eyes on the U.S.

Mueller Probe, A True Test For American Democracy

Washington and the Trump administration are reeling after the first charges are filed in special counsel Robert Mueller's investigation into Russian meddling in the U.S. presidential election.

File photo of Mueller on June 21, 2017
File photo of Mueller on June 21, 2017
Michael Scherer

-Analysis-

WASHINGTON - The hardest part for official Washington, D.C., is not knowing what happens next.

Amid the fast-moving criminal investigation into Russian involvement in the 2016 election, every corner of the city finds itself preparing for the unexpected.

Democrats fret that President Donald Trump might try to shut down the inquiry. Republicans worry that their last best hope for a legislative win, a tax overhaul, could fall victim to the scandal. And the president's denial that his campaign worked in any way with Russia continues to be tested by new disclosures.

The only person with any significant control over events, Special Counsel Robert Mueller, offered no hints Monday on his next move beyond the day's bombshells - a series of legal filings, including the indictment of two former Trump campaign officials and the guilty plea of a third.

And the possibilities seemed only to grow as the day wore on. Hours after the first indictments landed, a leading Democratic lobbyist, Tony Podesta, announced that he would leave his firm, after his firm's apparent role in a Ukrainian lobbying campaign was described in court papers.

"We are in a real testing time for democracy," said Thomas Mann, a scholar at the Brookings Institution. "You really have to go back to Watergate to find anything of this scope and dimension."

Former Democratic strategist David Axelrod liked to say that presidential campaigns give MRIs of the soul of candidates. The corollary is that criminal investigations can similarly expose the hidden malignancies of Washington.

The sort of tradecraft that rarely becomes public

The release of the charges followed the disclosure that a prominent Democratic lawyer and a news outlet backed by a major Republican donor had at different times paid a firm that compiled opposition research on Trump alleging ties to Russian interests that could threaten national security.

Both disclosures were the sort of tradecraft that rarely becomes public, but there was little sign that they would be the last. Mueller has signaled that he will seek to turn every stone in his search and use all available legal tools. Monday's court papers revealed that he had decided to file charges under the Foreign Agents Registration Act, a nearly 80-year-old law that regulates lobbying for foreign powers but that rarely leads to criminal charges.

Legal experts say the Mueller investigation is likely to bring more charges, not to mention a protracted legal process that is likely to distract from other priorities.

"The charges brought last week could easily result in prosecutions extending into 2019, just on the trial level, not even the appellate level," said Jonathan Turley, a law professor at George Washington University Law School. "That is going to continue to have a dysfunctional impact on the Trump Administration."

That raises the prospects for political distractions that could continue into the 2018 campaign season, possibly complicating Republican efforts to hold the House and Senate. It also undercuts the expectations of White House aides, who say they expect the Mueller investigation to conclude soon.

Already, there are signs that the growing scandal has begun to distract from a key week for Republicans looking to build momentum behind tax legislation.

On Capitol Hill, Senate Majority Leader Mitch McConnell, R-Ky., avoided questions from reporters on the indictments. At a separate event, House Speaker Paul Ryan said this when asked about the indictments: "I really don't have anything to add, other than nothing's going to derail what we're doing in Congress."

"It has added a degree of unpredictability and volatility into what was already an unpredictable environment," said Simon Rosenberg, a Democratic strategist. "It ends up just being a thing that just started eating up bandwidth."

Even the president found himself caught off guard, when he prematurely tweeted his own absolution hours after indictments were announced of his former campaign chairman, Paul Manafort, and a top deputy, Rick Gates. At 10:25 a.m., Trump felt it safe to boast that the announcements did not directly reference his campaign.

"Sorry, but this is years ago, before Paul Manafort was part of the campaign," Trump wrote on Twitter. "Also, there is NO COLLUSION!"

Minutes later, Mueller's team announced a previously secret guilty plea of a third Trump campaign adviser, George Papadopoulos, who worked on foreign policy in a volunteer capacity. In court papers, Papadopoulos described in detail his 2016 efforts to arrange contacts with people he knew to be Russian agents, including one person who had told him about Russian "dirt" on Democratic candidate Hillary Clinton, including "thousands of emails."

Papadopoulos pleaded guilty to giving false statements to federal agents in his initial interviews about the interactions. He now says that he discussed the Russian overtures he had received with several other people in the Trump campaign, including a "senior policy adviser," "campaign supervisor" and a "high-ranking campaign official." Among the campaign officials he emailed were campaign manager Corey Lewandowski, campaign chairman Paul Manafort and national campaign co-chairman Sam Clovis.

The media will be consumed

The campaign officials are not identified in court documents, but some of the emails cited by federal prosecutors match messages described in August to The Washington Post by people familiar with their contents.

White House press secretary Sarah Huckabee Sanders chose not to acknowledge that confession later in the day. "Today's announcement has nothing to do with the president, has nothing to do with the president's campaign or campaign activity," she said, arguing that the work by Papadopoulos to coordinate a Russian meeting with the campaign did not amount to a campaign effort.

Podesta's decision to leave his firm amounted to the first collateral damage for Democrats from the Russian investigation. One of the party's most powerful lobbyists and effective fundraisers, he is also the brother of Clinton's 2016 campaign chairman, John Podesta.

The Manafort and Gates indictments described the efforts of "Company B," which appears to be Tony Podesta's firm, the Podesta Group, to help the government of Ukraine. A principal from Podesta's firm is described as privately warning Gates that his talking points on work on the lobbying contract could be contradicted by "lots of email traffic."

Senate Minority Leader Charles Schumer put out a warning to Trump not to interfere with the ongoing probe. "If he does, Congress must respond swiftly, unequivocally and in a bipartisan way to ensure that the investigation continues," he said in a statement.

Republicans, meanwhile, seemed more concerned that the scandal not distract from the effort to pass tax legislation before the end of the year. Lobbyist Charlie Black, a former business partner of Manafort, worried that the focus on the investigation could. "The agenda of politics is dictated by the news media most of the time," said lobbyist Charlie Black, a former business partner of Manafort. "And the news media will be consumed by these scandal issues." Black noted that all of his 65 clients are interested in the outcome of the tax fight.

Grover Norquist, a conservative activist working on tax legislation, said the current situation recalled moments during the scandals of the 1990s. "There was a period of months during Monica Lewinsky when I could have set my hair on fire and I would not have gotten on television," he said, arguing that more debate over taxes would help his side. "It's a distraction."

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Society

Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum

-Analysis-

SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.


It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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