[EDITORIALS]Economic Measures Cause Concern

As days go by and the U.S. military action against terrorist targets looms larger, it is alarming to see that the government may be losing its cool on the economic front. We can see that Korea is trying, but there are signs that Seoul may be losing its grip on what it should and should not do and when and how it should do it.

The government's economic policy measures this past week concentrated on stabilizing the markets. Wednesday's move to cut the key interest rate by half a percentage point is just one of the more stronger moves made by the government. The moves are obviously intended to calm the jittery feelings of market participants both on the demand and supply sides, and they are more or less in line with the moves undertaken by other economies, including the United States. But we remain concerned about some of the measures. The interest rate cut could have worked better if it had come last week. And the loss in the stock market could have been limited if the government had applied the brakes on our notorious "hot-pan stock market" by temporarily reducing the daily fluctuation limit.

What is more alarming is that the government is resorting to policy measures that should be avoided. The clearest examples are President Kim Dae-jung's call to hold onto the stocks we own and the Finance Ministry's plan to raise investment funds to support the market with the participation of pension funds and institutional investors. The call to hang onto stocks is no doubt an echo of an earlier national campaign in 1997 to help save the economy by gathering gold. But it is an idea that ignores the speculative nature of the stock market. It is a market where institutional investors pledged to "buy" and then turned around on the same day to unload what they could. A call such as Mr. Kim's, that tries to move the patriotism of the ordinary people, can only hurt the smaller investors. It is an inappropriate suggestion coming from a head of state, who should be ensuring that personal property and lives are protected. Investment funds intended primarily to support the stock market were first introduced in the early 1990s, but they failed to do the job then. We have yet to see any indication that the new proposals will succeed.