Blame the central bank. That’s typically the prime (so to speak) suspect during most financial crises. In the case of South Korea’s near bankruptcy of 1997, the Bank of Korea (BOK) was pursuing a contradictory policy. They wanted to keep the won pegged to the dollar, requiring a tight money strategy, yet they also wanted to spur exports with loose money. On top of their Jekyll and Hyde monetary policy, the major banks kept turning over non-performing loans to large enterprises in industries “anointed” by the national government. That did not work either. However, the BOK gets off easy in Choi Kook-hee’s Default (trailer here), which opens this Friday in New York.
It is a period of semi-wild exuberance, as the story of South Korea’s economic miracle continues to chug along. However, there is a liquidity crunch brewing beneath the surface and only BOK economist Han Shi-hyun sees it coming. At current burn rates, the bank will not have sufficient foreign reserves to maintain its peg and clear the necessary balance-of-payments involved in international trade. Unfortunately, most of her colleagues prefer to keep their heads buried in the sand. The Vice-Minister of Finance is the exception. He welcomes the crisis as a way to force through his package of economic reforms (several of which really were needed).
Nevertheless, the stringent conditions demanded by the IMF director represent some bitter, recessionary shock treatment. Accepting the bailout will also deal a devastating blow to national pride. Han is convinced they can manage the crisis with less invasive monetary policy, but if you know your history, you will not be in suspense regarding the outcome.
The fictional Han is a forceful character to reckon with, but the subplot involving an increasingly desperate small factory owner is just nakedly and clumsily manipulative. Those scenes are so openly propagandistic, they inspire eye-rolling rather than feelings of revolutionary solidarity. On the other hand, the villainous rogue trader Yoon Jung-hak is bit like the dog that never barks, since he never comes into direct conflict with Han and the rest of the emergency response team during the course of his short-selling and bargain-taking. The actual financial intrigue is pretty gripping, but screenwriter Eom Seong-min definitely takes liberties with the root causes and circumstances of the IMF bailout, for obvious political reasons (for the record, right-of-center think tanks like the Heritage Foundation opposed the agreement, on both economic and political grounds).
Regardless, superstar Kim Hye-soo is terrific as Han. It is a smart, compassionate portrayal of a smart, complicated economist (there are some out there). Vincent Cassel’s high-handed scenery-chewing as the IMF director is also jolly fun to watch. Unfortunately, the rest of the cast give broad, clichéd performances as stock-character villains and victims. This is particularly true of Jo Woo-jin’s compulsively sneering Vice-Minister. Seriously, why not give him a handlebar mustache to twirl, in case anyone somehow managed to miss the point?
There are legitimately cautionary aspects to the 1997 “bailout” that should be called out and scrutinized. However, it is always problematic to play it fast-and-loose with the historical record. Nevertheless, the film’s main point—that being the bailout was unnecessary and in many ways counter-productive—is convincingly established. Frankly, there is so much good stuff in Default, it makes us want to take it into an editing bay and unleash our inner Stephen Soderberghs. Its flaws are considerable, but it is still an impressive showcase for Kim. Earning a very conflicted mixed review, Default opens this Friday (11/30) in New York, at the AMC Empire.