Comment by Victerius | Hacker News Reader

Comment by Victerius | Hacker News Reader

> But Legoland Korea struggled out of the gate, too far from Seoul and too expensive for what was on offer, and it did not generate enough revenue to honor the bonds. Also, as South Korea’s real estate market softened, the value of the real estate backing the bonds began falling below the amount of the debt.

This is the heart of the problem.

I know the current South Korean president owes his victory in part to popular resentment in the face of the Moon administration's inability to stem the explosive growth of housing costs in Seoul.

Could it be that the target demographic for this Legoland just doesn't have enough disposable income or free time to make the asset profitable? It sure seems like it. Other Legolands around the world don't struggle with profitability. Distance isn't an issue for car owners. But cars are more expensive than ever. And shelter costs in SK are too high in proportion to household incomes.

Housing speculators and NIMBYs are going to kill capitalism.

I do think Legoland should never have been built there (they found one of the largest bronze age settlements ever found in Korea - they built freaking Legoland on top of it anyway), but it was built, and defaulting on bonds was probably the stupidest thing anyone could have done with it. I mean, someone could've sneaked in with a can of gasoline at night and burnt the whole thing down, and it would have cost less on the Korean economy.

So you are telling me they could have built lower cost tourist attractions based on the bronze age history of the location but they decided to pave over their money maker because Legoland is an internationally recognized brand?

Well, in terms of money-making, the bronze age settlement would have made, at best, a small provincial museum that attracted a negligible number of people. Nobody drives an hour to see some stones arranged in the shape of a house.

Builders bulldozing over irreplaceable ancient sites are not exactly unique to Korea, after all. (At least this one got excavated.)

This is definitely not the heart of the problem. Governments issue bonds for what turn out to be bad investments all the time.

The heart of the problem was the completely unnecessary default which seems to have been done for petty and self-defeating political reasons.

> Governments issue bonds for what turn out to be bad investments all the time.

Yeah, and this is even worse since Gangwon-do is an extremely rural and aging area without any hope of future growth. It only contributes 2% of the total GDP in South Korea and is rapidly shrinking. No sane private entity would go there without government supports since none of significant development there would make financial feasibility. It's where a government is supposed to intervene.

The current governor (who was a prosecutor like Yoon anyway) seems to consider this as a really good chance to put their political opponents into jail and they need to access confidential information to make the case. The default is a necessary part for the grand scheme and he probably was willing to make that sacrifice. He was just not competent enough to understand its implication.

I'm not sure how you see that a small piece of bad debt is the heart of the problem versus a government repudiating a loan guarantee during increasingly severe global contraction thus destroying the market for more risky (e.g. corporate) debt.

> Housing speculators and NIMBYs are going to kill capitalism.

No arguments with the sentiment, but keep in mind that South Korea is roughly the size of Indiana (the 12th-smallest state) and over two-thirds of what land they have is mountainous, populated by over 50 million people. It's hard not to have relatively expensive housing in that country, just based on the sheer lack of availability of land.

Of course, it doesn't help that half the country lives in the Seoul Capital Area.

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