Real Debt and Desperation Behind Netflix’s “Squid Game”
The calling card, thrown with expert precision from a motorcycle as she pulled away, landed at Park Chui-woo’s feet as he neared the end of his wits.
The brightly colored card advertised quick loans with low interest rates, especially for small business owners. At the peak of all other lines of credit and with payday looming for employees at his small coffee shop chain, Park dialed the phone number.
With that call three years ago, he entered the underground world of illegal private lending that tempt desperate South Koreans, then traps them with crippling interest rates, oppressive collection methods and a slippery slope leading to more debt.
Soon tattooed motorcycle skinheads showed up to chat with Park. They put down a wad of bills and started going through his store daily to collect interest, at an annualized rate of about 210%.
“You really don’t have any other choice,” said Park, 45, who has been borrowing from private loan sharks for about three years and had to increase the sum after the COVID-19 pandemic ravaged sales in his stores. cafes. “It can send you into a sand trap.”
Debt is the main motivation for characters in the Netflix hit “Squid Game,” a dystopian drama series in which 456 heavily indebted participants fight to the death – literally – for a chance of winning 45.6 billion won (approx. $ 40 million).
The South Korean series resonated around the world, exploiting growing economic fears and becoming the most popular version of the streaming service to date, with 111 million views within the first 28 days. At home, however, the show’s popularity has been inseparable from the country’s very real crisis of growing household debt, gaping inequality, and a weak social safety net with significant blind spots.
South Korean household debt hit record levels in the second quarter of 2021, jumping more than 10% from the same period last year. Citizens in their 30s are the most in debt, having borrowed on average more than 260% of their income, according to the Bank of Korea. Soaring house prices and soaring stock markets over the past year have fueled borrowing, prompting young adults who see less promise in traditional employment and have turned to massive investments in stocks. or cryptocurrencies.
Official statistics fail to capture the illicit world of private lending that Park and “Squid Game” protagonist Seong Gi-hun turned to when they could no longer borrow from banks and legally registered lenders, including loans are capped by law at an annual interest rate of 20%.
At the start of the series, Seong, a laid-off autoworker plagued by gambling addiction after unsuccessful attempts to start a business, is chased by black-suit, knife-wielding lenders who force him to sign. a commitment to give up a kidney. and an eye if he doesn’t pay back in a month. Seong, played by Lee Jung-jae, then enters the “Squid Game,” where each character’s debt is revealed, and childhood games like “Red Light, Green Light” turn brutal.
âAll of you in this room are in crushing debt and are now on the edge of a cliff,â one gambling runner told those gathered. “Do you want to go back and live your pathetic life running away from creditors?” Or will you seize the last opportunity we offer you? “
South Korea’s occult lending activity is difficult to quantify but appears to be pervasive. Cards and flyers promoting cash are easily visible on metro cars, bus stops and street lights. The government regulator, Financial Supervisory Service, received nearly 300,000 reports of illegal loan announcements in 2020. This is an increase of around 25% from the previous year, no doubt boosted by pandemic-related layoffs and trade restrictions that have pushed already vulnerable people deeper into finance. straits.
The Seoul-based industrial group Consumer Loan Finance Assn. said it negotiated over 5,000 high interest loan cases reported last year, in which the average annual interest charged was 401%. In one case in Gyeonggi province, which includes parts of the metropolitan area surrounding Seoul, interest on a short-term loan was 3,338% annualized, police said.
âDeadly interest rates are being charged below the surface,â said Seo Bo-kuk, senior executive at the Consumer Loan Finance Assn. “It becomes a domino effect, and a lot of people end up turning to it over and over again.”
Contracts that require a kidney or eyeball instead of reimbursement are a bullying tactic of yesteryear and are no longer common, according to industry officials. Even so, they are portrayed in “Squid Game” and other TV shows and movies, sparking fear among those in debt to slanderous lenders. South Korea’s richest man, Seo Jung-jin, founder of biopharmaceutical company Celltrion, said in interviews that he had to give up his organs as collateral to borrow from loan sharks to keep his business afloat following the Asian financial crisis of the early 2000s.
âMy debt would not be covered even if I sold all my organs,â said Park, the owner of the cafe, who noted that his lenders had never made such promises.
Nowadays, lenders demand the phone numbers of relatives and friends of debtors in order to harass them if the debt is not paid on time, or if they show up at the work places of the debtors, according to the accounts of the debtor. industry. Some go further. In 2017, a 27-year-old private lender from Incheon City was sentenced to five years in prison for sexually assaulting a woman who owed him about $ 8,500.
“People turn to it knowing that interest rates are high,” said Jung Deok-gil, an investigator with the special division of the judicial police in Gyeonggi Province. “They use it because they desperately need the money but don’t have the credit for it.”
Park said illegal creditors were a lifeline in paying employees and keeping stores open. Earlier this year, he managed to wean himself off loans but returned to it a few months ago when prolonged pandemic restrictions and other complications plagued his business. At present, he has two 60-day loans of 20 million won (approximately $ 17,000) each. In total, he has about $ 850,000 in debt, legal and otherwise.
âI have no bitcoin, no stocks, no real estate, no inheritance,â he said. “For someone like me, in the South Korean financial system, we cannot do without private loans.”
So far he’s barely holding up – relieved to have made October pay. He didn’t have time to watch “Squid Game” or think about it beyond the show’s headlines. The reality in South Korea, for him, is quite dystopian.
âOnce COVID-19 is over, it could be a whole different game,â he said. “All the social issues that we swept under the table and pushed back during the pandemic – it’s a huge time bomb.”