South Korea heads for black September as problems pile up for the ailing won(hit by Fannie/Freddie)

Times of London ^ | 09/01/08 | Leo Lewis

[TigerLikesRooster]

South Korea heads for black September as problems pile up for the ailing won

American investments threaten currency

Leo Lewis in Seoul

The deepening woes at Fannie Mae and Freddie Mac, badly stretched central bank reserves and a losing battle to support the won are pushing South Korea towards a full-blown currency crisis this month, analysts have said.

Heavy investment by the Korean Government in Fannie, Freddie and other US-related agency bonds has left a potentially huge liquidity problem - perhaps $50 billion (£27.4 billion) - in the foreign reserve portfolio. Some believe that Seoul might have no ammunition left to prevent a significant flight from the won. Fruitless currency intervention by South Korea - increasingly desperate-looking verbal and financial measures to fight the market trend - cost about $20 billion in July alone.

Attempts to prop up the won come as South Korea’s household and corporate sectors are wincing from the pain of high energy prices and inflation. A summer of strikes by lorry drivers and mass street demonstrations calling for President Lee to resign reflect rising public concern that the economy is in trouble

[TigerLikesRooster]

I had misgiving on former president embarking on investment spree using national pension fund. He was so 'unassuring.' Now it blew up big. Of course, those pinkos are busy blaming it all on the current president.

[TigerLikesRooster]

Ping!

[glorgau]

Another one of the group of suckers that Wall Street has screwed. Chumps.

The biggest shoe to fall will be the Chinese. They’ve been doing the manual labor while despoiling their country for IOUs.

[AndyJackson]

badly stretched central bank reserves

Amateurs. Need more reserves. Just print them.

[bruinbirdman]

"Now it blew up big."

It got worse in after hour trading:

Rescue plan near for Fannie and Freddie

"The exact form of the proposed government rescue remained unclear, but share prices for Fannie Mae and Freddie Mac declined 30.3 per cent and 26.6 per cent respectively in after-hours trading Friday, reflecting investor concerns that the rescue plan would wipe out holders of equity in the groups while guaranteeing their debt."

yitbos

[TigerLikesRooster]

Yes, this will create many screaming matches in political capitals around the world. :-)