A 821 Trillion Won Super Budget and Growth for All.

• “We must move beyond the outdated binary debate of growth versus distribution and present a new growth formula suited to the changing times and circumstances.”
• Lee Jae-myung (President) declared in yesterday’s budget address, “We must make a great transition—not growth for the few, but growth for all.”
• Next year’s budget is 820.9 trillion won, a 12.8% increase from this year’s main budget.
• A 162.3 trillion won future response fund will be established. Lee described it as “a strategic investment platform and fiscal stabilizer to support a rebound in potential growth rates.”
• Chosun Ilbo emphasized, “The focus is on cash welfare.”
• Newlywed couples will receive a 1 million won marriage support grant. Children up to age 12 will receive a 200,000 won monthly basic allowance.
• Tuition will be fully covered for 30 regional national universities.
• The youth budget is 43.3 trillion won, a 53.5% increase from this year. The defense budget is 73.3 trillion won, an 8.2% increase.
• The three mega-projects will receive 21.3 trillion won.
• Over 2,100 projects will be abolished alongside 107.2 trillion won in expenditure restructuring.
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What Matters Now.

National Debt Will Not Increase.

• Lee Jae-myung stated, “While we are issuing government bonds, almost all of it will be used to repay existing debt, so the net increase in national debt will be negligible,” prompting someone from the People Power Party benches to shout, “What nonsense!”
• The Chosun Ilbo pointed out that the outstanding government bond balance will increase by 96.3 trillion won.
• Jeong Jeong-sik (People Power Party floor leader) criticized, “This is about extorting money from businesses to throw a wild party.” The phrase “a declaration of future plunder, riddled with populism and fiscal addiction” also emerged.
• The People Power Party is threatening to cut 30 trillion won in populist budget items. They inserted a demand to increase the platform worker budget by 245 billion won.
• Lee Jae-myung emphasized, “The key is execution and speed.” The legal processing deadline is December 2nd.
• South Korea’s government debt-to-GDP ratio is 48.5%, not particularly high compared to other countries. As GDP (the denominator) grows, it is likely to decrease further this year and next.
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47% of Future Response Fund Spending Is Recurring Expenditure.

• According to Park Jeong-heum (Research Fellow at the Korea Institute of Public Finance), 34% of the 45.4 trillion won allocated to the Future Response Fund is cash-based welfare.
• The National Assembly Budget Office warned, “47% of the spending consists of recurring items,” adding, “Universal youth policies unrelated to income or assets could exacerbate policy regressivity.”
• In an editorial, Chosun Ilbo emphasized, “The basic principle of fiscal management is not to use temporary revenue for permanent expenditures.” The priority should be reducing the 106 trillion won deficit bond balance.
• In its editorial, Kyunghyang Shinmun stated, “While it is difficult to readily agree that fiscal soundness should be the top priority,” it acknowledged, “Criticism that the government has excessive discretionary power—with 30% of spending limits changeable without parliamentary approval—is valid.”
• In its editorial, The Hankyoreh assessed, “Reaffirming the government’s focus on overcoming polarization is an appropriate direction.”
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A 100 Trillion Won Deficit Bond and a 104 Trillion Won Future Response Fund.

• As of September, the government bond procurement rate was 4.25%, while the fund’s minimum target operating return rate was 3.8%.
• The National Assembly Budget Office analyzed, “If the 30 trillion won in surplus fund resources were used to reduce bond issuance, annual interest costs could be cut by 1.23 trillion won based on a 4.1% issuance rate.”
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Even Chosun Ilbo Calls PPP “Rude.”.

• People Power Party lawmakers held a silent protest with signs reading “1,400 Trillion Won National Debt + 162 Trillion Won Future Debt Fund.” Another sign read, “Stop Intimidating the Judiciary, Defend Judicial Independence.”
• Lee Jae-myung said, “If you keep interrupting, I’d appreciate it if you’d offer some specific objections.” His speech was halted for 40 seconds.
• In an editorial, Chosun Ilbo criticized, “The president’s State of the Nation Address is an occasion to explain future governance directions to the public. The opposition party’s disruption through shouting and jeering is not only disorderly but also a rude infringement on citizens’ rights.”
• After the speech, all PPP lawmakers except Cho Kyung-tae (People Power Party lawmaker) walked out.
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Air Force One Passenger Data Leak.

• Lee Jae-myung (President) and his spouse, ministers, Blue House staff, and press corps were among 168 individuals whose personal details—names, affiliations, titles, birthdates, and passport numbers—were exposed for five months on a malware inspection site. The leak, part of a file titled “Passenger List (Republic of Korea-Belgium),” was confirmed only recently, with KBS breaking the story.
• The Blue House instructed staff to reissue passports after belatedly identifying the breach.
• Identities of security and inspection officers are classified government information. Dong-A Ilbo called it a “security disaster.”
• Kyeongyang Shinmun warned, “This breach risks not just personal privacy but also national security.”
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Deep Dive.

“The Problem Is the Absence of Real Power.”.

• A Democratic Party lawmaker said, “I don’t think anyone can stop him.” There is growing concern over Lee Jae-myung (President)’s X.
• Yoon Tae-gon (Director of Political Analysis at The More) warned, “If this continues, fatigue will rise and ultimately trust will erode,” adding, “The president’s words lose their value.” Yoon Tae-gon said, “The issue with this government isn’t that there are too many power brokers—it’s that there are none. It seems no one can rein in the president.”
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“How Did This Happen?”.

• Lee Jae-myung (President) shared a YouTube video criticizing a Hankyoreh report on X, adding this comment.
• It turned out the Hankyoreh editor’s web browser had auto-translate enabled, and while retranslating Lee’s Korean post into Korean, it inserted nonsensical words before capturing the screen.
• Hankyoreh issued an apology.
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The Politics of Exclusion in Fairness.

• Lee Jae-myung (President) and progressive media are on a collision course. In a front-page headline, Kyunghyang Shinmun criticized Lee’s recent social media controversy as “divisive politics.”
• Lee posted on X yesterday: “The reason political correctness has met public backlash and fatigue today lies not in its values but in the ‘hypocrisy’ and ‘double standards’ inherent in the attitudes of those advocating it.”
• Re-quoting his post criticizing the Kyunghyang Shinmun article as “media sensationalism through clever headlines,” he added, “To those who chase only appearances, only appearances are visible.” He also noted, “The dignity of words comes not from the vessel of letters but from the depth of insight within.”
• Hong Sung-soo (Professor at Sookmyung Women’s University) criticized, “When the president expresses agreement with specific posts, it can be perceived as granting official authority to those critiques—and legitimizing the biases and hostility within them.” The mere absence of intent to incite hate does not absolve responsibility for its effects, the commentary added.
• Choi Chang-ryul (Professor at Yong In University) said, “Regardless of intent, the president’s excessive focus on multicultural policies creates a certain impression.” Given that public opinion is not shifting as the president desires, he added, “Aides should intervene to stop this pattern of the president rebutting every criticism individually.”
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Hoban Construction and Cho Won-tae’s Stake Battle.

• Hoban Construction claimed to have become the largest shareholder of Hanjin Kal, the holding company of Korean Air. It held 20.15% as of July 10, and speculation suggests it may have acquired less than an additional 1%.
• Cho Won-tae (Korean Air Chairman) and his special-relationship affiliates held 20.57% as of July 10. Cho signed a contract yesterday after market close to purchase additional shares worth 37.1 billion won.
• Delta Air Lines and the Korea Development Bank hold 14.90% and 10.58%, respectively, making a management rights transfer unlikely. LX Pantos’ 3.83% could also become a friendly stake.
• The National Pension Service holds 5.11%.
• The Hankyoreh analyzed, “Kim Sang-yeol (former Hoban Construction chairman)’s long-standing ambition was to enter the aviation industry.” In 2015, he also attempted to acquire Kumho Industrial.
• Hanjin Group and Hoban Group’s fair assets are 62.5 trillion won and 20.1 trillion won, ranking 12th and 33rd in the conglomerate hierarchy, respectively.
• The Korea Development Bank, holding the casting vote, stated, “There are no plans to sell before the aviation industry restructuring concludes.”
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“Democrats Seizing Congress? I’ll Be Mr. Veto.”.

• Democrats are likely to retake the House in the U.S. midterm elections.
• Trump (U.S. President) told the New York Post in an interview, “If the Democrats take over Congress, I’ll probably become ‘Mr. Veto’—I’ll veto everything.” He added, “If bills keep getting vetoed for a couple of months, the Democrats will eventually come to negotiate.”
• “I’ll veto everything. I’ll veto and veto again.”
• Trump appears to have already anticipated a House defeat. The key question is whether the Senate will also flip or if Republicans can hold it.
• In the final New York Times poll, Democrats led in six of the seven competitive Senate races.
• Nate Silver’s “Silver Bulletin” assessed the Democrats’ chance of retaking the House at 95%.
• The Cook Political Report analyzed that Democrats could secure up to 240 of the 435 House seats, becoming the largest majority party since 2009.
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Resurfacing Merger Talks Between the Democratic Party and Cho Kuk’s New Party.

• Jeong Cheong-rae (Democratic Party lawmaker) appeared on ‘Park Si-young TV’ and said, “The sooner, the better—it should be finalized by January at the latest.”
• He directly attacked Kim Min-seok (Democratic Party leader), saying, “Once Kim’s 100-day mark arrives, his performance and approval ratings will be the deciding factor” and “I’m thinking about what slogan to write on the banner.”
• Park Ji-won (Democratic Party lawmaker) criticized, “What banner are you talking about?”
• A Democratic Party lawmaker interviewed by Kyunghyang Shinmun pointed out, “The one who ruined the merger is Jeong Cheong-rae.”
• According to Chosun Ilbo, a private Democratic Party poll showed opposition to the merger outpacing support.
• Among pro-Myung factions, complaints arose: “Why is he setting deadlines when he’s not even the party leader?”
• The Hankyoreh analyzed, “Merger talks, alongside the Shincheonji controversy, are becoming a trigger for the Democratic Party’s ‘internal strife.’”
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Cho Kuk Innovation Party Polls at 8.1%.

• Realmeter survey results showed: People Power Party 40.2%, Democratic Party 38.3%, Cho Kuk Innovation Party 8.1%.
• A ruling party insider remarked, “This is a bargain-buying window.”
• Yu Si-min (author) diagnosed, “The Cho Kuk Innovation Party is becoming a Noah’s Ark.”
• Shin Jang-sik (Cho Kuk Innovation Party leader) dismissed it outright: “We firmly reject.”
• The Cho Kuk Innovation Party also commented, “A merger is not a cheap card the ruling party casually plays to shift the narrative.” It insists Kim Min-seok’s apology must come first, and only a “party-to-party unification”—not an “absorbing merger”—is possible.
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Another Take.

Who’s Blocking the Won-Pegged Stablecoin—and Why?

• Legislation for a digital asset framework remains stalled. Multiple bills are on the table, but the Financial Services Commission’s hesitation has halted progress.
• Two issues are at stake. First, who will issue it. Second, what cap to set on major shareholders’ stakes.
• On issuers, the People Power Party advocates starting with banks and expanding to fintech, while the Democratic Party is internally divided. On exchange stake limits, the People Power Party strongly opposes them, while the Democratic Party avoids public opposition—possibly wary of the Blue House’s stance.
• Park Sung-hoon (People Power Party lawmaker) pointed out, “The Financial Services Commission’s original proposal didn’t even include major shareholder restrictions.” Some suggest, “Is there an unseen higher authority pulling strings?”
• Shin Hyun-song (Bank of Korea Governor) has stated, “Stablecoins should be issued by private companies.”
• Lee Won-bok (Financial Services Commission Chairman) said, “We’re in final negotiations.”
• Industry observers speculate that after Kim Yong-beom (former Blue House Policy Chief), who pushed for stake limits, stepped down, the sector is awaiting instructions from Lee Jae-myung (President).
• The government must table a proposal for discussions to proceed. Concerns grow that the golden window of opportunity could be missed.
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Unpredictable Kospi.

• Yesterday, South Korea’s stock market rebounded. The Kospi rose 2.2% to 5,859.1. Samsung Electronics and SK Hynix climbed 1.8% and 3.8%, respectively.
• Kim Hak-kyun (Shinyoung Securities Research Center Director) analyzed, “It can be seen as having ‘taken the beating first.’” SK Hynix’s share buyback also had a significant effect.
• The U.S. midterm elections are another variable. According to Daishin Securities, from 1950–2022, the S&P 500 never declined in the 12 months following 19 midterm elections.
• Some analyses suggest a Democratic victory would help stock prices. Daishin Securities projected that if Democrats control both chambers or only flip the House, the Kospi could reach 6,700 in Q4. If Republicans win, the index might fall as low as 4,950.
• Shin Seung-jin (Samsung Securities Investment Team Leader) analyzed, “Even considering growth slowdown concerns, Samsung Electronics and SK Hynix’s stock prices have fallen excessively.”
• U.S. big tech stocks remain weak. Amazon rose 2.7%, and Alphabet rebounded 0.3%. The Philadelphia Semiconductor Index dropped 3.4%.
• The S&P 500, Dow, and Nasdaq closed -0.50%, +0.42%, and -1.07%, respectively.
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Socrates AI and Lu Ban AI.

• Ren Zhengfei (Huawei CEO) emphasized, “American AI seeks answers to existential questions, while Chinese AI delves into more practical ones.” This is the difference between Socrates AI and Lu Ban AI. (Lu Ban was a legendary Chinese artisan.)
• China’s trade surplus is projected to rise from $1.2 trillion last year to $1.3 trillion this year. Containers traveling from China to Europe now outnumber those going the opposite direction by six to one—up from 2.5 to one in 2019.
• There was a time when selling to China meant entering the Chinese market. Now, selling to the world means accessing Chinese supply chains by entering the Chinese market.
• Thomas Friedman (New York Times columnist) noted, “China is moving too fast and too far,” adding, “It is provoking serious backlash.”
• Friedman stressed, “China will not slow its manufacturing growth,” and argued, “For the U.S. and China to regain balance, Washington must rebuild its influence—not beg Beijing.”
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North Korea Applies for Taekwondo UNESCO Intangible Heritage Status.

• Heo Min (Director-General of the National Heritage Administration) stated, “The Democratic People’s Republic of Korea’s ‘Traditional Martial Art—Taekwondo’ application is expected to receive a ‘recommended for inscription’ evaluation.” Such recommendations are rarely overturned.
• The final decision will be made at the Intangible Cultural Heritage Committee in Xiamen, China, in December.
• North Korea submitted its solo application in March 2024, while South Korea—after reviewing the possibility of joint inscription—filed a separate application last March.
• Chosun Ilbo criticized, “While the government delayed pursuing joint inscription, North Korea preempted the registration.”
• Even if North Korea is inscribed first, it does not grant exclusive rights. Heo emphasized, “Regardless of the review outcome, we will continue efforts to ensure our taekwondo is either ‘expanded’ or ‘individually inscribed’ in the UNESCO Representative List of the Intangible Cultural Heritage of Humanity.”
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AI-Generated Fake Precedents Shake Courtrooms.

• The Supreme Court Administrative Office’s survey of judges found that 68% of 360 respondents had “experienced AI-generated false precedents.”
• Fake rulings mimicking Supreme Court formats or citing real case numbers that yielded no results upon search were common. Some filings even included verbatim AI-generated dialogue or litigation strategies.
• A sitting senior judge remarked, “Documents openly name ChatGPT or Gemini,” adding, “Trials inevitably drag on as we must verify each such source.”
• According to the Dong-A Ilbo, some judges have warned lawyers, “We won’t accept filings if this happens again.” In an editorial, the Dong-A Ilbo argued, “Penalties should match or exceed those for evidence destruction or perjury.”
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The Fix.

Foreigners Draining Welfare Funds? Three Serious Misconceptions.

• Three fact-checks are needed.
• First, there was a claim that migrant workers sending money abroad harms the Korean economy.
• Migrant workers in agriculture, forestry, and fisheries sent 56% of their income home. If their spouse and children were in Korea, they sent only 27%; if the family was abroad, this rose to 60%.
• If remittances are a concern, families could be brought to Korea. However, the Employment Permit System visa (E-9) restricts family accompaniment.
• Second, the claim that foreigners drain welfare funds is also false.
• Foreigners alone generated a 1.0128 trillion won surplus in health insurance last year. Without them? A 513.2 billion won deficit.
• Foreign workers paid 1.2 trillion won in income taxes.
• There was only one case of a foreigner making 119 months of retroactive national pension payments.
• Third, the claim that multicultural families receive preferential treatment causing reverse discrimination against locals is misleading—multicultural families are not foreign. While they receive priority points for daycare enrollment, only 45% of them use daycare.
• “Not all multicultural families are economically struggling or in need of support. Still, this doesn’t negate the need for systems aiding social integration and childcare.”
• Jang Ju-young (Research Fellow at the Immigration Policy Research Institute) emphasized, “Don’t cherry-pick evidence to fit policies—build policies based on evidence.”
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Seoul’s Medical Tourism Bill Hits $8.8 Billion.

• Of the 15.1 million patients who visited Seoul medical institutions last year, 6.32 million were from outside the region.
• Na Baek-joo (Professor at Eulji University School of Medicine) pointed out, “The declining trust in national university hospitals is a key issue.”
• Patient numbers rose by 1.4%, while medical costs surged by 11.7%.
• Song Ki-min (Chair of the Citizens’ Coalition for Economic Justice’s Healthcare Committee) analyzed, “This likely reflects an increase in severe cases like cancer or rare diseases.”
• Last year’s total national healthcare expenditure was 138 trillion won. The per capita monthly cost was 228,871 won.
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Passenger Numbers Soar 79% After Bus System Municipalization.

• Uiryeong County in South Gyeongsang Province introduced a fully municipalized bus system in February this year. Over three years, 9.4 billion won was invested to acquire 17 buses, route rights, and terminals. Operating costs increased by 500 million won compared to the previous 3.1 billion won in subsidies to private operators.
• The result? August ridership reached 47,098 passengers, a 78.6% increase from the same month last year.
• A Uiryeong resident interviewed by Dong-A Ilbo said, “We worried the buses might stop running due to low demand, but the county’s direct management has eased our concerns.”
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ICYMI.

Pacific Bluefin Tuna in the East Sea: Caught but Unmarketable.

• Warmer East Sea waters: squid depart, tuna arrive.
• Pacific bluefin tuna catches rose from 31 tons in 2020 to 438 tons in the first half of this year.
• Four problems exist.
• First, international quotas cap sales—higher catches do not mean higher profits.
• Second, immediate bleeding and rapid-cooling infrastructure is lacking, both in technology and equipment.
• Third, mass catches cause price collapses.
• Fourth, only net-fishing vessels profit.
• Kim In-hyun (Director of Korea University’s Maritime Law Research Center) emphasized, “Commercialization could generate over tenfold economic impact,” adding, “A linked industrial structure—from ice supply, onboard processing, net-cage management, processing, to retail—must be established.”
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310,000 Foreign Students in Korea.

• Vietnamese students outnumber Chinese students: 97,000 vs. 79,000 respectively.
• Overstaying foreign students totaled 34,000 as of 2024.
• Only 13.8% of graduates secured employment in Korea.
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This Year’s Word: ‘Maxxing.’.

• It means pushing something to its maximum.
• Dictionary.com’s Word of the Year, ‘maxxing,’ evolved from ‘min-maxing.’ Originally, it meant ‘minimizing’ the useless and ‘maximizing’ key traits—but the ‘min’ dropped off, and an extra ‘x’ was added to ‘maxing’ for emphasis.
• Whether it’s ‘looksmaxxing’ (extreme appearance optimization), ‘personalitymaxxing’ (cultivating likability), ‘proteinmaxxing’ (maximizing protein intake), ‘cozymaxxing’ (ultra-cozy Fridays), or ‘sleepmaxxing’ (optimizing sleep quantity and quality), appending it to anything creates a trendy phrase.
• Even ‘nonnamaxxing’—living like an Italian grandmother (nonna), cooking, walking daily, socializing, and taking it slow—became a buzzword.
• In AI circles, ‘tokenmaxxing’ was a hot topic for a while, but the trend is shifting toward token optimization.
• Yoon Hee-young (editor at Chosun Ilbo) warned, “The compulsion to be the best can lead to endless self-scrutiny and exhaustion.”
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Worth Reading.

“No Need to Come Unless Necessary.”.

• Lee Jae-myung (President) said this to Kim Ji-yong (Prosecutor General) during a State Council meeting. He also added, “Please come at least once a month.”
• What is Kim Ji-yong thinking? If he’s told to come but also that it’s unnecessary, will he show up next week or not?
• Kim Jung-pil (The Hankyoreh’s Social Affairs Editor) pointed out, “The moment Kim Ji-yong stepped into the State Council meeting, the ‘appearance of fairness’ was tarnished.”
• Song Kwang-soo (former Prosecutor General) is worth revisiting: “Prosecutor Generals are given duties and authority to block external pressures, but if even that fails, they must leave. They should work with the resolve to risk their positions, not cling to them.”
• Kim Ji-yong, the Prosecutor General who transcribes the President’s words—will he truly succeed in maintaining appropriate distance?
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The Illusion That Machines Are Better Than Us.

• “What’s scarier than AI hallucinations is our own delusion—that machines are better than us, and that we don’t need to verify further.”
• Kim Jae-in (Professor at Kyung Hee University) pointed out, “What should be opposed is not AI, but ‘efficiency that skips learning.’”
• The lack of ability to verify AI is a problem, but if even those who could verify disappear, issues will go undetected.
• “Organizational memory should retain not just successful outcomes, but also what was reviewed, which alternatives were discarded, and why those decisions were made.” Kim warned, “If the reasoning behind decisions is erased, the next person inherits only the conclusion.”
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Crack 100 Banks at Once with $5,000.

• Son Jae-kwon (CEO of The Milk) analyzed, “AI hasn’t changed the technology of attacks, but the economics of them.” It’s an era where anyone can attack easily and quickly with a few clicks.
• Unlike U.S. security systems, which are designed under the zero-trust principle assuming they’re already breached, South Korea’s financial security is built as a ‘compliance-based’ system. Son emphasized, “The mindset and strategy must change first.” The discussion is about auditing how many hours it takes to detect and halt breaches.
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These Are the People We Called For.

• Yang Seung-hoon (Professor at Kyungnam University) emphasized, “Prioritizing multiculturalism in regions is not reverse discrimination but the minimum condition for regenerating local communities.” While the priority ranking for postpartum care centers sparked controversy, it should not overshadow the fact that many counties lack such facilities altogether.
• Childcare center enrollment is not preferential treatment but education. Yang stressed, “It is the state’s responsibility to teach the language to second-generation immigrants.”
• “We cannot sustain either production or reproduction without immigrants. This is not a left-right issue but a matter of survival. If, as the president says, we must reduce excuses for far-right agitation, the real problems to solve are the poor working conditions of young people shifting between subcontractors in local manufacturing—and the struggles of immigrant-background youth who are marginalized in education due to limited Korean proficiency.”
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