What is the South Korean bankruptcy crisis shown in 'Squid Game'?
Global
Now we’re not suggesting people should be killing each other in a mass carnage competition, but the debt crisis of young people in Korea is very real.
And while there may be a lot of reasons for this, the standout issue why a majority of Korean youth have submerged into a bankruptcy crisis is one: private moneylenders.
Korean household debt-to-GDP ratio grew up to 104% in 2020. In comparison, the household debt-to-GDP ratio for India was around 32%, and that for the G20 countries at around 70%.
The >100% figure indicates that the level of debt outstanding in Korean households is greater than the annual flow of disposable income.
Private loans
The Korean debt largely consists of loans - mainly home mortgage loans, but also other types such as credit card liabilities and private lendings.
60% of graduate students already owe student loans upwards of USD 10,000.
And on top of it, there's the Korean job market.
“Despite being the most highly educated generation in the country's history, nearly 1 in every 4 Koreans in the 15-29 age group was effectively jobless as of May, far higher than the 13.5% for the rest of the working population.” - Reuters
This has accounted for millennials resorting to illicit ways of gaining more capital- such as gambling addiction or piling a huge sum in credit card debts.
The high credit limits and tax deductions on card usage in Korea made it a very enticing proposition for youngsters. For instance, someone with a monthly income of USD 500 could pile a debt of up to USD 30,000, just by owning 4 credit cards!
Targeted ads on messaging app ‘KakaoTalk’ (Korean equivalent to ‘We Chat’) also offer easy loans to students by simply sending a text message.
Loan sharks
Another disturbing trend is the rise of unauthorised moneylenders and loan sharks. Reported instances of lenders standing in front of schools offering up to USD 240 in loans while demanding USD 400 two weeks later are not uncommon.
The interest rates on these loans go as high as 500%, with cash-strapped Korean youngsters falling prey to shark threats and physical harassment on the failure of repayment.
Suicide rates
Debt repayment is one of the leading causes of suicide among Korean youth today.
“Between 2014 and 2018, more than 800 people tried to kill themselves by jumping off the Mapo Bridge in Seoul. Known as the “Bridge of Death”, it is one of the country’s most notorious suicide spots.” - CNA
Government intervention
In 2019, Moon Jae-in’s government ramped up its efforts to deflate the real estate bubble amounting to large household debts. They tightened home loan regulations, raised taxes on property, and banned any new mortgages on houses more than 1.5 billion Won.
To cut the debt burden of business owners, the government lowered the maximum legal lending rate to 24% and worked with banks to offer affordable mid-rate loans to them.
Endnote
‘Squid Game’ is currently one of the most popular Netflix shows of all time, offering a twisted, dark take on modern-day capitalism. The plot revolves around an underground tournament where participants with hefty personal debts battle each other to death for large prize money.
According to estimates, there are approximately 400,000 Korean youngsters currently in debt to loan sharks and private lenders.
The world is facing an energy crisis: Where and why?
Business
India
The northern states have seen worries with coal supplies being extremely low, with Arvind Kejriwal being the first to acknowledge cautious use of electricity to avoid blackouts. Even the Maharashtra State Electricity Regulatory Commission asked its citizens to be cautious about electricity, with over 13 thermal power plants shutting down due to a shortage of coal.
China
With China’s focus on Green energy, it started shutting down its coal mills and power plants. This year the unprecedented increase in demand has offset its plans. With rising coal prices, suppliers find it more profitable to focus on coal, since last year China banned Australia’s import, the leading exporter of coal in the world. This has led to most of China facing blackouts since mid-September.
Europe
European Natural Gas futures have seen a 1300% surge since May 2020, owing to high commodity and carbon prices, since Europe has been facing low wind output for efficient wind power supply. The U.K. now has the most expensive electricity in Europe, due to the global surge in gas prices. The European surge in gas price comes off unseasonable cold weather conditions with supplies dipping to below pre-pandemic 5 years average.
Lebanon
Lebanon is now plunged into “complete darkness”. Two of its largest power station were shut down due to massive fuel shortages. The last couple of years have been difficult for the country economically, crippling more than half of its population into poverty. Rising global energy prices have exacerbated the country’s health, leaving the population with only a couple of hours of electricity throughout the day.
As it stands
The beginning of the last quarter for 2021 has seen big players go through a power crisis, led by inconsistent demand rippling to pre-pandemic levels with lower than average supply constraints. With oil and gas at multi-year highs, governments across the globe are now forced to take measures to prevent blackouts in their countries.
At a personal level, it is advised to use energy conservatively to help mitigate the risk.
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