The Corona 19 shocked KOSPI, which fell to 1,400 in March, recovered to 2,000. So-called'Donghak Ants' are plunging into the money game by buying stocks whenever the stock price declines, as if they had an opportunity to return to Corona 19.

The real estate market centering on Seoul is heating up. After the Moon Jae-in government was launched, the 22nd real estate price stabilization plan was announced, but even in the 30s and 40s, the company is jumping into the real estate market with a'young loan' that draws on the soul. More and more people are saying that this is the last chance to get my house in Seoul before the house price rises.

Looking at the stock and real estate markets alone, Corona 19 and the recession that appeared suddenly in 2020 seem to be about other countries. Even the ruling Democratic Party's Democratic Party has been exposed to the scene that says the current measures will not decrease the price of real estate.

And in this stock and real estate craze, the devil of debt is poised to swallow the Korean economy by secretly spreading like the Corona19 virus. Following the Bank of Korea, the National Assembly Budget Office is also warning of the rapidly increasing debt levels of the Republic of Korea.

● The Bank of Korea, "Financial Stability Index'Caution'... Concerns about Recurring Financial Instability"

The Bank of Korea publishes a financial stability index every six months, which is calculated by standardizing 20 indicators of the real and financial sectors related to financial stability by month. In the Financial Stability Report released on June 24, Han Eun said that Korea's financial stability index rose rapidly from February, exceeding the crisis stage of 22.3 in April. Since then, as the financial market stabilized, the financial stability index declined, but the May index reached 18.0, more than twice the'warning stage' threshold of 8.0, reaching the'crisis stage'.

The Bank of Korea said, “The financial market instability has largely subsided due to active policy responses such as the government and the Bank of Korea's market stabilization measures. And now, as the Corona 19 virus spreads again, the number of corona 19 diagnoses around the world has surpassed 14 million. The US and European countries, which lifted the blockade in July and resumed economic activity, are reinforcing control and implementing social distance measures.

● The National Assembly Budget Office, "The level of private debt risk in our country…enters the credit gap or'alarm stage'" The

National Assembly Budget Office issued a more stringent warning against the rapidly increasing debts of households and businesses. In the report titled'Recent Trends and Implications of Korea's Private Credit Increase' announced on July 6, the National Assembly Budget Office announced, "Attention as our country's credit gap surged from 0.4% at the end of 2018 to 7.0% at the end of 2019. "We have entered the stage." And by the end of this year, the credit gap exceeded 10%, suggesting that it could enter the'alarm' stage, the highest risk level. This means that the debt of the private sector can rise to an unacceptable level as the private debt increases more rapidly than income.

The credit-to-GDP gap, calculated and announced by the International Settlement Bank (BIS), is a numerical representation of how much the ratio of GDP to private sector (family or business loans) deviates from the long-term trend. . If the credit gap is less than 2%, it is classified into'normal','caution' if 2-10%, and'alarm' when it exceeds 10%. This is a measure of how quickly loans grow more than annual income and whether there is no problem with debt repayment.

The amount of private credit compared to the annual gross domestic product (GDP), which can be called gross income in Korea, rose 10%P from 187.6% at the end of 2018 to 197.6% at the end of 2019. This means that the debt of households and businesses has nearly doubled to 1,919 trillion won in current GDP last year. The National Assembly Budget Office analyzed that the ratio of private debt to GDP in Korea increased by 10.4 percentage points to 208% this year, and the credit gap could surpass 10% to enter the'alarm' stage.

Korea's credit gap rose to 13.2% in the fourth quarter of 2007, when the foreign exchange crisis occurred. In addition, the financial crisis rose to 10.7% in the fourth quarter of 2008, and the following year, it recorded 13.2% in the second quarter of 2009. The credit gap was 13.2% in the two financial crises so far.


In preparing this report, the National Assembly Budget Office predicted that this year's private credit growth rate will increase over the past two years to 6.1% and nominal GDP growth rate to 0.8%. The Bank of Korea said that the debt growth rate of households and corporations this year was 7.6% in the first quarter, and the nominal GDP listing rate was 1%. Debt is growing faster than expected. As Corona 19 rises again, the growth rate will fall further, and the debt will increase, making the credit gap more likely than expected.


● "Korea, the world's second largest rate of increase in private debt compared to income"

According to the National Budget Office, Korea's rate of increase in private debt compared to last year's GDP was the second largest among 43 major countries submitting credit data to the International Settlement Bank (BIS). Recorded. The debt growth rate was the fastest after Chile, with a 11.1%P increase in private debt to GDP.

As of the end of last year, the ratio of private debt to GDP in the 43 major countries that submitted credit data to BIS was 156.1% on average, and the average in developed countries was 168.6%. The ratio of private debt to GDP in Korea was 41.5%P higher than the average of 43 countries and 29.0%P higher than the average of developed countries.

In a financial stability report released on June 24, the Bank of Korea said that the ratio of private credit to GDP in the first quarter of this year has increased to 201.1%. The average household and corporate debt is more than twice the annual income. Household debt increased 6.5% as housing demand increased, and corporate debt increased 8.6% due to efforts by companies to secure liquidity to respond to Corona 19.

● This year's national debt is expected to increase by 111 trillion won

, to reach 840 trillion won . The nation's debt scale, one of the three pillars of the national economy, is increasing at a faster pace. The National Budget Office predicted that the state's managed financial balance, excluding various pensions and funds, would record a deficit of 111 trillion won this year. The government's debt is expected to increase by 15.2% this year to 840 trillion won. This is because government spending increases to alleviate the impact of Corona 19, while income from businesses and households decreases and tax revenues decrease. This year's tax revenue is expected to fall further than expected, so the national debt is likely to grow.


● Lowest interest rate streak ever?

The Bank of Korea froze the base rate to 0.5% on July 16th. On the same day, the European Central Bank (ECB) held a monetary policy meeting in Frankfurt, Germany, and said it would keep the standard interest rate at 0% and the deposit rate (DFR) and marginal interest rate at -0.50% and 0.25%, respectively. The standard interest rate, which is adjusted through open market operations to buy and sell bonds, is 0%, the deposit rate applied by banks when depositing the remaining money to the central bank, -0.5%, and when the banks run out of money, borrow from the central bank. Is that the marginal loan interest rate is 0.25%. The Fed's base rate is also 0-0.25%. Central banks in each country are not enough to lower the standard interest rate, and they are buying money by buying bonds from insolvent companies. In short, don't worry about money, but focus on economic activities.

As of the end of May, the average loan interest rate of Korean banks is 2.82% per year based on new loans, and the average loan interest rate of mutual financial institutions such as savings banks is 3.59% per year. Compared with the loan rate exceeding 10% a year in the early 2000s, it is a sense of inflation. The average deposit rate applied to savings at a bank is 1.07%. If you're worried that your debts will increase in this situation, you're likely to hear a fool who doesn't know how to invest.

The central bank lowering the base rate and releasing money is aimed at revitalizing the economy by reducing debt burdens in difficult economic conditions and encouraging them to borrow money at low interest rates to increase investment and consumption. The problem is that the money released so cheap is more focused on speculation than investment. And now, in Korea, there is a serious distortion of resource allocation, where money is focused on the real estate market.

Now most economic actors are convinced that "the interest rate will not rise." Governments and central banks around the world are sending messages like this.

However, there are very few cases where interest rates are raised. So did the Fed's steep rate hike just before the 2008 global financial crisis. Real estate prices soared and speculative behavior spread, severely affecting the economy, followed by an increase in interest rates. In addition, with the interest rate hike, various moral hazards, insolvency and bubbles that were hidden in the ultra-low interest rate all at once led to the global financial crisis.

"I was worried about household debt and real estate, but I'm holding on. I was worried." This is one of the seniors who were worried about speculation on rising national debt, household debt, and real estate if they only met. However, it is not known when the wind will change direction. Even if interest rates don't rise, it's impossible to know what will happen after the stocks and real estate prices that seemed to rise endlessly stop.

Past history shows that the time when everyone cheers for a bubble without worrying about debt is a real problem. The relief of the senior who was worried about debt may be the critical point, the tipping point.