Increase Defense Costs, Then Nuclear Submarines.

• Lee Jae-myung (President) and Trump (U.S. President) met.
• After receiving a report that the No. 1 U.S. investment had been decided, Trump made time. Progress was made in a short 30-minute window.
• According to a high-ranking Cheong Wa Dae official, South Korea agreed to increase defense costs and proposed accelerating discussions on nuclear submarines. They also suggested finalizing the wartime operational control transition.
• No mention was made of troop deployment to the Strait of Hormuz.
• In an editorial, JoongAng Ilbo assessed, “The very fact that the talks materialized only after investment negotiations advanced reveals the awkward current state of the ROK-U.S. alliance.” In its editorial, The Hankyoreh concluded cautiously, “The South Korea-U.S. relationship, which had been reeling from Coupang lobbying, delayed investments, and deployment controversies, may have entered a somewhat stable orbit.”
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Not Denuclearization, But a Nuclear-Free Korean Peninsula.

• An early draft of the speech mentioned denuclearization, but it was revised at the last minute.
• Lee Jae-myung (President) emphasized in his UN speech, “First, we must halt North Korea’s advancement of nuclear missile capabilities, then gradually reduce them, and in the long term, move toward a nuclear-free Korean Peninsula.”
• He also proposed a four-party dialogue, stating, “A peace regime on the Korean Peninsula is an issue that South and North Korea—as well as the U.S., China, and other relevant parties—have long agreed on and discussed.”
• A high-ranking Cheong Wa Dae official explained, “We use ‘nuclear-free Korean Peninsula’ and ‘denuclearization’ interchangeably, as they mean the same thing,” adding, “The ultimate goal remains unchanged.”
• A former diplomat interviewed by The Korea Herald assessed, “The ‘price’ for lifting sanctions on North Korea has significantly dropped compared to the past.”
• Park Won-gon (Ewha Womans University professor) warned, “This could open the same path for North Korea as Pakistan, which gained nuclear-armed state status through sanctions relief.”
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What Matters Now.

Cho Gi-dae’s Chicken Game.

• Cheong Wa Dae claims there were procedural flaws in the nomination process for Cho Gi-dae (Chief Justice).
• Cho Gi-dae argues, “The official document sent by Cheong Wa Dae did not clearly state the reasons for the renomination request.”
• Cheong Wa Dae strongly rebutted, “Viewing the president as bound by the Chief Justice’s nomination is effectively equivalent to the Chief Justice appointing Supreme Court justices.”
• Cheong Wa Dae stated, “We are not considering filing a constitutional dispute review.”
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The Authority to Demand Re-nomination.

• One judge interviewed by JoongAng Ilbo pointed out, “If the demand for re-nomination goes through, it will become a norm for the president to ‘cherry-pick’ candidates of their choice.”
• A lawyer interviewed by Kyunghyang Shinmun analyzed, “This reveals the intention to refuse seating candidates who suit the Blue House’s preferences.”
• Park Seong-jun (Democratic Party Spokesperson) countered, “The nomination authority is merely a power that supports the president—directly elected by the people—in exercising their appointment rights properly.”
• Kim Min-seok (Democratic Party Leader) criticized, “Cho Gi-dae’s refusal to re-nominate is essentially a dereliction of duty that disregards the people.”
• Han Byung-do (Democratic Party Floor Leader) criticized, “It’s a stab in the back while the president is on an overseas visit.”
• Park Ji-won (Democratic Party Lawmaker) argued, “The goal is dismissal, but at least a suspension of duties is necessary immediately.” Song Young-gil (Democratic Party Lawmaker) emphasized, “It is unacceptable and constitutes grounds for impeachment.”
• Song Pyeong-in (Donga Ilbo Columnist) wrote, “While the demand for re-nomination itself is not unconstitutional, demanding it solely because of a lack of prior consultation has significant potential for unconstitutionality.”
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Sedition Special Investigation Unit.

• Chosun Ilbo noted on its front-page lead, “There is talk that this is aimed at Cho Gi-dae (Chief Justice).”
• A ruling party official said, “As criticism emerged that the sedition special probe ended incompletely, it’s true that a broad consensus has formed that reinvestigation is unavoidable.”
• Another official stated, “The special unit review is merely an idea at the conceptual stage—nothing has been finalized.”
• A Democratic Party lawmaker interviewed by The Hankyoreh said, “I worry we’ll repeat the Moon Jae-in administration’s mistake of failing to expand centrist support while fixated on purging old evils.” Another lawmaker said, “This is necessary, even if it means bearing political responsibility for losing centrist voters.”
• The People Power Party issued a statement criticizing it as a “sedition-dependent regime” that “cannot maintain power for a single day without a sedition frame.”
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“We’ll Have to See the Outcome.”.

• These were the words of Lee Jung-hyun (Vice Prosecutor General, Acting Prosecutor General) when asked about the possibility of dismissing the indictment in the Lee Jae-myung case.
• Ko Bong-suk (Seoul High Prosecutors’ Office prosecutor) pointed out, “This means they’ll drop the indictment if the investigation team concludes there were ‘issues in the investigation process.’”
• Joo Jin-woo (People Power Party lawmaker) criticized, “This is a designated pinch-hitter to dismiss Lee Jae-myung’s indictment.”
• Lee Chang-on (Ewha Womans University professor) stated, “Rather than dismissing the indictment, it would be more appropriate to publicly judge the flaws in the investigation and prosecution through a trial.”
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OECD Raises Korea’s 2023 Economic Growth Forecast to 3.7%.

• Up 1.1 percentage points from 2.7% three months ago. The 2024 forecast also rose from 1.9% to 2.6%.
• Semiconductor exports are driving growth.
• Prices are rising too. This year’s consumer price inflation is now projected at 3.0%, up from 2.6%. The 2024 forecast also increased from 2.2% to 2.7%.

Deep Dive.

U.S. and Iran Met.

• After Trump’s speech vowing to “annihilate” Iran, Steve Witting (U.S. Special Envoy for the Middle East) and Abbas Araghchi (Iranian Foreign Minister) met.
• Trump called it “a very good meeting” and said, “Further talks will follow.”
• Trump pressured, “Potential greatness or obliteration.” A threat: accept U.S. terms and rebuild, or face swift destruction.
• The deadline for an agreement was set just after the November midterms. Two implications: first, the election won’t sway war decisions; second, winning the election is key to ending the war.
• António Guterres (UN Secretary-General) stated, “Peace cannot be secured by military force alone.” Talks occurred, but no specific agreement was announced.

“Spoils to the Victor.”.

• Trump’s UN speech was abysmal.
• He unleashed curses at Iran: “I will send you to hell with no chance of survival, no future greatness, no hope for the next generation.”
• He called the arrest of Venezuela’s Maduro and securing oil rights “a war, but perhaps the greatest deal ever.”
• He attacked the International Criminal Court as a “rogue institution” and dismissed climate change as a “hoax.” He rejected AI control, declaring he would write “Super Intelligence” (SI) instead of AI. “Let’s see if I have any power,” he said.
• Emmanuel Macron (French President) said, “We have returned to the law of the jungle.”
• Julius Maada Bio (Sierra Leone President) stated, “Those least responsible for the climate crisis are paying the heaviest price.”
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Fact-Checking Trump’s Speech.

• Unfounded exaggerations and baseless claims were repeated throughout.
• He claimed, “The U.S. and Venezuela together hold over 60% of the world’s oil,” but reserves account for only 22%, and production for 23%.
• The assertion that “I ended the Gaza war” is an overstatement. While he brokered a ceasefire last October, Israeli attacks continue. Over 1,000 Palestinians have died since the truce.
• The claim that “97% of maritime drug flows have been destroyed” lacks evidence. The New York Times noted traffickers have shifted to alternative routes.
• The “$21 trillion in foreign investment” figure is more than double the actual amount. The “largest tax cut in U.S. history” claim is also false.
• The statement that “employment is at a record high” ignores population growth. The August unemployment rate was 4.1%—lower than recent years but slightly higher than when he took office.
• The claim that “we have more ammunition than we could ever use” is untrue.

Empty Threats.

• The Wall Street Journal editorialized, “We might have believed it more if we hadn’t heard it all before from Iran’s Revolutionary Guard.”
• Iran expects Trump to back down due to election pressure, but Trump insists he’ll win the election and continue the war afterward.
• The Wall Street Journal warned that Iran could miscalculate: even if Republicans lose, Trump has over two years left in office—enough time to escalate the war.
• The seesawing between destruction and peace makes everything untrustworthy.
• Iran also sees action, not words, as key. The Wall Street Journal noted, “Unenforced threats undermine U.S. deterrence.”
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“We Need Strength.”.

• “Israel kills people, Iran faces sanctions.”
• Masoud Pezeshkian (Iranian President) said this during his UN General Assembly speech.
• “We will seek no one’s permission to defend our homeland,” he stated. “Peaceful nuclear technology is an inherent part of development,” he emphasized.
• He left the door open to dialogue with the U.S.: “We are prepared for dialogue, diplomacy, and negotiation.”
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Another Take.

“The Wolf Is Coming.”.

• Thomas Friedman (New York Times columnist) warned, “I’d rather be the boy who cried wolf,” adding, “We must not repeat the failures of imagination seen in 9/11 and COVID-19 with AI.”
• He countered claims that regulation kills innovation. Eric Beinhocker (Director of the Institute for New Economic Thinking at Oxford University) said, “Good regulation builds trust, and trust grows markets.” The growth of aviation and pharmaceuticals, he explained, stemmed from consumers trusting their safety.
• Friedman praised Janet Yellen (U.S. Treasury Secretary) for rejecting a ‘liability shield’ for AI companies.
• “Plans are useless, but planning is indispensable.” So said Dwight D. Eisenhower (former U.S. President).
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We Even Prevented Nuclear War.

• The U.S. and Soviet Union established a hotline during the Cold War to prepare for the worst-case scenario.
• Anthony Aguirre (CEO of the Future of Life Institute) proposed that monitoring upper limits of AI computational power could be feasible instead of uranium enrichment. The story goes that kill switches are not impossible and ultimately depend on political will.
• The difference is that governments control nuclear weapons, while private companies develop AI and anyone can use it.
• Whether China will accept a development freeze while lagging is another variable. The Soviet Union only agreed to limit nuclear weapon numbers after catching up to the U.S. There is also weak common awareness of the risks humanity faces.
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“U.S. Interest Rates Must Be Below 1%.”.

• Trump actually said this.
• Martin Wolf (Financial Times columnist) retorted, “irrelevant and absurd.” The Fed’s rate hikes were already overdue.
• Trump’s claim about the U.S. having the world’s best credit is also false. Martin Wolf noted, “It’s astonishing that investors continue to trust the bonds of a country that elected someone like Trump twice.”
• It’s a battle between “a fundamentally strong economy and an irresponsible government,” as the story goes.
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Perfect Storm in the Bond Market.

• U.S. 10-year Treasury yields have surpassed 5.1%—the highest level since 2007. High bond yields mean bond values have fallen accordingly.
• Christopher Sullivan (Chief Investment Officer at UN Federal Credit Union) said, “From intractable conflicts in Iran to a seemingly unbreakable U.S. economy, holding bonds in this environment ‘doesn’t make sense for many people.’”
• “Just when you think it might stop, it keeps climbing.” Isaac Brekken (U.S. Rates Strategist at RBC Capital Markets) added, “You might find rates attractive now, but we’ve been saying the same thing for the past six months.”
• The U.S. economy is projected to grow at an annualized rate of 5.1% in the third quarter. Speculation dominates that the Fed will likely raise rates further.
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OECD Government Bond Interest: $2 Trillion.

• That’s 3% of GDP. Stefano Scarpetta (OECD Chief Economist) warned, “Rising government bond rates are a major concern.”
• The average 10-year bond yield for G7 countries hit 4%. After the financial crisis, debt-to-GDP ratios have risen step-by-step with each shock. In many countries, interest payments have already surpassed defense spending.
• Many nations rely on short-term bonds with relatively low rates. There are forecasts that the U.S. will issue up to $1 trillion in Treasury bills with maturities under one year.
• According to the OECD, G20 inflation rose from 3.4% last year to 4.1% this year. Next year, it’s projected at 3.6%. Over half of G20 countries still see inflation above central bank targets.
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YouTube Tribalism.

• Hankook Ilbo analyzed, “Political YouTube has become the frontline for factional power struggles beyond mere fandom.”
• Analysis of major political YouTube comments revealed that 1.6% of participants accounted for half of all chat messages. One individual wrote over 50,000 messages in a single day.
• Since Yu Si-min (author)’s ABC theory in March, criticism of Lee Jae-myung (president) flooded Mae-Bul Show and News Factory, while Lee Dong-hyung TV defended him. Support for Lee Jae-myung was split: 19.0% on Mae-Bul Show, 26.2% on News Factory, and 88.5% on Lee Dong-hyung TV.
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The Fix.

Super El Niño Has Only Just Begun.

• Projections suggest 450,000 deaths over six months. The Guardian called it “Godzilla-scale.”
• El Niño is a weather phenomenon, but it has been amplified by climate change.
• Tropical regions like Nigeria, Indonesia, Sudan, India, and Brazil will be hit hardest.
• “El Niño is a postcard from the future,” one critique notes—a warning that in 20 years, conditions will be far more catastrophic than today.
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A Worst-Case Scenario Remains.

• It’s true that renewable energy is growing. The extreme scenario of coal use quintupling by 2100 is unlikely. But on our current path, temperatures will still rise more than 2°C above pre-industrial levels. There’s a 50% chance we’ll exceed 2°C within roughly 25 years.
• The probability of surpassing 4°C by 2150 is 25%. Of course, probabilities are probabilities—it could stabilize at 2.2°C or reach 3.9°C. Variables include not just emissions but also clouds, water vapor, wildfires, and changes in oceanic carbon absorption.
• The difference between energy Earth absorbs and radiates back to space has doubled over 20 years.
• Wally Broecker (climate scientist) likened it to “a furious beast—we’re poking it with sticks.” Reducing a few sticks doesn’t make it safe.
• David Wallace-Wells (New York Times columnist) stressed that uncertainty isn’t on our side. The best course is to replace fossil fuels faster and cut emissions harder.
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Fifteen Dollars for a Lifetime of First Electricity.

• “We all live under the same sun.”
• A public proposal by Bernie Sanders (U.S. Senator) and others to supply solar panels to everyone in the world by 2030.
• Renewable energy, first, lowers energy bills. Second, it reduces pollution. Third, it is the cheapest and fastest way to supply electricity where it’s needed.
• California (U.S.) has halved its LNG usage compared to three years ago, thanks to solar and batteries.
• In Africa, millions of people are getting electricity for the first time every month. Fifteen dollars can help one person use clean electricity for a generation.
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Will Birth Rate Hit 0.9 This Year?

• Cumulative births surpassed 170,000 by July.
• Births have risen for 25 consecutive months.
• Marriages also increased: 147,000 cases by July, the highest since 2018.

ICYMI.

Jongno 3-ga: No Longer So Cool.

• Raphael Rashid (Guardian journalist) recommended Jongno 3-ga three years ago when asked for the coolest neighborhood. It actually ranked third that year and became first this year.
• Raphael Rashid confessed, “I should be happy, but I was devastated.”
• Jongno 3-ga was a sanctuary for the outcasts. It drew the homeless, the elderly, and the gay community. It was a shabby yet cozy neighborhood where pensioners played board games and musicians and artists lived.
• It was a place where people could reveal their true selves without fear of exposure, harassment, or condemnation. But after the pandemic, the neighborhood’s atmosphere changed. As retro trends swept Instagram, crowds began lining up. The hidden neighborhood became a visible spot. Elderly drinkers were driven out, and board game tables vanished. Rents rose. Even humble soups shops disappeared.
• Raphael Rashid lamented, “It’s changed beyond recognition, no longer feeling Korean,” and added, “I regret contributing to creating a monster.” He went as far as saying, “Being named the coolest neighborhood is something to celebrate, but if I could, I’d take back that statement.”
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AI Fear? AI FOMO.

• Nasdaq 100 broke its all-time high. AI optimism lifted big tech stocks.
• Emmanuel Cob (Barclays strategist) analyzed, “AI FOMO has returned strongly.”
• Meta’s new AI model, Muse, raised expectations.
• Michael Zigmont (Wisdom Investment Group trading head) assessed, “It’s the moment everyone jumps back into the pool.” The unwinding of leveraged bets after June’s plunge also fueled the rebound.
• Funding pressures remain. The U.S. 10-year Treasury yield still stands at 4.95%. Variables like war, inflation, and high rates haven’t vanished.
• Yesterday, all three major U.S. indices fell. The S&P 500, Dow, and Nasdaq dropped -0.76%, -1.03%, and -0.69%, respectively.
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Worth Reading.

Can Farmland Ownership Be Restored to Farmers?

• Under the principle that only those who farm should own farmland, 4% of the population (farmers) must control 19% of the nation’s land.
• Ha Hyun-ok (JoongAng Ilbo columnist) called the farmland survey a “rural version of punishing non-resident (non-farming) landowners.”
• The government’s full audit found 27% of farmland classified as suspected violations. Ha Hyun-ok noted, “About half of farmland is leased, over half of leases lack contracts, and it’s common for heirs to inherit land they can’t farm.” She added, “Even if sold, there are no buyers—leading to price crashes and frozen transactions.”
• The message: “Stop clinging to obsolete principles that label citizens as speculators or criminals without first considering how to increase farmland productivity.”
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Why No Mega Civil Welfare Project?

• Oh Geun-ho (co-representative of “The Welfare State We Create”) proposed a social inheritance system providing 50 million won to every young person turning 20, and a national caregiving responsibility system to reduce caregiving costs.
• Ahn Sun-hee (Hankyoreh columnist) suggested fully free college tuition and a dramatic expansion of public rental housing could also be discussed.
• There’s talk that even “following the welfare roadmaps of the Moon Jae-in and Yoon Suk-yeol governments would be progress.”
• Ahn Sun-hee emphasized, “We must dare to imagine bolder policies.”
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Business Rationality Over Commercial Rationality.

• While commercial rationality weighs the profits and risks of individual projects, business rationality considers the markets to be defended and the follow-on opportunities to be gained through the venture.
• This is what’s being discussed regarding the review of power plant investments as the first U.S. investment. It includes the costs of not investing.
• Kwon Hyo-jae (CEO of COR Energy Insight) emphasized, “Commercial rationality should remain a criterion for selecting projects, but the final decision requires business rationality that weighs the nation’s overall gains and losses.”
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Polarized, Boiling Over, Then Suddenly Collapsing.

• South Korean politics has become more volatile because the core groups of the Democratic Party and the People Power Party have changed.
• According to Cho Gwi-dong (Strategy Director at Political Consulting Min), the Democratic Party has become a party for highly educated, high-income, and high-asset middle-aged and elderly voters. The reformist group that prioritizes prosecutorial and political reform is now a minority. Cho Gwi-dong pointed out, “Polarized mobilization politics has instead increased the fluidity of moderate or soft-supporting voters, who are the majority.”
• The solution? Some suggest it’s time to consider either coalition politics among parties representing different voter blocs or, in the long term, expanding to multi-member or larger electoral districts.
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