer huge losses and the central government and the Communist Party will also be affected, so I would like to advise you to sell the RMB you bought in advance.

And, in fact, as predicted, the crisis in China, which has been called the ‘factory of the world’ and has driven the average GDP growth rate of the world, soon shook the world economy.

Of course, including North Korea, where it is difficult to escape from Chinese influence.

* * *

– The yuan is depreciating sharply. The crisis that started in China, which was leading the BRICS (Brazil, Russia, India, China, and South Africa: emerging markets represented by Brazil, Russia, India, China, and South Africa), is coming to the United States beyond Asia. The Asian stock market is all in turmoil, including Japan, Hong Kong, Singapore, South Korea, and North Korea.

“Listen again. How much did the stock price drop?”

At the beginning of July, when the financial crisis that started in China finally began to spread around the world in earnest, Jeong-hwan, watching the TV screen conveying the urgent situation, turned his gaze to the executives sitting around the table and asked Seung-il Choi again.

It was an unplanned meeting of the Politburo before noon, but everyone had a serious expression on their faces.

As Seungil Choi, who answered his question, had never experienced anything like this before, so he raised a handkerchief and wiped his sweat before opening his mouth.

“It’s minus 8 percent. At 10 am today, all trading was halted at the Pyongyang Stock Exchange when the Circuit Breaker was triggered for about 20 minutes. There are several unsettling factors such as rising prices of raw material items except crude oil, slow recovery in the Sichuan disaster area, and the upcoming US presidential election, but the biggest is… … .”

“The Chinese real estate market will collapse. Rumors are circulating that China Construction Bank, one of the four largest banks in China, may go bankrupt… … The market is frozen. What is the reaction of the Republican corporate workers?”

“Everyone is going to die. Especially for those who do business in China… … It is natural for large companies such as Hyundai Group, Bukmyung Group, and Ssangwoo Motors to cancel or put on hold all their export and delivery contracts, and in the case of Bukmyung Group, the party said that the construction cost was delayed in hundreds of millions of dollars. I’m on my way here after hearing about the ejaculation, Comrade General Secretary… … .”

The person who answered this time was not Choi Seung-il, but Jang Seong-taek, chairman of the Ministry of Foreign Affairs.

In conclusion, as Jang Song-thaek said, North Korea was currently facing an unprecedented economic crisis.

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No, actually, the use of the word ‘unprecedented’ was a little different before that, that is, during the socialist economic system, because we were always hungry, we were always short of almost all goods, and the value of the Korean Won was always at the bottom. It wasn’t, it just existed.

And after Jeong Hwan came to power and transitioned to a market economy system, thanks to the leadership of the party and general secretary, and the global boom that began in the 1990s (and above all, because it started from the bottom of nothing worse than that), the country called the Democratic People’s Republic of Korea (DPRK) The economy of the country has been running in a straight line for growth.

Therefore, in the current economic crisis from China, almost everyone, not only the people, but also the companies who have become accustomed to the boom and overinvested in facilities and businesses despite the Party’s instructions, even the government officials who have to respond to this situation. It upset me and made me cringe.

In other words, following the one year ago when the democratic forces, including the Hak Chongryon, arose like wildfire, this time the period of economic testing has arrived for the Kim Jung-hwan regime.

‘Since about two years ago, Peony Holdings will make a lot of money on the contrary because it has continuously taken out assets from China and invested in an inverse fund in emerging countries. But the economy of this country is not running with only oil and Peony Holdings… … .’

Junghwan thought so to himself and put his hand on his forehead with a brief sigh.

Politics and economy are closely related, and even though they look almost identical at times, they are distinctly separate areas.

Of course, it is a state-owned company, and the money earned is reinvested in the reinvestment of the industry and economy in the republic to strengthen the national economy. The issued government bonds are still hard to pay off) is a distant story now.

However, in the current republic, countless private sector companies and capital are scattered, and although the scale is several orders of magnitude larger than that of Peony Holdings, the security of the people of the republic and the entire system is at stake in the employment guaranteed by the companies. have.

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North Korea has enjoyed export-led economic growth similar to South Korea to this day, and for North Korea, a latecomer, the largest export market and growth engine so far has been the Chinese market, which is a neighboring country and can enjoy preferential trade for political reasons.

And in spite of the various negative factors that have continued since 1980, China has achieved rapid growth up to now, although its growth rate is a little slower than in its original history, and this has led to the growth of North Korean companies in China and the country of the Democratic People’s Republic of Korea. It was impossible.

State-owned enterprises, such as Peony Holdings, directly affected by Jeong-Hwan, were able to foresee and avoid a crisis like this crisis from China, but forcing numerous private companies to withdraw from a specific market is the previous planned economy system. It’s like going back in time, isn’t it?

‘After all, this crisis was a crisis that should have come at some time. Are you going to enter the middle-income trap section in earnest like this?’

Come to think of it, something came to my mind when I heard the story of China.

“I will call the governor of the Central Bank of Korea soon and look for ways to revitalize the economy with the aim of lowering interest rates and releasing money in the market.

“It’s the worst, needless to say. In May and June, in just two months, a whopping 1 million companies went bankrupt. The General Bureau of Photoelectricity has already begun censoring the media, and the public security is imprisoning reporters who pour out these reports in the name of creating anxiety. Within the Prince’s Party, there are rumors that President Bo Si Lai and Secretary Xi Jinping are blaming each other, and that they even come out from the Politburo meeting to Goseong… … .”

“No, not that, the Olympics. Are they still going to hold the Beijing Olympics in this state of affairs?”

At Jeonghwan’s words, Jang Seong-taek and the officials patted their foreheads as if they had just remembered.

It is only now that they remember that the Beijing Olympics are only one month away, the pride of which China has been preparing for the past eight years, since it is in a very difficult situation.

Although the bid itself was made during the Jiang Zemin era, even after the transition to the Xi Jinping-Boshilai regime, the efforts made by the Chinese government and the Communist Party for the Beijing Olympics were indescribable. Therefore, there was a possibility that the hosting of the Olympics would be different.

However, unlike a while ago, Jang Sung-taek did not answer this question easily.

“That… … .”

“Why are you hesitating to answer, Director Jang? If your Chinese comrades have already internally decided to postpone the Olympics, but are reluctant to disclose it because of national prestige and public opinion, I would be more than happy. It would be even better if it was canceled!”

In fact, even though he said so, Jeong-hwan himself was well aware that the cancellation was only a wish, and he knew best how much effort the Chinese and Communist Party leaders put into the successful hosting of the Beijing Olympics.

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No, rather, even after the change of government, the effort would have been doubled if it had been doubled, but never decreased, just like the execution of bin Laden, in order to give the world awareness that China has been reborn as a new advanced power, a G2 capable of competing with the United States, after the Afghan War. seemed to do their best in this matter with one mind and one accord.

In order to clear the sky on the opening day, super-precipitation was put in place to ban all taxis in Beijing that emit fine dust during the Olympics, and artificial rainfall was induced to drive out Beijing’s rain clouds to neighboring cities. However, the financial crisis broke out just a month before the opening ceremony.

We have already returned invitations to the leaders of allied countries like Jeong-hwan, as well as US President John McCain, who expressed dissatisfaction with China’s war in Afghanistan throughout his tenure, to attend the opening ceremonies and honor the occasion. I was asking because I wanted to be immersed in national entertainment… … .

However, in the next moment, the words that came out of Jang Seong-taek’s mouth made Jung-hwan lose his humor.

“That… … My party sources say it’s about 8:2.”

“8:2? What does that mean?”

“… … This means that 80% of the members of the party want the Olympics to go ahead and 20% say they want to cancel or postpone it.”