[Editorial] Malignant Rumor on Economic Collapse

A rumor says Korea’s financial system will break down in March to cause a second financial crisis, with major industries such as construction, shipbuilding, and cars to worsen and global financial institutions to leave Korea. The groundless rumor, which has emerged in the midst of the economic slowdown, has aggravated investor confidence.

The rumor is based on the assumption that Japanese banks will sell their bonds issued by the Korean government before March, when they settle their accounts. It is similar to the “black September” scenario, which erroneously predicted a financial crisis in September but pushed the market into a panic.

“Minerva,” a netizen who has posted articles on the economy on the Internet, has also played a role in fanning public anxiety by saying, “Unless the government changes its ways to deal with upcoming stagflation, Korea will face a catastrophe before March 2009.”

Korea is expected to face bigger economic challenges next year. Strategy and Finance Minister Kang Man-soo said, “The government drew up next year’s budget on the assumption that economic conditions will not improve until the first half of next year.”

Undeniably, the fate of Korea’s economy depends on how it weathers mounting difficulties such as declining exports, falling domestic demand, corporate insolvency and falling growth.

But the perilous state of the economy cannot justify the ill-intentioned attempt to spread a groundless rumor that Korea will definitely face a crisis. Rumors have been proven false if financial authorities take a cautious approach to uncertainty and deal with it preemptively. It is irresponsible to exaggerate one of many factors and spread negative sentiment on the economy. It is no different from self-injury that can destroy the economic fundamentals of a nation.

The spread of malignant rumors are evidence that Korea’s economic fundamentals have weakened and the public has lost confidence in the government. But this nasty and groundless rumor could destroy the market.

To prevent another malignant rumor from emerging, the government should regain confidence and eliminate uncertainty by providing efficient policies swiftly. Korea should also find out exactly who Minerva is and why he or she is fueling market uncertainty through unproven explanations. Only those who have behaved as responsible citizens are eligible to talk about a crisis.