Lee Yong-woo: "Governor Kim Jin-tae's Legoland Incident May Not Be Preventable Even with '50 Trillion Won + α'"

"Yesterday's essential discussion was Governor Kim Jin-tae's 'Legoland Incident' and 'Livelihood'"
"Emergency Economic Livelihood Meeting under Yoon without 'Emergency' or 'Livelihood'... Why hold the meeting?"
"Market trust has collapsed, so it inevitably spreads widely... Measures must be taken, but they don't understand"

[Asia Economy Reporter Oh Ju-yeon] Rep. Lee Yong-woo, considered an 'economic expert' within the Democratic Party, expressed concern on the 28th that the government’s injection of 50 trillion won plus alpha in liquidity might not be enough to prevent the bond market liquidity crunch triggered by the default of the Legoland asset-backed commercial paper (ABCP) linked to Governor Kim Jin-tae of Gangwon Province.

Lee Yong-woo, Member of the Democratic Party of Korea./Photo by Dong-joo Yoon doso7@

On the same day, Rep. Lee appeared on MBC Radio's 'Kim Jong-bae's Focus' and said, "The ripple effect (of the liquidity crunch triggered by the Legoland incident) has been absurdly magnified when it could have been stopped with a cough."

He added, "During the recent National Assembly audit, I continuously pointed out issues regarding ABCP and funding maturities. But from what I gathered through the audit, the government was unaware," explaining, "Deputy Prime Minister Choo Kyung-ho even said in Washington DC on the 14th, 'That is a problem of Gangwon Province.' And Chief Secretary Choi Sang-mok said he found out later."

He continued, "Speaking from the perspective of someone who has managed bonds, I said, 'This is a collapse of market trust, so it will inevitably spread comprehensively, and therefore countermeasures must be prepared.' But they did not seem to understand that," he criticized.

When asked by the host whether the current crisis might not be prevented even with the '50 trillion plus alpha' liquidity supply, Rep. Lee answered, "That could be the case."

Rep. Lee referred to the financial difficulties faced by project financing (PF) for real estate development, which has dried up since the Legoland incident.

He said, "The unsold PF in Daegu is spreading to various places," and questioned, "Yesterday, Dunchon Jugong succeeded in refinancing. That was possible because it is a large construction company, but what about smaller and medium-sized companies?" He added, "Looking at the current housing price outlook, will sales go well? If sales do not go well, how will the bond interest rates issued with sales as collateral be affected?" He also mentioned, "Yesterday, all 50 billion won worth of corporate bonds from Tongyeong Eco Power were unsold." Tongyeong Eco Power has an A credit rating and Hanwha provided a payment guarantee, but the bond market froze, resulting in all bonds remaining unsold.

Regarding the ruling party’s mention of a possible 'hard landing,' Rep. Lee said, "That is very reckless," criticizing, "If they had the perception that a hard landing could occur, they should have discussed various measures to prevent it at yesterday’s emergency economic meeting. But what came out was just the LTV 50% for first-time and one-home owners."

The day before, the Financial Services Commission decided to lower the loan-to-value ratio (LTV) for mortgage loans to 50% for non-homeowners and one-home owners and to allow mortgage loans for apartments exceeding 1.5 billion won.

Rep. Lee said, "I don’t know why the meeting was held," evaluating, "The title was 'Emergency Economic and Livelihood Meeting,' but I did not feel any emergency, nor was livelihood discussed."

He added, "It was not a meeting that prescribed what the public wants to hear or what they need; it was just people saying what they wanted to say. Such meetings are unnecessary," delivering a sharp rebuke.

Rep. Lee identified the issues that should have been discussed as the 'Legoland incident triggered by Governor Kim Jin-tae' and 'livelihood.'

He emphasized again, "The funding market is in chaos. The 50 trillion plus alpha, the Bank of Korea’s eligible bonds for bank bonds, all are good. But this is not the end. When it spreads further, we need to prepare Plan B and Plan C for what measures to take in this urgent market."

This content was produced with the assistance of AI translation services.