Lee Jae-myung's "Economic Recovery" Lee Hye-hoon's "Gray Rhino Tax Future", Telescope Effect

Lee Jae-myung's "Economic Recovery" Lee Hye-hoon's "Gray Rhino Tax Future", Telescope Effect

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While President Lee Jae-myung has formalized "economic recovery," Minister of Planning and Budget nominee Lee Hye-hoon has diagnosed the Ministry of Planning and Budget as a "gray rhinoceros" with a serious illness and announced her role as a "tax future." This telescope effect is expected to exacerbate the sharp fluctuations in the exchange rate and stock market next year, likely due to the telescope effect.

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On the first day of her term, the 29th, Lee declared, "The Ministry of Planning and Budget will create a strategic virtuous cycle where the people's taxes become investments for the future, and those investments, in turn, enrich the people's lives." She characterized the Korean economy as a "gray rhino" that faces a fatal threat if ignored or neglected.

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Public consumption has plummeted, and the National Data Agency's "November Industrial Activity Trends" on the 30th showed a 3.3% month-on-month decline in retail sales.

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The sharp decline in consumption occurred in October, immediately following the Lee Jae-myung administration's policy of prioritizing consumer spending and directly distributing funds to the public. The decline in consumption reached its sharpest in 21 months, following a -3.5% drop in February of last year.

​Retail sales, which had fallen 2.4% in August, rebounded slightly to -0.1% in September due to the Lee Jae-myung administration's consumer stimulus measures. However, they rebounded sharply to 3.6% in October before declining sharply in November.

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Reuters reported on the 30th that "South Korea's factory output was weaker than expected," adding that "the industrial output index rose 0.6% month-on-month on a seasonally adjusted basis, following a 4.2% decline the previous month, but compared with a 2.2% increase expected in a Reuters poll of economists."
Reuters continued, "The national data showed the index (output) fell 1.4% year-on-year, compared with an 8.2% decline the previous month and the 3.0% increase economists had expected," describing it as "lower than expected."

 

Lee, addressing the ailing Korean economy, imitated Reaganomics, which prioritized money supply, stating, "Our economy is in a perfect storm in the short term." He added, "We need to identify and eliminate unnecessary spending and boldly invest in people's livelihoods and growth." He also shifted tax revenue to secure a hardline conservative regime, arguing, "(Current) taxes are investments in the future."

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Regarding the national budget, this candidate stated, "I believe that strategic thinking beyond short-term responses is necessary, taking a longer-term, more far-sighted approach. This is why the Ministry of Planning and Budget was born. The Ministry of Planning and Budget is a strategic planning control tower that designs the future of the Republic of Korea and takes steps toward the future." He highlighted the current administrative dictatorship based on crackdowns on taxpayers and a "government monopoly on future investment."

He continued, "We need a way to link planning and budgeting," but added, "Rather than allocating budgets on short-term, ad hoc basis, we need to link planning and budgeting with a vision for the future." He added, "I will transform the Ministry of Planning and Budget into a more agile, flexible, and long-term planning office, a budget office that shares authority and increases participation, and a budget office that transparently discloses its operational processes." This constitutes a strategy driven by administrative bureaucrats to divert the current national treasury to future industries like AI, defense, and weapons, thereby boosting stock prices.

This candidate's remarks appear to be a repeat of the experience of the 1980s, when the Cold War system was strengthened by a "debt-driven military buildup" that ignored and increased the fiscal deficit, leading to a twin deficit of overlapping trade and fiscal deficits, which ultimately led to the Republican Party's loss of power and the outbreak of the financial crisis.

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The Lee Jae-myung administration's economy will shift to "investing in the future of finance." Following the $20 billion annual investment payment from the Trump administration, the $150 billion in MASS funds for the US Navy's warship construction project, and the $100 billion in US investment promised by conglomerates at the South Korea-US summit, the $100 billion in fixed payments, including the purchase of US LNG, are expected to expose the economy to foreign exchange attacks. The continued expansion of the fiscal deficit is expected to lead to a "telephoto effect," with the exchange rate gradually increasing in magnitude.

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The sharp decline in consumption in November was evident across all categories. Sales of non-durable goods, including food, beverages, and pharmaceuticals, fell 4.3% month-on-month. Sales of semi-durable goods, including clothing, entertainment, hobby, and sports equipment, also declined 3.6%. Sales of durable goods, including telecommunications devices and computers, fell 0.6%.

By industry, the sharp decline was primarily driven by a sharp 8.3% decline in hypermarkets, reflecting a decline in consumption among the middle class and below. Supermarkets and general store sales also saw a 4.8% decline. However, non-store retail, a form of daily consumption, rose, and in particular, sales of passenger cars and fuel retailers saw growth, exacerbating polarization.

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In economics, the term "gray rhinoceros" refers to the crisis that arose in the US-dependent economy, which had been riding the Cold War bandwagon, as the hard-line conservatives of Reaganomics' oversupply-dominated economy declined internationally. Unlike the "black swan," this crisis was seen as a "predictable economic crisis," with a high probability of occurrence and unpredictability. It was applied to aggressive expansion of the debt economy.

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In 2013, at the Davos Forum, American economist Michele Wucker described the subprime mortgage crisis, a classic example of a financial crisis in the US, as a "predictable economic crisis." She applied the term to the rhinoceros, a robust indicator of economic health, by describing the state of the economy as a "gray rhinoceros" that had been neglected and was already in a state of decline. Conversely, the term "black swan" describes the phenomenon of an economic crisis arising without warning.

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In a press conference announcing the first anniversary of the establishment of the government, President Lee announced that the economy was rapidly recovering. He then lowered the 8.2% defense budget increase for next year to 7.5% in the National Assembly. He then formalized the strategy of "holding a North Korea-US summit in April next year" through a live televised executive branch work report.

Unification Minister Chung Dong-young stated in his report, "The Ministry of Unification hopes that the North Korea-US summit will take place around the time of President Trump's visit to China next April."

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US President Reagan attempted to break the backbone of the socialist economic system by expanding deficit spending and escalating the arms race to the point of nuclear war, under the guise that "high debt means high credit." South Korea became the foundation for this Cold War-intensifying system. It became a supply-side economic model.

 

Hanwha Aerospace announced on the 30th that it will sign a ‘third execution contract’ worth 5.6 trillion won to supply the 80km-range Chunmoo guided missile with the Polish Armaments Agency. 

Presidential Chief of Staff Kang Hoon-sik held a press conference after returning to Korea that day, saying, “Yesterday, a contract for the Chunmoo guided missile worth 3.9 billion dollars, or 5.6 trillion won in our currency, was signed in Warsaw, Poland. Following the contract for the K2 tank worth approximately 6.5 billion dollars signed last August, a defense cooperation contract with Poland worth over 10 billion dollars, or nearly 15 trillion won in our currency, has been finalized since the Lee Jae-myung administration took office.” 

He also announced, “The total amount of defense contracts with foreign countries in 2025 was 15.2 billion dollars. I can report that contracts worth 14.2 billion dollars, or more than 90% of that, have been signed since June, after the Lee Jae-myung administration took office. It can be said that the national agenda of joining the top four defense industry powers in Korea is not just a slogan but is being implemented in earnest.” 

In defense contracts, the "Third Execution Agreement" refers to Korea's "financial support" for a "local Polish production plant" for US-standard weapons. This is interpreted as a "guarantee from the Korean President" for the funds to be provided to Poland, and the "Presence of the Chief of Staff in the Contract Agreement." Chief of Staff Kang was present at the signing ceremony.
The "Third Execution Agreement" is a contract for the establishment of "Hanwha WB Advanced Systems," a joint venture for the production of the Cheonmu guided missile, following the agreement to establish a "joint corporation" with the Polish private defense company WB Group in September of last year. 

This constitutes a "preliminary agreement" to establish a production plant through future funding. Through this arrangement, Korea will shoulder the financial burden, while Hanwha's stock price will rise first.
On the 30th, Uractiv reported that "Poland and South Korea have signed a 3.3 billion euro agreement to jointly produce missiles for the HOMAR-K rocket launcher in Poland," and that "the Polish state-run Ministry of Finance, the Polish-Korean joint venture Hanwha WB Advanced Systems, and a consortium of manufacturers including Hanwha Aerospace signed an 'implementation contract' for the production of the CGR-080 precision-guided missile with a range of 80 kilometers on the evening of the 29th."
Polish media reported on this joint production of American missiles that "the missiles will be produced at a newly built factory in the city of Gorzow Wielkopolski."

On its website, WB wrote the title “HOMAR-K equipped with Polish missiles” and stated, “The subject of the contract, totaling approximately PLN 14 billion, is a contract signed between the State Finance Ministry and a joint consortium of Hanwha WB Advanced System Sp. z o.o. (the leader of the consortium) and Hanwha Aerospace Co. Ltd. for the delivery of CGR-080 precision missiles with a range of 80 km to be manufactured in Poland.”

The website states, “The delivery date is from 2030, and the production of missiles for the HOMAR multiple rocket launcher will be carried out at a Polish production plant operated by a joint venture in which WB Electronics and Hanwha Aerospace are shareholders,” which is a significant difference from Secretary Kang’s statement that “a contract for the Cheonmu guided missile worth 5.6 trillion won has been signed.”

The signed photo released on the website shows Chief of Staff Kang Hoon-sik standing in the center.

 

See <Lee Jae-myung's Concealment of Military Buildup: "Coexistence and Co-Prosperity"; Chung Dong-young's "North Korea-US Summit Prioritized"; Breaking the Socialist Economy, December 19, 2025>

<K-Economy: Scraping the Bottom and Pushing the Top, Stock-Driven Wealth Growth>, December 2, 2025>

<K-Shaped Polarization of the US-ROK Economy Leads to Declining Consumer Confidence; Stock Market Rise Drives High-Price Housing Prices, October 29, 2025>

<Lee Jae-myung's Presidential Campaign Pledge to Boost the Stock Market: Hardline Conservatives by Expanding Supply During Recession, May 14, 2025>

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