In the closing days of November 1997, South Korea discovered that it had one week before the Asian financial crisis depleted its foreign reserves. One woman at the Bank of Korea was determined to avoid an International Monetary Fund (IMF) bailout. This is her story.
The premise of "Default" ("Gukgabudo-ui Nal" / 국가부도의 날), the new film from director Choi Kook-hee, invites comparisons with "The Big Short" (2015), but though both are based on real financial crises, this film revolves around human drama rather than delighting in wonkiness; in fact, many detailed parts of the film seem to assume that viewers have a solid understanding of the financial background. Accordingly, most of the film is melodramatic rather than expository, befitting the stakes of the crisis.
Yet a key expository scene early in the film, explaining the core structural causes of the crisis, crackles with energy, as rebel investor Yun Jeong-hak (Yoo Ah-in doing the exact opposite of his character in "Burning" ("Beoning" / 버닝)) explains to prospective clients why he’s shorting the government.
Meanwhile, the film intercuts with two other plotlines to illustrate each step of his explanation. Too many bad loans? Cut to steelworks entrepreneur Gab-su (Heo Joon-ho) being granted a loan way too easily. Government lying to the people to quell fears? Cut to the Vice-Minister of Finance (Jo Woo-jin) arguing successfully for obfuscation and denial against Bank of Korea head of monetary policy Han Shi-hyeon (Kim Hye-soo). And Yun even plays the prophet later in the film when, just as Han convinces the government not to go to the IMF, he predicts that they will – lo and behold, the government does an about-face.
Those are the three plotlines: Gab-su and his doomed business; Yun making ridiculous amounts of money for his investors; and Han, a woman (though based on a man in real life), fighting for the person in the street against corrupt and sexist government officials.
Gab-su’s story is tried and true, squeezing every ounce of sympathy out of the viewer as we watch him decide which debts to pay off first, struggle to raise money, and assure his employees that everything will be fine. After a last-minute decision to step away from the balcony, he shuffles his way into Han’s plotline in a somewhat stretched ending that shows just how important one’s reputation is to a Korean person. Almost all of this is clichéd, but who ever heard of an artistic bankruptcy? Melodrama, the heightening of emotion to convey raised stakes, is precisely what this plotline calls for.
Yun’s story most closely resembles "The Big Short". He resigns from his job at a merchant bank (a kind of non-insured commercial bank) to start his own investment fund based on a strategy of shorting everything and everyone; he attracts a whopping two investors, and they follow him around as he vacuums up U.S. dollars, real estate, and an expensive dinner. Yun is established as morally self-aware when he visits his old employer, now in the throes of a bank run. One of his investors is ecstatic at the sight, thinking of how much money they’ll make; in response, Yun slaps him hard, twice. “You should never feel so good about making money ever again,” he intones.
Yet his morality doesn’t stop him from getting filthy rich, and we’re introduced to the depths of the film’s cynicism in the cut away from that dinner scene: When Yun remarks that, though they’ll sleep well that night, someone must be sleepless with anxiety, we think of government officials busy trying to cushion the crisis, but instead the film cuts to Gab-su lying in bed, having exhausted all financing options.
So what is the government doing? Han strives at every turn to implement amelioration strategies that least affect the average person, but she’s repeatedly stymied by the Vice-Minister, who it’s revealed has ties to chaebol (Korean family-owned conglomerates). The machinations here recall another film about the Great Recession, the no-good-option "Margin Call" (2011). Things go from bad to worse when the Vice-Minister invites the IMF negotiating team, led by the managing director himself, Michel Camdessus (Vincent Cassel in full-on evil Westerner mode).
Negotiation – what a joke; the government has less negotiating power than the UK does for Brexit, and the film shows it by putting Camdessus at the head of the table and not on the IMF side. Han’s realization that the neoliberal interests backing the IMF also want to avoid Korean bankruptcy and debt restructuring comes too late, after she’s kicked off the Korean negotiating team for being too disagreeable.
The IMF deal goes through, of course, but what’s amazing, especially given how evilly the film frames it, is the fact that the conditions of the deal are basically just as the film depicts it: the expected financial and labor reform and corporate restructuring (which are long overdue, though the film disapproves of the labor reforms), but also allowing hostile foreign takeovers and sharply raising interest rates on a rapidly contracting economy. Even the government cronies are struck dumb by how rapacious the demands are, but having crossed the Rubicon, they have no choice but to accede.
(Technical note: One expert argues that the IMF-imposed reforms served Korea well, though they would’ve been less painful if enacted before the 1997 crisis. The monetary strategy, on the other hand, was a disaster, as the higher interest rates hurt the local economy without attracting foreign investment, while the opening up of capital markets merely amplified fluctuation rates. The film discusses none of this.)
With this Manichaean worldview, the film has trouble concluding on a high note, exhorting viewers to keep our eyes open, rather than, say, voting for honest leaders. A coda shows that both Yun and the cronies made out quite well, while Han toils away in the private sector. Exiled, but not forgotten: As the Great Recession looms, the new Vice-Minister of Finance seeks out her help. Whether it will do any good this time around is anyone’s guess.
"Default" is open in theaters across Taiwan now.
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TNL Editor: David Green (@DavidPeterGreen)
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