Rapid Increase of Korean Household Debt Should Be Monitored Carefully

Joseph E. Stiglitz, Professor of Columbia University, ex-President of IBRD, awarded Nobel Prize in 2002, insisted, “Globalization should wear human face.”

He visited Korea to attended ‘World Knowledge Forum’ (organized by Maeil Economic Papers) and had press interview at 15th with domestic and foreign reporters and showed acute criticism again as in his new published book ‘Globalization and the Complaint’.

During his term of Vice President of IBRD, he was kicked out because of his criticism against US. in a press interview at Seoul Grand Hilton Hotel of the day, he commented, “While US insists globalization to foreign countries, it supports historical amounts to US industries, so the cost of liberalization, privatization and deregulation will be burden on African and Middle and South American poor countries.”

He commented, “The globalization needs more humanization and IMF should restrain it intervention about economic policy of the members.” and added, “The recovery of Korean economy was not due to IMF policy, but was due to the rapid recovery of world macro economic condition, and Korean government try.”

For the forecast of World and US economies, he commented, “US leads world economy in stagnation deeper and deeper. If US economy sneezes, Korean economy suffers from cold, but now US economy suffers from cold.” And he added that his opinion on world economy is pessimistic.

He also commented about US plan for Iraq War, “Some said that Iraq War will contribute to the recovery of world economy with the example of the recovery of world economy after the Second World War. However, the number of human resources mobilized and the amount of injection of GNP to Iraq War can’t be compared with the Second world War.” and added, “Iraq War has high negative possibilities such as extending the war to Middle East and increasing oil price.”

He also mentioned about the rapid increase of household debt, “It is not serious matter like business debt caused financial crisis in 1997, however, the increase of household debt squeezes the room for bank rate policy, so the tendency should be monitored carefully.”

Mi-Kyung Jung mickey@donga.com