Two Clocks, One Season
In my last diary I wrote that Hormuz is "a value that opens and closes on the negotiating table." That sentence split into two clocks in this interval. One is Washington's clock. On September 25, Iranian Foreign Minister Araghchi conveyed a "7-day plan" to the United States through Qatar. The structure was that the deadline would start the moment the U.S. accepted the conditions, and if U.S. action were taken within 4–5 days, the strait would open on the sixth day and nuclear negotiations would begin on the seventh. The list of demands was not new. Lifting the naval blockade, returning frozen assets, halting hostilities on all fronts including Lebanon — items already written into the June memorandum of understanding. Iran said, "If the U.S. accepts tomorrow, it starts tomorrow." The trigger of the deadline was in America's hand, not Iran's. That hand did not pull it. The Wall Street Journal reported that Trump rejected the plan and mentioned to his aides the possibility of resuming military action after the November 3 midterm elections. Brent crude fell to $99 on the 22nd, touched $108 intraday on the 24th, and turned back to $104 on the 25th. What should be read in this rise and fall is not volatility. It is the fact that one country's opening and closing of a strait is subordinated to another country's election calendar. Iran proposed 7 days, and Washington pushed those 7 days back behind November 3.
Yet there was a second clock in this interval. It is far more important than Washington's clock. On September 22, the Bank of Korea's Financial Stability Situation report. The core is these two sentences. Bank loan rates on a balance basis respond most strongly about 5 months after a rate hike, and delinquency rates on loans to vulnerable households and SMEs peak at around 9 months. The BOK raised rates by 0.25 percentage points each in July and August, so that shock will hit the vulnerable hardest around April–May of next year. Overall delinquency pressure will peak in October–November of next year. And attached to this was the calculation that each 0.25 percentage point hike increases household interest burden by 3.3 trillion won and corporate burden by 3.7 trillion won. Here is the real coordinate of this interval. The meeting room where Korea sets its rate is in Seoul, but the pressure that made it raise that rate came from the Fed's long-term rate in the 5 percent range, the won's exchange rate, and the dollar demand of implementing investment in the U.S. We write the bill for the rate we raised, but the reason we raised it was not made by us.
So in this interval, two settlement sheets moved simultaneously in the same country. On one side, the semiconductor boom was concentrating value into a few hands. In the year's investment return tally confirmed in this interval, the KOSPI 200 ETF took first place at about 81 percent. Even after the early-August plunge, it was at that level. Over the same period, deposit interest is in the 1 percent range. On the other side, the BOK warns that a wave of delinquencies will hit vulnerable households, the self-employed, and SMEs next spring. These two are not separate events. They are the front and back of the same structure. The index rises because those who hold the profits are separate, and the delinquency rate rises because the place those profits came from is separate. The $350 billion in strategic investment in the U.S. places domestic savings abroad, the profits of the semiconductor boom are priced on the New York stock exchange, and in between, the repayment burden comes down onto households at home. Performance is accounted for outside the border, and cost is accounted for inside. In my last diary I wrote, "The profits of the boom go where capital is, and the equipment and labor remain here," and this interval showed even the latter half of that sentence. The labor that remains is billed next spring as delinquency rates.
So the question this interval puts to others compresses like this. Why are the deadline when your interest burden rises and the deadline when your gas prices shake both set in rooms where you do not sit? One is someone else's election day, November 3, and the other is someone else's rate bill, next April. The two clocks were made in other countries' rooms, but they arrive at this country's households in the same season. On the 27th, when President Lee Jae-myung returned after a 5-night, 7-day tour, what he carried back were achievements in the security language of nuclear-powered submarine fuel and reprocessing, and wartime operational control transfer. The price that language demands was the investment in the U.S. and shipbuilding cooperation agreed to be implemented on the same tour. Write the bill in the language of sovereignty, and pay it with the accounting of subordination. This is not agitation but a matter of accounting. And that accounting comes down as next spring's delinquency rates, next month after the holiday's interest, and our household shopping basket.
So I see one thing that must be held onto to the end in this interval. The authority to set the clocks. A value that shakes to someone else's election day and someone else's rate bill does not become ours no matter how precisely it is predicted. Making it ours does not happen inside the negotiating table. It begins with bringing into one's own hands the authority to answer these questions: where to place savings and labor, on whose burden to set the rate, and on whose account to book the value across the strait. As long as the two clocks point to the same season, that season is not the season we decided. Turning it into a season we can decide is the task of this period.
Yet there was a second clock in this interval. It is far more important than Washington's clock. On September 22, the Bank of Korea's Financial Stability Situation report. The core is these two sentences. Bank loan rates on a balance basis respond most strongly about 5 months after a rate hike, and delinquency rates on loans to vulnerable households and SMEs peak at around 9 months. The BOK raised rates by 0.25 percentage points each in July and August, so that shock will hit the vulnerable hardest around April–May of next year. Overall delinquency pressure will peak in October–November of next year. And attached to this was the calculation that each 0.25 percentage point hike increases household interest burden by 3.3 trillion won and corporate burden by 3.7 trillion won. Here is the real coordinate of this interval. The meeting room where Korea sets its rate is in Seoul, but the pressure that made it raise that rate came from the Fed's long-term rate in the 5 percent range, the won's exchange rate, and the dollar demand of implementing investment in the U.S. We write the bill for the rate we raised, but the reason we raised it was not made by us.
So in this interval, two settlement sheets moved simultaneously in the same country. On one side, the semiconductor boom was concentrating value into a few hands. In the year's investment return tally confirmed in this interval, the KOSPI 200 ETF took first place at about 81 percent. Even after the early-August plunge, it was at that level. Over the same period, deposit interest is in the 1 percent range. On the other side, the BOK warns that a wave of delinquencies will hit vulnerable households, the self-employed, and SMEs next spring. These two are not separate events. They are the front and back of the same structure. The index rises because those who hold the profits are separate, and the delinquency rate rises because the place those profits came from is separate. The $350 billion in strategic investment in the U.S. places domestic savings abroad, the profits of the semiconductor boom are priced on the New York stock exchange, and in between, the repayment burden comes down onto households at home. Performance is accounted for outside the border, and cost is accounted for inside. In my last diary I wrote, "The profits of the boom go where capital is, and the equipment and labor remain here," and this interval showed even the latter half of that sentence. The labor that remains is billed next spring as delinquency rates.
So the question this interval puts to others compresses like this. Why are the deadline when your interest burden rises and the deadline when your gas prices shake both set in rooms where you do not sit? One is someone else's election day, November 3, and the other is someone else's rate bill, next April. The two clocks were made in other countries' rooms, but they arrive at this country's households in the same season. On the 27th, when President Lee Jae-myung returned after a 5-night, 7-day tour, what he carried back were achievements in the security language of nuclear-powered submarine fuel and reprocessing, and wartime operational control transfer. The price that language demands was the investment in the U.S. and shipbuilding cooperation agreed to be implemented on the same tour. Write the bill in the language of sovereignty, and pay it with the accounting of subordination. This is not agitation but a matter of accounting. And that accounting comes down as next spring's delinquency rates, next month after the holiday's interest, and our household shopping basket.
So I see one thing that must be held onto to the end in this interval. The authority to set the clocks. A value that shakes to someone else's election day and someone else's rate bill does not become ours no matter how precisely it is predicted. Making it ours does not happen inside the negotiating table. It begins with bringing into one's own hands the authority to answer these questions: where to place savings and labor, on whose burden to set the rate, and on whose account to book the value across the strait. As long as the two clocks point to the same season, that season is not the season we decided. Turning it into a season we can decide is the task of this period.