From the people who didn’t exactly cover themselves in glory a decade ago during the financial crisis come some not-very reassuring words about South Korea. Moody’s Investors Service thinks that a military conflict with North Korea would be “credit negative” for its southern neighbor.
Moody’s gives South Korea’s vibrant economy, the fourth largest in Asia, a relatively high AA2, between the ratings placed on peaceful, prosperous Austria and Belgium and the same as Kuwait’s. The country’s main stock index just hit an all-time record.
But calling a military conflict “credit negative” puts reassurances about subprime mortgages being “contained” to shame should a conflict actually come to pass. Aside from its 10 to 20 nuclear warheads, North Korea has one of the world’s largest militaries and could devastate South Korea’s main population centers with conventional artillery and rockets.
Sounds far scarier than a basket of liar loans....