Turmoil in Seoul: What We Know

Summary

WSJ What’s News: "Turmoil in Seoul: What We Know" – December 4, 2024

The latest episode of WSJ What’s News delves into a spectrum of global political upheavals and significant business developments. Hosted by Luke Vargas, the episode provides in-depth analysis of turbulent events in South Korea, shifting political landscapes in France, notable changes in U.S. politics, educational setbacks in America, and critical movements in the business sector. Below is a comprehensive summary capturing all key discussions, insights, and conclusions.

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U.S. Political Shakeup: Trump Considers DeSantis for Pentagon Nomination

Key Highlights:

• Donald Trump's Nomination Dilemma: President Trump is contemplating Florida Governor Ron DeSantis to replace his current Pentagon nominee, Pete Hegseth.
• Pete Hegseth’s Scrutiny: Hegseth faces allegations of sexual assault and other misconduct, which have raised concerns among Republican senators. Although no senator has explicitly opposed him, they anticipate rigorous questioning during confirmation hearings.
• Ron DeSantis' Credentials: DeSantis, a Navy veteran who served in Iraq and at Guantanamo Bay, was initially a contender for the Defense Department role before Hegseth was chosen. His current status remains unconfirmed as his spokesperson has not responded to inquiries.
• Context of Recent Setbacks: Trump experienced a setback when Matt Gaetz withdrew from consideration for Attorney General amid mounting sexual misconduct allegations. Additionally, Chad Chronister recently withdrew from a potential DEA nomination following conservative backlash over his actions during COVID-19 arrests.

Notable Quote:

"Donald Trump is considering Florida Governor Ron DeSantis as his pick to run the Pentagon, possibly replacing his current nominee, former Fox News host Pete Hegseth." – Luke Vargas [01:15]

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South Korean Political Crisis: President Yoon’s Martial Law Declaration and Impeachment Threat

Key Highlights:

• Martial Law Declaration: South Korean President Yoon Suk Yeol declared martial law, a move that swiftly ignited public protests and led to a parliamentary vote to revoke the emergency measures.
• Impeachment Motion: Opposition parties have submitted a motion to impeach Yoon, with a vote expected as early as Friday. Yoon's approval ratings have plummeted to record lows, exacerbated by conflicts within his conservative party and opposition infighting.
• Potential Leadership Vacuum: Should Yoon be impeached, his party faces significant challenges, with no clear successor. Potential shifts in leadership could alter South Korea’s foreign relations, particularly with the U.S. and Japan, and its stance towards North Korea.

Insights from Tim Martin, WSJ’s Korea Bureau Chief:

• Unclear Motives: Yoon has not clearly articulated the reasons behind the martial law declaration, citing threats from "anti-state forces" and concerns over the country's direction but without substantial evidence.
• Historical Context: South Koreans have vivid memories of militarized rule ending in 1987, making Yoon’s modern declaration of martial law a startling and angering action for many citizens.

Notable Quotes:

"There's a gap between those problems and the solution that Yoon seemed to think he needed by declaring martial law." – Tim Martin [04:28]

"To see a modern president attempt something that seemed to be a relic of the past was quite shocking to many South Koreans and angered many of them." – Tim Martin [04:37]

Potential Implications:

• U.S.-South Korea Relations: Yoon’s administration strengthened ties with the U.S., including nuclear consultations and relations with Tokyo. His potential removal could result in a more skeptical opposition towards Washington and less stringent policies towards North Korea.

Notable Quote:

"If Yoon leaves the scene, his conservative party is at a very weak moment." – Tim Martin [05:10]

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French Government Faces No Confidence Vote Amid Budget Showdown

Key Highlights:

• Prime Minister Michel Barnier’s Budget Bill: Barnier attempted to address France's soaring deficit, projected to exceed 6% of GDP, by implementing tax increases and expenditure cuts.
• Marine Le Pen’s Opposition: Leading the far-right opposition, Marine Le Pen is poised to challenge the government’s budget measures, emphasizing protection for the French working class.
• Political Repercussions: The no confidence vote could lead to significant political and fiscal instability. Marine Le Pen’s ability to leverage this vote may test her credibility to supplant France’s longstanding political establishment.

Insights from Noemi Becerb, Paris Correspondent:

• Fiscal Strategies: Barnier's approach aims to curb the deficit exacerbated by pandemic-related spending, inflation from the Ukraine war, and Macron’s tax cuts aimed at stimulating growth and reducing unemployment.
• Le Pen’s Strategy: Le Pen critiques Barnier’s fiscal policies as detrimental to the working class, positioning herself as a defender against economic strain.

Economic Impact:

• Bond Market Reaction: Ahead of the vote, the spread between French and German bond yields reached a decade high, reflecting investor unease over potential political instability and economic management.

Notable Quotes:

"What Marine Le Pen says she wants to do is that she wants to protect the French working class." – Noemi Becerb [07:43]

"The prime minister is trying to address France's massive deficit." – Noemi Becerb [07:14]

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U.S. Education Declines in Math and Science Rankings

Key Highlights:

• TIMSS Results: The Trends in International Mathematics and Science Study (TIMSS) revealed that U.S. fourth and eighth graders have regressed in math and science, now ranking 24th out of 45 in eighth-grade math and 15th out of 63 in fourth-grade science.
• Global Comparisons: Countries like England and Poland have overtaken the U.S. in these subjects, reversing years of progress and aligning U.S. scores with mid-1990s benchmarks.
• Underlying Issues: The decline is attributed to challenges exacerbated by the COVID-19 pandemic, including increased teacher turnover, chronic absenteeism, and rising student misbehavior.

Insights from Matt Barnum, K12 Education Correspondent:

• Pandemic Impact: The abrupt shift to remote learning and subsequent return to in-person education left lasting disruptions that have hindered student performance.
• Systemic Challenges: Persistent issues within the education system have been magnified, leading to the observed declines in international rankings.

Notable Quotes:

"US Students fell even further behind other countries." – Matt Barnum [09:23]

"Even after schools returned to in-person learning, there have been different challenges that American schools have faced." – Matt Barnum [09:23]

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Business Developments: Wells Fargo, Salesforce, and Federal Reserve Updates

Wells Fargo Headquarters Relocation:

• Move to East Coast: Wells Fargo is planning to sell its San Francisco headquarters, shifting its primary operations to New York and Charlotte, North Carolina. This move signifies a strategic realignment, although a spokesperson affirmed the ongoing importance of the San Francisco office.
• Historical Significance: The San Francisco office, once a central hub housing key executives and corporate history museums, marks a significant shift in the bank’s operational base.

Salesforce’s Stock Surge:

• Revenue Outlook: Salesforce experienced a notable increase in shares during after-hours trading following the company's announcement of an optimistic full-year revenue projection.
• AI Innovations: The company’s enhanced sales growth was partly driven by its advanced AI agent system, positioning Salesforce as a leader in business software innovation.

Federal Reserve’s Jerome Powell Speaking:

• Interest Rate Speculations: Federal Reserve Chair Jerome Powell is scheduled to participate in a moderated discussion in New York, where investors anticipate insights into potential interest rate adjustments. Market bets on an interest rate cut later in the month have been intensifying.

Notable Quotes:

"Salesforce shares have jumped in off-hours trading after the business software provider bumped up its full-year revenue outlook." – Luke Vargas [09:58]

"Federal Reserve chair Jerome Powell will be in the spotlight this afternoon when he's set to speak in a moderated discussion in New York." – Luke Vargas [09:58]

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Conclusion and Forward Look

The episode of What’s News underscored significant political instability in South Korea and France, signaling potential shifts in international alliances and economic policies. Concurrently, the U.S. faces internal challenges in politics and education, while major business entities like Wells Fargo and Salesforce navigate strategic transformations. Investors and global citizens alike are advised to stay attuned to these developments, as they hold substantial implications for both domestic and international landscapes.

Final Notable Quote:

"Investors will be watching for any hints on the likelihood of an interest rate cut later this month, bets around which have been rising." – Luke Vargas [09:58]

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Produced by: Daniel Bach and Kate Bullivant
Supervising Producer: Christina Rocca
Host: Luke Vargas

Thank you for tuning into WSJ What’s News. Stay informed with us for the latest updates shaping your world.

Transcript

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[Luke Vargas]

Donald Trump weighs a shakeup in his pick to run the Pentagon as Pete Hegseth faces scrutiny in Washington. Plus the latest from South Korea after a tumultuous 24 hours for the country's.

[Tim Martin]

Politics, Most people you would encounter in South Korea have painful memories of the era of militarized rule. So to see a modern president attempt something that seemed to be a relic of the past was quite shocking to many South Koreans and angered many of them.

[Luke Vargas]

And France's government faces a no confidence vote spurred by a budget Showdown. It's Wednesday, December 4th. I'm Luke Vargas for the Wall Street Journal, and here is the AM edition of what's News, the top headlines and business stories moving your world. We are exclusively reporting that Donald Trump is considering Florida Governor Ron DeSantis as his pick to run the Pentagon, possibly replacing his current nominee, former Fox News host Pete Hegseth. Republican senators are concerned over mounting sexual assault and other allegations that Hegseth is facing, and while none have publicly said they would oppose him, they have warned him that he'd face a grilling during public confirmation hearings. DeSantis, who served as a Navy lawyer in Iraq and at Guantanamo Bay, competed against Trump in this year's GOP presidential primary and was on an early list of candidates to run the Defense Department before Trump chose Hegseth, whom he still publicly backs. A spokesman for DeSantis didn't respond to a request for comment. Last month, Trump was dealt a setback when former Florida representative Matt Gaetz withdrew from consideration to be attorney general, under pressure in the midst of sexual misconduct and allegations. And yesterday, the president elects pick to run the Drug Enforcement Agency. Florida County Sheriff Chad Chronister also pulled his name from consideration after coming under attack from conservatives over the arrest in 2020 of a pastor who defied COVID 19 restrictions. A day after South Korea's president imposed a short lived period of martial law, prompting immediate protests and a swift vote by parliamentarians to undo the emergency measure, Yoon Suk Yeol's 10 tenure in office hangs in the balance. That's as opposition parties in the country today submitted a motion to impeach him that could receive a vote as early as Friday. And here to make sense of a historic 24 hours in South Korean politics, I'm joined by our bureau chief in Seoul, Tim Martin. Tim, before we look at this impeachment motion and the potential significance of a leadership change in South Korea, do we have any clearer sense now of why Yoon yesterday declared martial law? It was a pretty abrupt and destabilizing announcement, to say the least.

[Tim Martin]

We don't. Unfortunately, only Yoon himself can really provide that granularity. There's lots of speculation. There's an awareness that Yoon is unpopular. His approval ratings fell to record lows recently. He's dealing with a very contentious opposition party and infighting with his own conservative party. The public reason that Yoon Seok Yeol has said he declared martial law was because his political enemies are anti state forces and he's worried for the country's future. But why does he feel that way? He hasn't really articulated the true underpinnings beyond listing a budget fight, beyond worrying about the direction of the country that it's becoming too leftist. But there's a gap between those problems and the solution that Yoon seemed to think he needed by declaring martial law.

[Luke Vargas]

And Tim, the rapid response we saw in opposition to that declaration yesterday is reflective, is it not, of South Korea's very recent history when it comes to martial law? Right.

[Tim Martin]

Very recent. Most people you would encounter in South Korea have vivid memories, painful memories of the era of militarized rule that stopped only in 1987. So to see a modern president attempt something that seemed to be a relic of the past was quite shocking to many South Koreans and angered many of them.

[Luke Vargas]

Indeed. And now Yoon's political future is on the line. What should we be watching for in the coming days? And should he end up being impeached, could we possibly see changes in South Korea's leadership that would potentially have a bearing beyond its borders?

[Tim Martin]

We're going to get a vote pretty soon on whether South Korea's legislature wants to impeach Yoon now. The opposition party and their allies are a few votes short of 2/3 of the 300 seats at the National Assembly. Given how unpopular Yoon is currently and that nearly 20 lawmakers of his own ruling conservative party voted to halt this martial law, there are at least some indicators, right, that it's not just a purely partisan issue. Now, if Yoon leaves the scene, his conservative party is at a very weak moment. There is a frontrunner with the opposition leader, Lee Jae Myung, but it's such a tenuous spot in South Korean politics. The citizens don't really like anyone from the two major parties. But someone has to win. At the end of the day, Yoon's removal from office could bring a lot of variance in the South Korea U.S. relationship. Yoon was an avowed fan of the U.S. and President Biden. He sang American Pie at the White House. He strengthened ties with Tokyo. He won deeper relationships with the US on nuclear consultations, for instance. If Yun and his party are out, that opens the door to an opposition that has a much more skeptical look of how they should encounter Washington, Tokyo and is less inclined to take a hard line with North Korea.

[Luke Vargas]

I've been speaking with the Journal's Korea bureau chief, Timothy Martin in Seoul. Tim, thanks for staying up for us. Appreciate the update as always.

[Tim Martin]

All right, cheers.

[Luke Vargas]

Coming up, more political uncertainty in France as Marine Le Pen prepares to square off with the government. And we'll look behind the numbers as American students lose ground in math and science rankings compared to their global peers. That's after the break.

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[Luke Vargas]

French lawmakers will vote later today in a pivotal no confidence motion that threatens to plunge France into political and fiscal uncertainty. The party of far right opposition leader Marine Lapis Penn holds the balance of power in France's splintered National assembly, and she has said that she's prepared to topple the government after Prime Minister Michel Barnier pushed through a budget bill without buy in from lawmakers. Noemi Becerb covers French politics for the Journal from Paris.

[Noemi Becerb]

The prime minister is trying to address France's massive deficit. In recent years, France's debt has increased dramatically, in part because we've spent a lot of money trying to soften the impact, first of the COVID pandemic and then of the inflation triggered by the war in Ukraine. But also Macron has implemented massive tax cuts in order to stimulate growth and reduce unemployment. And that has worked in part, but it has also dramatically increased France's deficit. And what Barney is trying to do is to address this massive deficit, which is expected to reach more than 6% of GDP. And to do that, he's increasing taxes, he's also reducing spending. And what Marine Le Pen says she wants to do is that she wants to protect the French working class.

[Luke Vargas]

Chasing power the standoff will test whether Le Pen has the credibility to ultimately replace decades of rule by France's political establishment, including President Emmanuel Macron, whose term ends in 2027. Macron and his allies have long argued that Le Pen lacks the knowledge to manage the eurozone's second largest economy and that her rise to power would shake investor confidence. Ahead of the vote, the spread between benchmark French and German bond yields stood at a more than decade high, signaling invest unease Results from a closely watched international exam show that American fourth and eighth graders are slipping in math and science, wiping out years of gains and putting scores back in line with where they were in the mid-1990s. Matt Barnum covers K12 education for the Journal.

[Matt Barnum]

The results are not entirely surprising. We know from a great deal of data that US Students have been struggling since the pandemic upended American education, in that even after schools returned to in person learning, there have been different challenges that American schools have faced. Teacher turnover has gone up, chronic absenteeism has gone up. Student misbehavior has gone up. So these results mostly confirm what we already know. But they add one more extra discouraging factor, which is that US Students fell even further behind other countries.

[Luke Vargas]

According to the Trends in International Mathematics and Science study, known as TIMSS, the US now scores 24th out of 45 education systems in 8th grade math and 15th out of 63 in 4th grade science. Moving ahead of the US were England in science and Poland for both subjects in fourth grade. In a Journal exclusive, we report that Wells Fargo is preparing to sell its San Francisco headquarters as the bank shifts its power base to east coast hub New York and Charlotte, North Carolina. Once an influential hub, the San Francisco office previously housed key executives and the last of the company's corporate history museums. A Wells Fargo spokeswoman said the city remains important to the bank. In market news, Salesforce shares have jumped in off hours trading after the business software provider bumped up its full year revenue outlook. The company's sales growth outpaced analysts expectations in the third quarter, driven partly by its hotly watched AI agent system. And Federal Reserve chair Jerome Powell will be in the spotlight this afternoon when he's set to speak in a moderated discussion in New York. Investors will be watching for any hints on the likelihood of an interest rate cut later this month, bets around which have been rising. And that's it for what's news for Wednesday morning. Today's show was produced by Daniel Bach and Kate Bullivant, with supervising producer Christina Rocca. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.

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