Korea and IMF

Re “Can Capitalism Survive the IMF?” Commentary, Dec. 19:

Chalmers Johnson overlooks the facts that it is the Korean economy that is broken, it is Korea that went to the IMF for assistance, and the lender is the institution that sets the terms.

South Korea is broke because the major conglomerates that dominate the economy borrowed excessively to expand recklessly into industries unrelated to their core areas and because these loans were made with no financial analysis by the banks other than the tacit approval of the government, which supported these conglomerates at the expense of small business. These expansion projects have largely failed, the conglomerates are now bloated, inefficient and burdened with debt and many banks are insolvent. It would be idiotic for the IMF to extend a loan of $57 billion without demanding reform of such a system, and if Korea does not like the terms, it can always turn down the IMF package and solve its problems by itself.

JEFFREY M. WHITBRED

Puchon, Kyunggi-do, Korea