Armistice End Countdown: D-2, Mood Sours.

• The Strait of Hormuz remains closed. U.S. time tomorrow, U.S. and Iranian negotiating teams meet in Islamabad, Pakistan.
• Donald Trump (U.S. President) warned, “If the blockade of the Strait of Hormuz continues, unfortunately, we’ll have to drop bombs again,” adding, “We’ll destroy all power plants and bridges.”
• Trump claimed, “We’ll excavate nuclear waste from Iran’s underground facilities and bring it to the U.S.,” but Saeed Khatibzadeh (Iranian Deputy Foreign Minister) retorted, “We will not send any enriched materials to the U.S.”
• A container ship under Indian registry also departed and returned after being attacked by Iranian forces.

A Fistful of Tyrants Ravaging the World.

• “The world is being ravaged by a handful of tyrants, yet it is held together by a multitude of supportive brothers and sisters,” said Pope Leo XIV.
• “Woe to those who exploit religion and the name of God for their own military-economic-political interests,” he warned.
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What Matters Now.

“Let Me Take the Heat, Let’s Be Rational.”.

• Lee Jae-myung (President) proposed reducing government-funded research institutes. Instead of expanding them, he suggested increasing civil servants.
• “Each institute has a director and administrative staff. They receive salaries, file taxes separately—there are more non-research personnel than actual researchers.”
• The critique questions the necessity of maintaining separate entities like the Korea Development Institute (KDI), Korea Research Institute for Human Settlements, Korea Institute for International Economic Policy, Korea Energy Economics Institute, and Korea Institute of Public Finance.
• Cho Jung (Minister of Foreign Affairs): “Expanding civil servant positions is extremely difficult, which is why we use foundation-based structures.”
• Lee Jae-myung: “If we discard the obsession that ‘we must not increase civil servants,’ even 10 more could make work far more efficient. When tasks require it, organizations must grow. People will later criticize me for increasing civil servant numbers. Let me take the heat—better to proceed rationally.”
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Hormuz Strategy Without the U.S.

• G7 leaders gathered at the Élysée Palace in Paris. Forty-nine heads of state, including Lee Jae-myung (President), convened. Lee participated via video link.
• Keir Starmer (UK Prime Minister) stated, “We must act to ensure the free flow of energy and trade.” Emmanuel Macron (French President) said, “This plan is purely defensive in nature and separate from ongoing hostilities in the Middle East.”
• There was an idea to negotiate with Iran while excluding the U.S., but it carries enormous risks.
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What’s Trump Thinking?

• According to the Wall Street Journal, he’s in a rage because things aren’t going his way.
• On the first day of bombing Iran, Trump said, “If this succeeds, we’ll save the world.” But when the Strait of Hormuz was blocked and oil prices soared, he panicked. The UK and France distanced themselves, and domestic opinion turned sour.
• His inflammatory Truth Social posts were intentional.
• “Open the Fuckin’ Strait, you crazy bastards, or you’ll be living in Hell. (빌어먹을 해협을 열어라, 이 미친놈들아, 안 그러면 지옥에서 살게 될 거야.)”
• His offhand remarks to reporters were meant to reverse the situation, but they fell flat.
• When Susan Wales (White House Chief of Staff) suggested holding a press conference, the idea was to reassure the public by showing there was a concrete plan—but it backfired.
• On the day Trump warned, “We’ll destroy all civilization,” his aides knew he’d back down at the last minute.
• Trump never intended to escalate globally. He planned to strike quickly like in Venezuela and withdraw, but now he’s trapped in a quagmire holding the global economy hostage. The Wall Street Journal analyzed, “He’s sinking into fear.” Yelling at his staff won’t change the fact that this is a failed war.
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Deep Dive.

Seoul Mayor Race: Jeong Won-o vs. Oh Se-hoon.

• People Power Party nominated Oh Se-hoon (Seoul Mayor) as its Seoul mayoral candidate.
• Oh Se-hoon distanced himself from Jang Dong-hyeok (People Power Party Leader), stating, “After the nomination process concludes, the leadership’s role will diminish, and messages will be delivered centering on the candidate.”
• His choice of a light green tie instead of the usual red also drew attention.
• Jeong Won-o (former Seongdong District Mayor, Democratic Party Seoul mayoral candidate) emphasized, “Ending internal strife will be the standard for municipal governance.”
• While real estate sentiment and conservative bloc consolidation are wildcards, both candidates are seen as unlikely to surpass the president’s strong approval ratings.
• Unlike Jeong, who is building a campaign committee centered on the party, Oh is likely to rely on personal appeal.
• People Power Party has yet to decide on a Gyeonggi Governor candidate, with no primary schedule announced.
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Nominate and Win.

• Jeju Governor’s seat opened up as Heo Won-gon (Democratic Party lawmaker) received the nomination.
• Of 14 vacant National Assembly seats, 13 were Democratic Party strongholds—holding all is the party’s goal.
• A Democratic Party official said, “In Honam, where simply raising the flag guarantees victory, any controversy in nominations could impact Jeong Cheong-rae’s (Democratic Party leader) bid for re-election as party leader,” adding, “We have no choice but to nominate region-specific candidates who won’t provoke backlash.”
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“Appoint a Special Inspector for the Blue House.”.

• This is Lee Jae-myung’s request.
• The Special Inspector is an independent body tasked with investigating the president’s close associates, relatives, and in-laws. The National Assembly recommends three candidates with over 15 years of legal experience, the president nominates one, and the appointee is confirmed after a confirmation hearing.
• “Power must be checked, and even for the sake of those in power, it’s better to be scrutinized,” Lee Jae-myung stated.
• The position has remained vacant for a decade since Lee Seok-su (then-Special Inspector) resigned during the Park Geun-hye administration.
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Chokepoints and the Bullwhip Effect.

• US private debt defaults were a latent risk, but the mood is shifting toward resolution.
• If private debt is resolved, AI crisis theories are also likely to subside. Once confidence grows that this is not a systemic crisis, money will flow.
• Han Sang-chun (Korea Economic Daily columnist) emphasized, “Semiconductors are the world economy’s chokepoint.”
• When free trade functions, minimizing inventory costs via JIT (Just in Time) is optimal, but in crises, a JIC (Just in Case) strategy is necessary. Maintaining buffer stock reduces risk—but this amplifies supply-demand imbalances, creating a bullwhip effect.
• Triple L effects can also be expected: lock-in (stable demand), leverage (rising sales boost operating profits), and liquidity (abundant capital).
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Another Take.

Is the Long-Term Holding Special Deduction (Up to 80% Off) Justifiable?

• It refers to a special deduction for long-term holdings, which allows a certain percentage of capital gains to be deducted when selling real estate held for over three years and resided in for over two years. Single-homeowners can receive up to 80% deduction.
• Lee Jae-myung (Democratic Party leader) pointed out on X, “This system drastically reduces transfer taxes solely based on long-term holding, regardless of residency,” adding, “While wage earners pay nearly half in taxes when exceeding 1 billion won, real estate speculation windfalls—even tens or hundreds of billions—are slashed simply because they were held long enough. This defies justice and common sense.”
• Regarding concerns that abolishing the deduction would cause a market freeze, he countered, “A gradual phaseout would give sellers time.” He explained, “If we abolish the deduction but delay implementation for six months, halve it for the next six months, and fully abolish it after a year, those who sell quickly will benefit. This would induce listings, not freeze them.”
• “Will you endure these risks and burdens until the end? The decision is yours, but you’d better calculate the economic losses carefully.”
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Living in Your Home Is Still Speculation? Chosun’s Framing.

• “What about retirees who’ve spent their lives guarding a single home?” The old refrain resurfaces.
• Chosun Ilbo pointed out, “If the long-term holding special deduction is to be abolished, a sophisticated supplementary measure adjusting for inflation in acquisition costs is absolutely necessary.”
• Analysis also shows that abolishing the deduction would increase taxes for half of Seoul’s apartment owners.
• In principle, reducing transaction taxes while strengthening holding taxes—and encouraging those burdened to sell and relocate—is the correct direction.
• Critics claim it breaks the “no property control via taxes” pledge, but abolishing the deduction is better understood as a matter of tax equity, separate from price stabilization.
• According to JoongAng Ilbo, if an apartment bought for 1 billion won a decade ago and lived in for two years is now worth 4 billion won, capital gains tax would rise from 460 million to 800 million won—the most extreme case. Here, the deduction rate drops due to short residency.
• Related Link.
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Hate It or Not, Why the U.S. Government Can’t Abandon Claude.

• It’s because the U.S. views resolving security issues as impossible without Anthropic’s next-generation model, Mistral.
• Anthropic’s publicly released Claude Opus 4.7 is a version stripped of Mistral’s cybersecurity capabilities.
• Anthropic has only selectively disclosed Mistral to 40 institutions.
• François-Philippe Champagne (Canadian Finance Minister) told the BBC, “The Strait of Hormuz is a known threat in terms of location and scale, but this issue with Anthropic is different—it’s an ‘unknown unknown.’”
• Park Tae-woong (Chair of the Nokseo Forum) noted, “Since late last year, AI’s ‘recursive self-improvement’—where AI creates more advanced AI—has accelerated, adding turbocharged speed to an already breakneck pace of development.”
• Related Link.
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Return of the Wolf, but Is Animal Display Ethical?

• The escaped wolf was captured after nine days.
• With the 2023 Animal Welfare Act, zoos transitioned from a registration to a permit system. All zoos must secure activity spaces, hiding areas, natural lighting, and safety measures by December 2028.
• Of 121 zoos, only 10 have received permits—O World, where the wolf resides, remains in a grace period.
• Yoo Dae-geun (Head of Social Policy, Hankook Ilbo) noted, “The true happy ending would be for the returned wolf to live freer and safer near its family, not consumed as zoo spectacle.”
• Related Link.
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Beware the ‘Shy Conservatives’?

• It’s a recurring election narrative, but it could also be a wind-making strategy to suppress the People Power Party’s underdog tactics.
• Kim Eo-jun (host of News Factory) said, “Busan and Gyeongnam always have 5% hiding.”
• Jo Gwi-dong (Strategy Director at Min Consulting) stated, “The existence of shy conservatives and their likelihood to vote for the opposition are separate issues,” adding, “If the opposition continues like this, they’re more likely to abandon voting altogether.”
• Related Link.

The Era of the Four Major Financial Groups Has Ended.

• At the launch ceremony of the National Growth Fund last December, the button was pressed by Park Hyun-joo (Chairman of Mirae Asset).
• Mirae Asset Securities’ market capitalization has long since caught up with Woori Finance and Hana Finance.
• Korea Investment & Securities’ net income surpassed NH Nonghyup Bank.
• Son Il-sun (Financial Desk Head at Maeil Business Newspaper) analyzed, “The fundamental reason the game is changing is that the essence of finance is shifting from ‘asset scale’ to ‘capital efficiency.’”
• The reality is that financial holding companies sitting on hundreds of trillions in assets see return on equity barely reaching 9%. Retail banking, once monopolized by banks, has shifted to internet banks and platforms, while corporate finance has moved from loans to solutions.
• “The hierarchical order centered on banks—where size (assets) equaled rank—is collapsing before the new commandments of growth and efficiency,” the analysis concludes.
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Thai Eggs Have Arrived.

• 30 eggs for 5,890 won—nearly 2,000 won cheaper than domestic.
• According to Livestock Product Quality Evaluation Service statistics, the average April price for 30 domestic large eggs was 6,969 won. The all-time high was 7,612 won in July 2021.
• Thai egg imports are a reluctant government measure amid ‘eggflation’ fears. 2.24 million eggs will be imported in phases.
• Feed costs have surged: 1kg rose from 597 won in November last year to 615 won in February. 13% of laying hens were culled from November to March, making production recovery unlikely in the near term.

Seoul Apartment Jeonse Listings Halved.

• 37,500 listings on April 18, 2024—down to 15,427 as of the 19th.
• Nowon, Jungnang, Gangbuk, and Seongbuk districts saw drops of over 80%. The market is so dry, it’s described as “bone-dry.”
• A Nowon realtor interviewed by The Hankyoreh said, “When a jeonse listing appears, it’s snapped up immediately.”
• Park Won-gap (KB Kookmin Bank Senior Research Fellow) called it “a watershed moment for the disappearance of jeonse,” adding, “Soft landings require revising the Lease Protection Act, expanding public rentals, and increasing tax deductions for monthly rents.”
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The Fix.

PyeongChang Olympic Venues Accumulate 40 Billion Won Deficit.

• Seven venues built at a cost of 600 billion won have accumulated a deficit. An additional 6 billion won in losses is unavoidable this year.
• Critics call them “white elephants”—ostentatious but useless.
• Gangneung City plans to bid for the Winter Olympics, but even if successful, it won’t happen until 2042.
• “Instead of wasteful bidding wars, the government needs a control tower role to renovate existing facilities and refine revenue models,” one expert noted.
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50,230 Capacity, 65,019 Inmates.

• This is the current state of South Korea’s correctional facilities. The occupancy rate is 126%.
• Journalists were given a one-day experience at Anyang Prison, where 18 people entered a 61㎡ shared cell designed for 9. It took an hour just to wash meal trays.
• With so many confined in tight spaces, conflicts are frequent. The number of inmates receiving disciplinary action rose from 1,830 in 2022 to 2,870 last year.
• Justice Minister Jeong Seong-ho said, “When rehabilitation fails in prisons, it ultimately creates additional social costs,” adding, “We will resolve overcrowding, improve facilities, and enhance the effectiveness of correctional systems.”
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ICYMI.

Lee Jae-myung and Hong Joon-pyo’s Makgeolli Meeting.

• Hong Joon-pyo (former Daegu mayor) made two requests.
• First, support the construction of a new airport in Daegu and Gyeongbuk.
• Second, restore the honors of Lee Myung-bak (former president).
• After visiting the Blue House, Hong Joon-pyo wrote, “I’ve gained nothing from MB, but I did it out of regret that politics has become so rife with petty grudges and greed these days.”
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Tokenmaxxing: Tokens Melting Away.

• Uber reportedly exhausted its AI budget this year—its annual allocation was spent by April.
• Can you see where the money is flowing? As AI agent usage grows, token costs are skyrocketing.
• After Jensen Huang (NVIDIA CEO) said, “A $500,000 developer should spend around $250,000 on tokens,” a culture emerged where tokens became a measure of skill.
• Meta even created a dashboard tracking token usage, pitting employees against each other to see who spends more (and thus, supposedly, works harder). At Amazon, some developers manipulated code to appear more token-intensive.
• Praveen Nepal Nagar (Uber CTO) told The Information, “Claude’s code generation completely derailed our budget planning.”
• At Uber, engineers spend $500–$2,000 monthly.
• AI writes 11% of Uber’s backend code updates—70% of all code.
• Uber’s annual R&D budget is $3.4 billion, not insignificant, but likely to grow.
• The Information analyzed that the era of agent software engineering has arrived. Soon, AI token costs may exceed labor expenses. Budgets must now account for AI costs like personnel expenses.
• Uber didn’t overspend—it might have just miscalculated. If trends continue, token usage will likely surge further.
• Planning (prototyping) workflows are changing too. Continuously asking AI, “Is this the right direction?” has become core process—each query melts tokens. Critics warn tokenmaxxing creates misaligned incentives.
• Steven Paleto (Span CTO) emphasized four points:
• First, not every task needs a powerful frontier model. Some require Claude Opus, others suffice with Haiku. Using advanced models only for multi-step tasks can reduce costs by over 90%.
• Second, to prevent AI agents from spiraling in reasoning loops and wasting tokens, circuit breakers and kill switches are essential.
• Third, performance metrics should shift from token usage to resolved tickets or cost-per-released-feature.
• Fourth, strategically develop local models or reduce reliance on external APIs.
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ChatGPT Gets Ads.

• OpenAI’s losses are projected to reach $14 billion this year. Weekly active users hit 900 million, but paid subscribers account for only about 5%.
• Free users are a burden, but even some heavy users on paid plans remain unprofitable.
• Sam Altman (OpenAI CEO) said, “Even at the $200/month tier, some heavy users still generate losses.”
• Ads will only appear for free users and low-tier subscribers. The ad revenue target is $2.5 billion.
• Related Link.

Japan Can’t Eat Bananas Due to Naphtha Shortage.

• Japan imports only green bananas under quarantine laws.
• They bring them in unripe and artificially ripen them with ethylene gas, which is extracted from naphtha.
• With U.S.-Iran tensions blocking naphtha exports, banana shipments are expected to decline.

South Korea’s 259 Suspension Bridges.

• In 2010, there were only 110. The Korea Culture & Tourism Institute analyzed, “The crowd-pulling effect of suspension bridges disappears after seven years.”
• According to the Dong-A Ilbo, 532 cultural centers and tourist facilities costing over 10 billion won have accumulated nearly 10 trillion won in deficits—9.483 trillion won as of 2024.
• Only 63 of the 532 facilities, including Seoul World Cup Stadium, Suwon Yeonhwa Park, and Gocheok Sky Dome, turned a profit.
• Ahead of local elections, nine pledges to build dome stadiums have already emerged, sparking concerns about budget waste.
• The UK, following the Green Book, verifies feasibility by calculating operational and maintenance costs over up to 60 years in present value before approving projects. Choi Han-byeol (professor at Jeonbuk National University) noted, “Korea should also calculate costs considering life cycles and periodically disclose aging condition assessments.”
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Worth Reading.

No Law Punishes Lies, But…

• Many people misunderstand this. Minerva took his case to a constitutional complaint and secured an unconstitutionality ruling.
• Even lies fall under freedom of expression, but freedom does not mean there is no responsibility. Fox News in the U.S. settled by paying $787.5 million in damages after airing a story claiming the voting system was rigged.
• If someone intentionally damages another’s reputation while knowing the statement is false, they cannot avoid liability. Lee Jun-ung (Seoul National University professor) emphasized, “Just as lies should not be punished indiscriminately, rules must be adopted that set a strict burden of proof for demonstrable harm.”
• Related Link.

Park Jin-seong and Kim Hyun-jin.

• Kim Hyun-jin alleged she was sexually assaulted by Park Jin-seong (poet) during high school. Park claimed it was a “fake #MeToo” and publicly attacked her by revealing her real name.
• As Park continued to imply suicide and play the victim, Kim Hyun-jin filed a complaint against him. The court ruled the sexual assault was factual. Seven years after the incident, Park was sentenced to 1 year and 8 months in prison for defamation.
• That Kim Hyun-jin took her own life. Lee Eun-ui (lawyer), who defended Kim Hyun-jin, assessed, “The courage he showed allowed many women to join hands and forge justice.”
• Lee Myung-hee (Kyunghyang Shinmun columnist) evaluated, “The ‘bright and fiery life’ he dreamed of remains a debt our society must repay.”
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Add Two Questions to the Census.

• “Which best describes your sexual orientation: heterosexual, homosexual, bisexual, or other?”
• “Does your gender identity match the sex assigned to you at birth?”
• The UK has included these questions since 2021. What about South Korea? The National Data Agency has rejected the National Human Rights Commission’s recommendation.
• Allowing same-sex household members to be reported as spouses or unmarried cohabitants in last year’s population and housing survey was already a significant change.
• Ahn Hyung-jun (Director of the National Data Agency) said, “Statistics are like a mirror reflecting society.” Park Han-hee (lawyer at ‘Hope Lawyers’) pointed out, “Sexual minorities, who live as members of society—not ghosts, are not reflected in the mirror.”
• Related Link.

The Wealthy Must Cut More.

• South Korea’s per capita carbon emissions were 13.7 CO2eq as of 2023.
• The government’s target for 2035 is 7.54 CO2eq—roughly halving emissions.
• Lee Jae-im (activist, Solidarity for Poor Society) pointed out, “The carbon reduction responsibility of the wealthy and high-emission groups is far greater and must take priority.”
• The top 1% by income emit 196 tons of CO2 annually, the top 10% emit 48 tons, and the bottom 50% emit 8 tons. To meet the government’s target, the top 1% must reduce emissions to 1/20th of their current level, and the top 10% to 1/5th.
• Lee Jae-im added, “Demanding equal cuts from everyone without specifying responsibility is a way of ignoring effective and just solutions.”
• Related Link.