Cablegate: Media Reaction in Seoul

R 180528Z DEC 08
FM AMEMBASSY SEOUL
TO SECSTATE WASHDC 2677
USDOC WASHDC 7909
DEPT OF TREASURY WASHDC
AMEMBASSY TOKYO
AMEMBASSY MOSCOW
AMEMBASSY BEIJING
CIA WASHINGTON DC
SECDEF WASHINGTON DC
USCINCPAC HONOLULU HI

UNCLAS SEOUL 002427

STATE FOR EAP/PD FOR SWALKER, EAP/P, EAP/K
STATE PASS USDA ELECTRONICALLY FOR FAX/ITP SCHEIKH
STATE PASS USTR FOR RCASSIDY
USDOC FOR 4430/IEP/OPB/EAP/JDONIUS
TREASURY FOR OASIA/MGREWE
CINCPAC FOR J-74

E.O. 12958: N/A
TAGS: PGOV PREL MARR ECON KS US KPAO KMDR
SUBJECT: MEDIA REACTION IN SEOUL

Subject: Media Reaction; Seoul

Global Economy: Financial Market Crisis

"Fed Cuts Rate to Zero to Fight a Deepening Recession"

Conservative Chosun Ilbo editorialized (12/18): "The Federal
Reserve's decision (to cut its key interest rate to a record low
range of between zero percent and 0.25%) is a radical measure that
is tantamount to printing dollars and scattering them from
helicopters. If it works well, the action could dramatically rescue
the U.S. economy from a deepening recession. However, if the
increased liquidity stokes inflation and weakens the dollar, it
might prompt foreign investors to sell off their dollar assets en
masse, putting an end to the long status of the dollar as the
world's default currency. Furthermore, the Fed has now become the
largest lender in the U.S. due to the financial crisis. This is the
result of its bailouts of financial institutions and purchases of
commercial paper (CP) to offer rescue measures. Even if the U.S.
economy recovers, it is questionable whether the Fed will be able to
handle the shock when it collects those loans."

Stephens

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