The U.S. Economic Instability is Not Just a Matter for the U.S.

American economy is unstable. Value of dollar has slump and the stock price of the high-tech industries have recorded the lowest since `September 11th terrorist incident`. Even the conservative International Monetary Fund (IMF) has warned the U.S. of financial crisis so it is not an invalid speculation.

The U.S. economic instability is due to bad profitability of American companies but the result is affecting the overall global economy. Currently, the investments are fleeing the U.S. and the anxieties among the global financial communities are being amplified. The London stock market has also recorded the lowest since last September and the Asian markets are also showing decline.

It is not clear whether the U.S., which has recovered quickly from the last year`s incident will fall under financial crisis or not. But the IMF is warning about the slump in the stock market. Experts are indicating that accounting fraud in the `Enron incident` will take time to resolve and the future isn`t bright. The `Enron incident` was indirect cause behind the slump in stock market.

As the saying goes, `When U.S. economy sneezes, Korean economy comes own with flu`, this is not just a matter for the U.S. The problem lays in the fact that money fleeing the U.S. isn`t coming to the Korea and other new markets. Instead the U.S. is selling their stocks in the new markets to raise profit so now we have to worry about investments going out of Korea.

The Korean economy has already fallen under the effect. The exchange rate of dollar was 1300 won in the beginning of April. It is now about 1220 won. It has fallen about 9% within last two months and exporting companies are already having difficulties. The Korean composite stock index has now fallen around 800 points. All these are evidence of the effect.

Currently the nation is in full swing under the World Cup festival and at the end of year there will be a presidential election. We hear so many compliments from the foreign media that we might easily overlook the change in the external economic situation. Five years ago, we have already experienced a financial crisis due to our negligence in economy. The government and corporations should be prepared for future contingencies.