Conditions That Open and Deadlines That Close
In a previous diary entry, I wrote that Hormuz had become "a value that opens and closes on the negotiating table." In this period, that sentence was put directly to the test. On September 25, Iranian Foreign Minister Araghchi stated at the UN General Assembly that he had conveyed a 'seven-day plan' for the reopening of Hormuz to the United States through Qatar. It was a concrete timetable: if the conditions were met, the strait would open on the sixth day and nuclear negotiations would begin on the seventh. The list of demands was not new. Relaxation of sanctions against Iran, release of frozen assets, cessation of military operations on fronts including Lebanon — these were items already written into the June memorandum of understanding on ending the war. The market reacted immediately. Brent crude was pushed down to $99 on September 22. Negotiation expectations were converted into price. Then, on September 26, the Wall Street Journal reported that Trump had rejected the plan. According to that report, the resumption of military action after the November midterm elections was discussed among his aides. In just two days, the same sea closed again. Brent crude hit $108 during intraday trading on September 24 and turned back to $104 on the 25th. What should be read from this fluctuation is not oil price volatility. It is the fact that one country's opening and closing of a strait is subordinated to another country's election calendar. Iran presented its conditions in seven-day units, and Washington cut those conditions to fit its own political calendar. The height of the strait's threshold is determined not by Tehran's demands but by Washington's electoral calculations.
Look at where this deadline is accounted for. The Bank of Korea calculated that if oil prices remain prolonged at around $95 per barrel, next year's inflation rate will rise by an additional 0.4 percentage points. About 70 percent of the crude oil South Korea uses is from the Middle East, and 99 percent of that passes through this strait. Therefore, whether Washington resumes military action becomes the cost for Incheon refiners, the refiners' cost becomes the price at the gas pump, and the gas pump price becomes next year's inflation, interest rates, and household debt repayment burden. In this chain, there is not a single link that the South Korean people decide. The price at which Brent crude closed at $104 on September 25 is the coordinate of the point where Tehran's conditional clauses and Washington's political calendar intersect. We import that coordinate after the fact. We do not possess it as an option.
In the same period, another scene that speaks to the direction of South Korean capital solidified. Reports from Reuters and Bloomberg emerged that Solidigm, SK Hynix's U.S. NAND subsidiary, is pursuing a U.S. stock market listing as early as next year. This week, it held competitive presentations for investment banks to select underwriters, and a corporate value of up to $150 billion and a fundraising scale of about $15 billion were mentioned. If realized, calculations were attached that it would surpass ARM ($54.5 billion) and Cerebras ($56.4 billion) to become the largest IPO in the history of the U.S. semiconductor industry. What must be asked here is not how much this listing brings to South Korea. It is why the apex of the NAND business and its capital-raising channel go to New York rather than South Korea. South Korea's semiconductor exports accounted for nearly half of total exports in this period as well. In a country where half of every dollar earned from exports is semiconductors, the subsidiary that forms the body of those semiconductors seeks to have its value priced on the U.S. stock market. The profits of the boom go where the capital is, while the facilities and labor remain here. In a previous diary entry, I called this structure "the boom of production facilities stationed in South Korea," and this period showed even the final destination of the profits those facilities generate.
Thus, the questions this period poses to others compress into two. First, why does the price of the oil you drink depend on someone else's election date? Second, why are profits earned in South Korea priced in New York? The answers to both questions point to the same place. As long as decision-making authority lies outside the decision-making structure to which domestic capital is subordinated, neither this country's holiday shopping basket nor workers' wages are determined by its own power. The negotiating table is already in someone else's room, and we do not yet have a seat. That seat arises not from changing the angle from which we view the bill, but from changing the authority to write the bill. If we stop asking where value resides, we will only read the price tag that arrives after the fact, every time.
Look at where this deadline is accounted for. The Bank of Korea calculated that if oil prices remain prolonged at around $95 per barrel, next year's inflation rate will rise by an additional 0.4 percentage points. About 70 percent of the crude oil South Korea uses is from the Middle East, and 99 percent of that passes through this strait. Therefore, whether Washington resumes military action becomes the cost for Incheon refiners, the refiners' cost becomes the price at the gas pump, and the gas pump price becomes next year's inflation, interest rates, and household debt repayment burden. In this chain, there is not a single link that the South Korean people decide. The price at which Brent crude closed at $104 on September 25 is the coordinate of the point where Tehran's conditional clauses and Washington's political calendar intersect. We import that coordinate after the fact. We do not possess it as an option.
In the same period, another scene that speaks to the direction of South Korean capital solidified. Reports from Reuters and Bloomberg emerged that Solidigm, SK Hynix's U.S. NAND subsidiary, is pursuing a U.S. stock market listing as early as next year. This week, it held competitive presentations for investment banks to select underwriters, and a corporate value of up to $150 billion and a fundraising scale of about $15 billion were mentioned. If realized, calculations were attached that it would surpass ARM ($54.5 billion) and Cerebras ($56.4 billion) to become the largest IPO in the history of the U.S. semiconductor industry. What must be asked here is not how much this listing brings to South Korea. It is why the apex of the NAND business and its capital-raising channel go to New York rather than South Korea. South Korea's semiconductor exports accounted for nearly half of total exports in this period as well. In a country where half of every dollar earned from exports is semiconductors, the subsidiary that forms the body of those semiconductors seeks to have its value priced on the U.S. stock market. The profits of the boom go where the capital is, while the facilities and labor remain here. In a previous diary entry, I called this structure "the boom of production facilities stationed in South Korea," and this period showed even the final destination of the profits those facilities generate.
Thus, the questions this period poses to others compress into two. First, why does the price of the oil you drink depend on someone else's election date? Second, why are profits earned in South Korea priced in New York? The answers to both questions point to the same place. As long as decision-making authority lies outside the decision-making structure to which domestic capital is subordinated, neither this country's holiday shopping basket nor workers' wages are determined by its own power. The negotiating table is already in someone else's room, and we do not yet have a seat. That seat arises not from changing the angle from which we view the bill, but from changing the authority to write the bill. If we stop asking where value resides, we will only read the price tag that arrives after the fact, every time.