The 'Lee Jae-myung Put': Argument for Government Intervention to Defend Stock Market

The term 'Lee Jae-myung Put' is circulating among some investors. This refers to expectations that the government will act as a rescuer during stock market declines, similar to former U.S. Federal Reserve Chair Ben Bernanke's intervention during the 2008 financial crisis, when he lowered interest rates and supplied liquidity to prevent stock prices from falling. A 'put option' is a derivative product that protects against losses when stock prices drop, and the term is used metaphorically to describe the government or central bank stepping in to defend the market.

Criticism arises that 'Lee Jae-myung Put' or 'Bernanke Put' can deepen moral hazard among investors, encouraging excessive risk-taking and potentially leading to asset bubbles and risks to the national economy.

The Lee Jae-myung administration recently intervened in the Samsung Electronics labor-management wage negotiations, leading to a tentative agreement. During this process, President Lee Jae-myung stated that the invocation of the emergency adjustment right would be unavoidable if a strike occurred. Prime Minister Kim Boo-kyum mentioned potential economic damages of up to 100 trillion won, but academia and market observers estimate the figure to be around 20-30 trillion won, raising questions about the possible exaggeration of the damage scale. Semiconductor expert Lee Bong-ryeol criticized the government's taboo-like attitude towards the constitutionally guaranteed right to collective action for workers and questioned the scale of losses resulting from strikes.