[EDITORIALS]Debt crisis looms large

Household debts, which once seemed to have subsided, resumed snowballing. According to the Bank of Korea yesterday, as of the end of September, household debts stood at a record 440 trillion won ($370 billion) in Korea. In other words, a household was 29 million won in debt on average.
Despite a recovery in exports, consumption is far from being revived. We believe the reason lies in the deep swamp of household debts. If not addressed properly, this could push the country into another credit crisis.
While adding to their debt load, households have also been taking on a more burdensome kind of debt. Household debts have significantly increased recently as loans from financial institutions for mainly the working class, such as from credit unions or mutual savings and finance companies, ballooned. As banks or credit card issuers tighten their provision of cash, people are turning to such smaller and more easily accessible financial institutions, which charge far higher interest rates.
As a result, people will end up with a higher interest rate and the number of credit delinquents will only go up.
But we fail to detect any sense of crisis from the government. More than 60 percent of credit delinquents are credit card delinquents, whose number reached 2.3 million. But policymakers turn from the responsibility of stopping the credit card companies that run their businesses in such a slipshod way.
There is no easy way to ease household debts in a short time. But considering the increasing seriousness of the issue, the government, creditors and credit card issuers shouldn’t pass the buck or put off a solution.
The financial authorities need to approach the issue in accordance with principles. It must reform the card industry with the attitude that even large corporations can fail. Credit card companies also must seek strong self-rescue measures, such as disposal of insolvent assets, layoffs or mergers.
Credit delinquents have also learned the hard way that they cannot spend more than what they earn. They need to keep that lesson in their hearts.