An article in the Chosun Ilbo raises the issue of Internet based rumors and their effect on Korea, pointing to the recent anti-US beef protests that nearly shut down the country and were fueled by a flood of mis-information over the saftey of US beef.

More recently is the impact such rumors have had on the local economy, drumming up what has come to be called the “September crisis,” a scenario which envisions a repeat of 1997, where foriegn investors flee in droves and the economy goes down the toilet.

According to the article, there is suspicion that foriegn investors and currency speculators are behind the latest rumors, seeking to cash in on a weakened won and slowing economy.

Financial authorities and experts say market players involved in “short selling”—borrowing a security from a broker and then selling it with the intention of repurchasing it later at a lower price to profit from the falling price of a stock—may be behind the rumors. Foreign investors in particular, who have led this practice, are being pointed out as the source of the rumors.

Now I don’t know near enough about economics to get into the details of this subject. What interests me is the immediate impact this has on the country, from top to bottom.

There’s a new president elected on a mandate of fixing the economy, which seems to be tanking. One of President Lee’s campaign promises was a tougher stance against North Korea, long seen as having benefited from Seoul’s largesse.

With attitudes here decidedly negative towards the North, following the shooting of a South Korean tourist in the North’s Mt. Geumgang resort, the WFP’s calls for food aid from the South to stave off a looming famine in the North may go unheeded.I read recently that the governemt here actually had to request more money just to afford the minimum quota on rice imports to feed itself as grain prices have soared.

Meanwhile, South Korean exports enjoy a boost, but inflation is increasing and more households go into debt. Lee has offered tax cuts, but these have been criticized for mainly helping the wealthy. (Cuts include lowring of inheritance taxes and reductions in property tax – obviously a wide swath of the population.) He’s offered to develop new housing, but I’ve heard this will help drive up land prices, to the joy of his buddies in the construction industry.

Household’s education spending is up, especially for those parents who’se children attend overseas schools, where the weak won can barely keep up with tuition there. For those who can’t afford an education abroad there will be chartered schools opening, though again they will be prohibitively expensive for all but the wealthiest. There’s always the hagwons I suppose.

And to think that all this is the product of rumors!