[EDITORIALS]Bending like plasticWatching the wavering in policy on credit cards by the government, it is doubtful whether the administration has a long-term vision for the economy. It has lengthened the deadline by three years for credit card companies to reduce the ratio of cash advances to less than half of their overall services. Seoul’s rationale is that if card firms cut back on lending, more credit delinquencies and lower consumption will follow, worsening the financial difficulties of the firms.
It is not an exaggeration to say that a large portion of the “bubble” in our economy is because of the aftermath of bad credit card policies. A few years ago, the government encouraged the use of credit cards in order to stimulate consumption; the result was young people without means who used cards recklessly, and problems like the countless individual credit delinquents and the insolvency of credit card companies. That is why the government decided to crack down on credit card limits, but within a few months it overturned that initiative. Could Seoul have not foreseen the problems it now cites a few months ago?
Deregulation does not lead to a promotion of consumption, and it is asking too much to expect unemployed people who have no income to pay back the debts. On the other hand, deep pockets at credit card firms can lead to excessive competition, which in turn can cause greater debt accumulation by individuals and companies.
The government lowered interest rates to spur consumption, but instead of an economic recovery, real estate prices have skyrocketed. Has the government forgotten its mistake last May? This recent measure will lead to more distrust of inconsistent government policy. The measure has merely delayed a solution.
Individuals must restructure their debts and repay them. The fundamental solution is to create more jobs so that people are able to repay their debts. Stimulating the economy is done by promoting conditions that lead corporations to invest and by maintaining consistency in economic policy. We need head-on measures, not short-term patches and expediency.