Preliminary US-Iran MOU Details Emerge.

• It includes provisions guaranteeing $300 billion in funding—not from the US, but through partner nations and reconstruction-development plans.
• Critics argue this shifts post-war costs while ignoring alliances that opposed the conflict.
• Though absent from the MOU, speculation persists about allowing Iranian crude exports. The US banned Iranian oil imports in 1979. Barack Obama (then-president) lifted sanctions in 2015, but Donald Trump (first term) reinstated them in 2018.
• Related Link.

“If You Don’t Like It, We’ll Bomb It.”.

• Donald Trump (US President) keeps changing his mind. He dismissed it as “not a final agreement, just an MOU.”
• When asked about the nature of the reconstruction fund, he said, “We won’t invest, and won’t give a single cent.” No US financial support, period.

What Matters Now.

Special Prosecutors Seek 1 Year, 6 Months for Mayor Oh.

• Oh Se-hoon (Seoul Mayor) is accused of receiving poll results from Myeong Tae-gyun (political broker) ahead of the 2021 Seoul mayoral by-election and arranging for a donor to pay 33 million won on his behalf.
• If a fine over 1 million won is finalized, he will lose his mayoral position.
• The special prosecutors argued, “Polling costs were paid without following proper procedures.”
• Oh Se-hoon claimed, “This is a case prosecuted by politically subordinated prosecutors.”

Did Kevin Warsh (Federal Reserve Governor) Betray Trump?

• The Federal Reserve kept the benchmark rate at 3.5–3.75%. It’s the fourth consecutive freeze, but the signal matters. Nine of 18 officials argued for a rate hike. Only one advocated for a cut.
• Trump picked Warsh to follow his orders to slash rates—but the economy isn’t cooperating.
• Stocks initially plummeted after the Fed’s announcement, then rebounded. The Dow rose 0.98%, the S&P 500 gained 1.21%, and the Nasdaq climbed 1.34%.
• Related Link.
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People Power Party Files Election Appeals in 11 Districts.

• The party filed appeals in seven districts where ballot disputes occurred and four additional districts requested by candidates.
• While some in the general assembly meeting warned against fixating on election fraud theories, the prevailing sentiment was to file first and deliberate later.
• In Jamsil 7-dong, 12 voters were confirmed to have ultimately given up and left without voting.

Deep Dive.

Chances of a Revote? None.

• Seoul mayoral vote difference was 60,259, while the missing ballots numbered 4,206. Since the winner cannot change, a revote holds no practical benefit.
• The Hankyoreh analyzed that revotes might still be decided for proportional representation elections for provincial or local council seats.
• Still, issues abound: whether to redo both early and main voting, how to address declining turnout, etc.
• If a party or candidate files an election appeal, the election commission rules. If rejected, it can go to court. Ultimately, the standard is whether the result could be overturned.
• Related Link.
• Related Link.

Electoral Commission Reform: Constitutional Amendment if Necessary.

• South Korea’s constitutional guarantee of the Electoral Commission’s independence stems from the 1960 rigged election scandal. Critics argue that its status as an independent constitutional body has allowed it to wield unchecked power without oversight.
• The revelation that staff received 10.2 billion won in loyalty bonuses over five years also sparked controversy.
• Noh Tae-ak (National Election Commission Chairperson) made three overseas trips accompanied by his spouse. During a 2022 Denmark visit, he traveled business class at a cost of 12.6 million won.
• Proposals include establishing an independent audit body or allowing the Board of Audit and Inspection to conduct oversight, but constitutional amendments may be required.
• In an editorial, The Hankyoreh emphasized, “The best solution must balance maintaining independence with strengthening accountability.”

Where Are Iran’s Frozen Assets?

• The Wall Street Journal reports that $20–50 billion is frozen in China, $15 billion in Iraq, and $7 billion in India—petroleum payments trapped abroad since Trump reinstated sanctions in 2018.
• Iran claims at least $100 billion, but estimates suggest the figure is lower. For now, negotiations have agreed to unfreeze $24 billion in phases.
• Releasing the funds could help Iran curb inflation.
• Related Link.

Jailbreaks and Distillation.

• Jailbreaking refers to breaking AI’s safety mechanisms.
• Distillation involves bombarding AI with prompt bombs to copy its reasoning capabilities.
• The difference between Anthropic’s Claude and Fable lies here. Fable is Claude with embedded safety measures, but it was revealed that Fable can be jailbroken and weaponized.
• Even without jailbreaking, observers note it’s only a matter of time before competitors distill Fable to catch up.
• Anthropic maintains that jailbreaks cannot be fully prevented, but their risks are overstated. The same applies to distillation: it’s not replication, and accepting exposure risks for speed is the grammar of competition.

Bugmageddon.

• Bug + Armageddon. The term emerged when Mistral was partially released three months ago.
• Decades-old systems that worked fine began spewing bugs when integrated with Mistral. Catching them early is a relief, but if hackers exploit them, they become critical vulnerabilities.
• Some have evaluated the White House’s order to restrict Fable exports as evidence it has become a devotee of Bugmageddon.
• Nicholas Carlini (Anthropic researcher) warned upon Mistral’s initial release, “It’s the first model that can find and attack vulnerabilities at scale,” adding, “It shouldn’t have been released yet.”
• When Carlini fed Ghost (a web publishing software) to Mistral and asked, “Show me the worst thing you can do,” it found a bug that could arbitrarily modify any website built with Ghost.
• Carlini also warned, “The balance that has existed between attackers and defenders for 20 years seems to be nearing its end.”
• Nothing has changed in three months. Fable is Mistral. How long will competitors take to catch up? The Wall Street Journal noted, “It’s unclear what that means.”
• Related Link.

Why Does Trump Hate Anthropic?

• First, it once refused a request to assist in warfare. He has also denounced it as an “out-of-control, Radical Left AI company.”
• Second, he fears Mistral but fears China more. He is likely receiving exaggerated reports.
• The Wall Street Journal noted, “It might be wiser to use Mistral to identify and patch vulnerabilities before Chinese hackers attack.” Banning Mistral+Fable won’t halt development. Will he block every stronger AI as it emerges?
• Related Link.

Another Take.

AI Revolution Must Be Managed.

• Martin Wolf (Financial Times columnist) proposed three measures.
• First, criminal and civil liability should apply to major decisions made by AI.
• Second, a pre-release verification system like that for new drugs is needed, but with global regulation.
• Third, a significant portion of the wealth created by AI must be redistributed.
• Who will set the new rules? A Pew Research survey found widespread distrust of the US and China. The European Union might be the best candidate to establish standards.
• Related Link.
• Related Link.

A Chernobyl-Level Disaster Could Be Coming.

• Will we only prepare countermeasures after it happens? A warning that we are too insensitive to the risks of AI escaping human control.
• Stuart Russell (UC Berkeley professor) proposed, “A licensing system is needed, requiring safety standards to be met before systems are built and released, just like nuclear power plants or aircraft.”

Nuclear Plants to Rise in Yeongdeok and Gijang.

• Two 1.4GW nuclear reactors will be built in Yeongdeok County, Gyeongbuk Province. They will be the 34th and 35th reactors, with commercial operation targeted for 2037–2038.
• A 0.7GW SMR (small modular reactor) will be constructed in Gijang County, Busan. Commercial operation is set for 2035.
• Regions hosting reactors receive special subsidies at 2% of construction costs, with annual payments over the 60–80-year operational period.
• The 11th Basic Plan for Electricity Supply estimated 129.3GW demand by 2038, but the 12th committee projects a peak of 138.2GW by 2040.
• Related Link.

The Fix.

Rural Basic Income Pilot Areas See 4.7% Population Growth.

• Implemented last October, it marks 8 months. Comparing population changes between September last year and May this year, 10 regions all saw increases, led by Shinan County (South Jeolla) which grew from 39,000 to 42,000—a 8.3% rise.
• Shinan County had already been distributing “sunshine pensions” since 2021, contributing to relatively higher population inflow.

Health Insurance Support for Hair Loss to Cost 700 Billion Won.

• If the patient’s share is 30%, the cost must range from at least 1 trillion won to a maximum of 7 trillion won. This is the analysis of Jeong Jae-hoon (professor at Korea University).
• The term “moptopulism” has also emerged—criticism that prioritizing hair loss is misplaced when even rare and severe diseases are inadequately covered.
• Kim Hyun-chul (professor at Yonsei University) pointed out, “This violates the fundamental spirit of health insurance.”
• Oh Geun-ho (representative of “The Welfare State I Create”) proposed, “If financial burden is high, apply insurance coverage but handle drug prices through selective benefits.” The idea is for the National Health Insurance Service to control prices while reducing patient burden by raising their share to 50–80%.
• In an editorial, the Korea JoongAng Daily advised, “The minister in charge should take responsibility, report to the president, and review the matter from scratch.”
• Related Link.
• Related Link.

Free Bus Rides for Those Over 70?

• Subways are free. Seoul is considering expanding this to buses.
• Jeong Soon-dol (Ewha Womans University professor) noted, “The fiscal sustainability must be considered.”
• Analyses suggest an annual budget of over 100 billion won would be required.
• Daegu, which introduced free bus rides for those over 75 in 2023, reported an economic effect of 61.1 billion won.
• Related Link.

ICYMI.

South Korea’s Market Cap Ranks 5th Globally.

• 4.5 trillion dollars. The UK, in 4th place, is only slightly ahead at 4.7 trillion.
• The US leads with 79.7 trillion, followed by 2nd-place China at 10.8 trillion.

Can SK Hynix Catch Up to Samsung Electronics?

• 8,864.24. The KOSPI broke its all-time high again. Investor deposits reached 132 trillion won as of the end of May—2.3 times higher than a year ago.
• SK Hynix hit 252,000 won. Fueled by expectations of listing ADRs (American Depositary Receipts) in the U.S. market, it surged 15% over five days. Foreign investors bought 3.8 trillion won worth of Hynix shares while selling 0.6 trillion won worth of Samsung Electronics. Speculation arises whether Hynix could overtake Samsung in market capitalization.
• Micron Technology has a PER (price-to-earnings ratio) of around 10x. Hynix is valued at less than 7x. If Hynix’s ADR listing in August earns a valuation comparable to Micron’s, a 30% upside potential is plausible.
• Related Link.
• Related Link.

C-Beauty’s Counterattack.

• Last year, Chinese cosmetics imports surged 84% to $71.76 million.
• Analysis suggests C-Beauty has emerged as a major player in Korea’s ODM (Original Design Manufacturing) market. Among 28,000 cosmetics companies, only about 10 have their own production facilities or R&D centers. The rest outsource development and manufacturing to firms like Cosmax or Kolmar Korea.
• Critics note that while France has Lancôme and Japan has SK-II, Korea lacks a flagship brand. Last year, Korean cosmetics exports reached $11.4 billion, ranking third behind the U.S. and France.

Men and Women Over 60: 22.78 Million vs. 9.20 Million Won.

• Personal income comparison shows women earned 40% of men’s income.
• The statistics include personal and pension income but exclude asset income and basic livelihood benefits.
• Men’s pension income averaged 6.02 million won annually, while women’s was 1.86 million won—31% of the male figure.

Gyeonggi Education Office to Establish a Bureau for Teacher Authority Protection.

• An Min-seok (Gyeonggi Superintendent-elect) said, “I hope to implement ‘Season 2 of True Education’ in Gyeonggi Province.” In an interview with CBS, he added, “We are considering securing 20–30 teachers with special forces or Marine Corps backgrounds to deploy in situations schools struggle to control.”
• A bureau-level organization requires three divisions and nine teams.
• “Political Moms” criticized, “We are shocked by An Min-seok’s human rights awareness and educational philosophy, which praises child-abuse dramas disguised as ‘teacher authority’ and seeks to introduce them to schools.”
• Related Link.

Jeong Cheong-rae Goes to the Airport Today.

• He skipped Lee Jae-myung (President)’s departure ceremony but will attend the return event. Speculation arises that the president is trying to mend party-government tensions.
• Jeong Cheong-rae (Democratic Party Leader) yesterday emphasized, “Claims about pro-Cheong factions or pro-Seok factions are malicious division tactics,” adding, “All of the Democratic Party is pro-Myung.”
• On the controversial one-person-one-vote system, he said, “If implemented, even Roh Moo-hyun’s dream could be realized.” Observers suggest the intra-party legitimacy debate will intensify ahead of the party convention.

Worth Reading.

“We’ll All Be Replaced by Robots, If We Can’t Negotiate Beyond Individual Companies.”.

• Han Seok-ho (Secretary-General of the Korea Labor Foundation) argued, “The top 10% and bottom 50% of workers cannot be considered a single class.” “Given the situation, slogans like ‘unite’ or ‘one class’ are nonsense.” Where you stand changes what you see—acknowledging differences is essential.
• The Samsung Electronics performance bonus issue goes beyond income inequality; it could reshape social structure and order. For now, companies have strong incentives to replace labor with AI and robots, but there’s no counterweight. Large corporate unions are likely to side with profits.
• Han proposed cross-company bargaining as a solution: freeze wages for the top 10% and use the savings to create a social solidarity fund for improving conditions for non-regular and subcontracted workers, supporting small merchants, and expanding youth employment.
• Related Link.
• Related Link.

Why Cho Man Is a Problem.

• Elon Musk (SpaceX CEO)’s assets have surpassed $1 trillion.
• To accumulate $1 trillion, one would need to work 70 hours per week for 55 years at an hourly wage of $5 million. The U.S. median hourly wage falls short of $25. Roughly 200,000 times the difference.
• Ingrid Robeyns (economic philosopher) proposed “limitarianism,” which draws a ‘wealth line’ like a ‘poverty line.’ There are three major issues.
• First, billionaires face extremely low effective tax rates—let alone Cho Man. It’s a matter of tax fairness.
• Second, extreme wealth concentration erodes democracy. Elon Musk donated $290 million to the 2024 U.S. election. After Trump’s victory, he created the Department of Government Efficiency (DOGE) and dismantled USAID. Analysis suggests over 14 million people could die by 2030.
• Third, power may become subordinate to super-rich individuals. It’s called the “oligarchic endgame” theory.
• Related Link.

Has the Honeymoon Ended?

• Polls vary slightly, but the Democratic Party’s approval ratings have indeed dropped sharply. The party hasn’t notably underperformed, and the ballot paper incident isn’t its fault. Jung Jae-hyeok (Khan Newspaper Columnist) assessed, “The honeymoon is over.”
• Interpretations of the election results are divided, but it’s also unclear why Lee Jae-myung (President) and Jeong Cheong-rae (Democratic Party Leader) are clashing. Both are making cryptic remarks.
• Jung Jae-hyeok noted, “Zen-like rhetoric is used when real issues are hard to address,” adding, “Issues that cannot be revealed are often unseemly.” “It’s a signal that something is going wrong,” he concluded.

Feeling Good Doesn’t Mean Buying Real Estate.

• This year, 3.7 trillion won raised by liquidating stocks and bonds flowed directly into real estate. Jang Deok-jin (Seoul National University Professor) pointed out, “Blocking loans while stock prices rise has allowed only cash-rich individuals who made big gains to buy high-end apartments.”
• According to Jang Deok-jin’s calculations, before debating whether property tax burdens are heavy or light, one must look at the proportion of real estate in total assets. In the U.S., it’s 30%; in South Korea, it approaches 80%. If assets are 1 million won and the tax rate is 5%, Americans pay 15,000 won while Koreans pay 50,000 won. Even halving Korea’s rate, the tax burden remains far higher than in the U.S.
• Jang Deok-jin noted, “No matter how clever, the tail (taxes) cannot shake the body (real estate).”
• Related Link.