Tuesday, November 17, 2020

2009 (Part 2): Explaining the 2008 Financial Crisis to North Koreans

2009 is one of the final novels of the “Immortal Leadership” series, which chronicles the life of Kim Jong Il. It was co-authored by Song Sang Won and Kim Yong Hwan, published in 2014, and is now fully available in the original Korean here at North Korea’s uriminzokkiri portal. As suggested by the title, the novel covers the events of the year 2009 – particularly the April Kwangmyŏngsŏng-2 satellite launch and KJI's brief meeting with former President Clinton. 

This post covers chapter 10, which includes a lengthy discussion of the global financial crisis by two of the most sinister characters we've uncovered to date - the American diplomat "Conan Jr" and his mentor "Hulbert," a seasoned deep-state operative. Conan Jr is the son of the recently deceased Conan Sr, last seen corrupting presidential candidate Barack Obama in a previous post, and Hulbert is an old friend of Conan Sr's

This chapter is a timely reminder that there was a time not too long ago when North Korea and its Chinese ally were loudly complaining about a global pandemic that originated in the US and spread to infect the whole world - the 2008 financial crisis.

The chapter also features a rare treat in NK fiction - an orgy scene. Set at a sandy beach in Pearl Harbor, this bacchanalian riot forms the backdrop for our anti-heroes' discussion of their financial woes. 

   The harbor was filled with pleasure boats on which fat tourists feasted, drank, and indulged in carnal behavior with all genders. The mainland was on the verge of sinking under a financial tsunami, but it seemed to matter little to these wealthy mainlanders who spent every weekend vacationing in perpetual warmth here. 

I'm not sure there is a beach in Pearl Harbor, but the author makes a point of setting this scene there. To complete the image, somewhere nearby a Hawaiian native sadly plucks out a song of his stolen ancestral land on a ukelele. The text continues:

   Even as their sacred Statue of Liberty gazed down on thousands of jobless street-dwellers and the lowest caste wandered Harlem clutching empty bellies, even with the “Dollar Empire” on the verge of collapse, in this place they had endless time and money to spend.

   It was a “last supper” of sorts. The financial crisis had been caused by real estate conglomerates chasing huge profits from skyrocketing housing prices, as the lower classes had gotten tangled up in speculation by taking out loans from them to buy houses. When housing prices plummeted and those people were unable to pay back their loans in time, the banks’ capital fluidity system collapsed. But the signs had appeared well before then.

   The sharp decline in the US economy after 9/11 had brought about the current crisis. Everyone knew the cause was the excessive military spending for the invasive wars the US was waging all over the world. 

   Last year all the big banks had crumbled like autumn leaves, and the three big car manufacturers were facing imminent bankruptcy. 

The text proceeds to name-check the major losers of 2008 and 2009: Ford, Kodak, Motorola, Fannie Mae and Freddie Mac, Lehman Brothers, Merrill Lynch – with very terse descriptions of each company's type, size and age (e.g. "Top-3 investment bank Merrill Lynch, boasting a 94 year history"). 

Hulbert tries to convince a skeptical Conan Jr. of the seriousness of the situation, quoting a recently published op-ed entitled "Public companies - America's downfall."

This illustrates a common conceit used in both fiction and news articles in NK - the Respected Foreign Expert's editorial. For all its demonization of the West, the Party clearly craves recognition from Western media and punditry. Quotes like the above, some fabricated and others taken out of context from actual articles, are used to corroborate the regime's image of itself and the world. 

At another point, the chapter quotes former President George W. Bush remarking on the 2008 financial crisis, “I felt just like the captain of a sinking ship.” This appears to be a reference to a quote found in Bush’s 2010 memoir Decision Points. The author then takes the sinking ship metaphor and runs with it, all the way to one of North Korea's favorite historic events:

   America’s economic growth had been largely driven by the dollar-based financial system. Its “economic growth” was based not on actual increases in production but on profits gleaned from the dollar circulating as the global currency. The result was financials backed by financials, with no connection to production. The US reaped tremendous advantages from the dollar system.

   But now, circumstances had changed.

   Global production in goods and services had reached $50 trillion a year, but securities like stocks and bonds amounted to $150 trillion. The plummeting prices of low-income housing mortgages brought chaos to the financial markets, as everyone wanted to convert their securities into cash. But no matter how many loans the central banks of America and the Eurozone gave out, they could not generate enough cash to convert $150 trillion in “fake money” securities.

   At last, the collapse of the “Dollar Empire” was underway. Just as the Titanic, the symbol of early 20th Century capitalist material culture, had sunk, now a century later the seemingly unsinkable “21st Century Titanic” was sinking.


NK children's comic about the Titanic.
Src: NK경제

Seasoned Pyongyang watchers will know that the regime makes much of the fact that the Titanic sank on the very day of its Great Leader Kim Il Sung's birth, a date that now marks Year Zero on the North Korean calendar and is commemorated on the annual Day of the Sun holiday. Thus the author seems to be hinting here that another Korean Great Leader will be born amid the sinking of the global financial system.

Hulbert fixates on China's power over the global financial system, notably referencing the "dollar dumping" theory:

   “Presently China holds an astronomical sum in US currency reserves and bonds. If it decides to sell off its bonds or convert its dollar holdings to euros, the US will either collapse or be compelled to defend the dollar’s position as the global trade accounting currency with military force. In short, war is inevitable. Many people had pointed out that the Iraq invasion happened just after Saddam loudly threatened to change his oil trading currency to euros.
   "Late last year, as the America-based financial crisis spread to the world, China established the Asian Financial Cooperation Exploratory Committee. The Asian Monetary Fund (AMF), which was proposed by Japan but founded by the US in response to the Asian Financial Crisis, was a plot to impose a common virtual currency (가상통화) and even create an Asian Central Bank.”

Conan Jr says he’s more worried about the present, and specifically North Korea. He sees great potential in their collectivist work ethic, and foresees that North Korea’s economic power will soon surpass America’s. As evidence he cites recent remarks by the president of Ecuador, blaming the capitalist system for the financial crisis and calling for a new global economic model. 

Gesturing to the carnal excesses playing out on the beach, Conan Jr frets: 

   “Hawaii is no longer a natural world of birds and fish, it has been taken over by humans degenerated into wild beasts. This scene of our people living only for the moment, gathered together to feast and drink themselves into oblivion, represents the doom of America. 
   "Meanwhile Koreans are building for the future; if it comes down to a confrontation, there’s no guarantee we will win. Think of our future – we who crowed loudly about Korea’s impending collapse; how pathetic that we should collapse instead."

Days later, Conan Jr goes over Secretary Clinton's head and sends a memo directly to President Obama. He advises the new president to "apply military pressure tactics to make [North] Korea back off from economic development" and to "use the dollar’s power to max effect to prevent Korea from establishing outside economic cooperation partners while blocking their import of necessary equipment and technology," applying UNSCR 1718 if needed. In closing he warns, "In Northeast Asia, Korea is every bit as important as the big powers Russia and China."