I muttered to myself, "Financial crisis..."
The moment I heard Yuri's words, I felt a chill. That's how much weight the term carried.
But why a financial crisis, not an economic crisis? The reason is that the global economy has been built to run on endless monetary expansion and debt.
In the case of the 2008 global financial crisis, the problem started with real estate. But a real estate crisis doesn't mean buildings or houses collapse. They remain the same before and after the crisis. What changed were the numbers representing their value.
When real estate prices plummeted, people couldn't repay their loans on time. Commercial banks that issued the loans and investment banks that created and bought related derivative products went bankrupt one after another.
Countless people lost their homes, lost their jobs, and ended up on the streets. Factories shut down, and goods in shops went unsold. Long lines formed in front of soup kitchens.
Although I was young then, the news reports I saw at the time remain vivid in my memory. What exactly had those people done wrong? They were likely just working hard for their families.
"A financial crisis will come someday."
Boom and bust cycles are inevitable in a market economy system. Countless economists have researched ways for booms to last forever, but no such method has been found yet. Currently, the best approach seems to be managing risks before a crisis hits and quickly implementing countermeasures when one occurs.
Alan Greenspan, a famous economist who served as Chairman of the Federal Reserve Board (FRB), left behind the famous quote, "Take away the punch bowl just as the party gets going." This means the central bank must prevent the economy from overheating excessively.
A glamorous and wonderful party makes everyone happy. But the party must eventually end. The later the party ends, the worse the hangover the next day. Someone needs to step up, clear away the champagne glasses guests are holding and the plates on the tables, and announce that the party is ending and it's time to go home.
The problem is that no one wants the party to end. Everyone prefers boom over bust, expansion over austerity, and rising prices over falling ones. Even Alan Greenspan, who uttered those words, failed to remove the punch bowl in time.
Yuri leaned forward and asked, "When do you think it will come, Sunbae?"
I chuckled. "Well, if I knew that, wouldn't everyone be able to make money?"
Truly great fortunes are born after famines pass.
When a crisis hits, everyone suffers losses, whether they have a lot of money or little. Ordinary people have no choice but to sell their assets to survive the immediate crisis. But the wealthy have the means to endure even during a crisis.
The rich buy up stocks and real estate being dumped at bargain prices. When the recession ends and recovery begins, the collapsed assets return to their original value. Thus, the rich get richer, and the poor get poorer. In fact, after the IMF crisis [in Korea], the middle class collapsed, but the number of wealthy individuals increased significantly. This is why financial crises are even more devastating for ordinary people.
Unlike in the past, financial crises in modern society manifest in more complex forms.
If the global financial crisis had solely been about loans, it might not have escalated to such a severe level. However, investment firms, seeking greater profits, created and sold derivative products like ABS (Asset-Backed Securities), MBS (Mortgage-Backed Securities), and CDOs (Collateralized Debt Obligations), which ultimately acted as time bombs within the financial system.
Humans, as always, create things they don't fully understand or handle well.
America's solution to the crisis was to print more money. They lowered the real interest rate to zero percent, and when that wasn't enough, they implemented quantitative easing, recklessly printing dollars.
An increase in the money supply usually leads to soaring inflation. But the dollar is the reserve currency. The dollars printed by the US spread throughout the world, and inflation was exported abroad.
Emerging economies had been enjoying the party fueled by the dollars the US had been distributing. They knew the party would end someday, but everyone panicked when the US suddenly started clearing the punch bowl.
China's economic growth rate dropped significantly. Argentina defaulted again and had to turn to the IMF for help. Turkey is experiencing a severe foreign exchange crisis. The currencies of some emerging countries plummeted by half, forcing them to raise benchmark interest rates to 40-50% to stem the fall.
"Some people see that as a precursor to a financial crisis, don't they?" Yuri asked.
"Don't worry too much about it. Extreme crisis theories always attract attention."
When a financial crisis hits, it often feels like the end of everything. During the IMF crisis, people thought Korea would collapse. During the global financial crisis, it seemed the financial system itself would end. But all those crises were overcome, and the global economy continued to grow.
Ellie smiled and said, "In the end, positivity triumphs over pessimism, right?"
Yuri nodded. "That's right, Unni."
I sipped my beer and thought.
People have a firm belief that the state system and the economic system will not collapse. That's why they willingly take out loans to buy houses and cars. Someone living in a developed country probably doesn't live in fear that a World War-level conflict will erupt someday and destroy their lives. However, the destruction of daily life due to a financial crisis is entirely possible. While war is an abstract and seemingly vanished threat, a financial crisis is a clear and present danger.
How robust is this system that we believe to be stable?
***
Several months had passed since CarOS launched the AD3 and AD4.
During that time, autonomous electric vehicles changed the world. A noticeable change was the reduction in accident rates. 90% of accidents involving CarOS cars were caused by other vehicles hitting them, and the remaining 10% were due to external factors. There hasn't been a single accident caused by system error. If an issue arose, the car would stop beforehand or transfer control to the driver. Performance was also improved through periodic software updates.
Previously, when the AD1 and AD2 were launched, there were many articles warning about the dangers of autonomous driving technology, but such talk has ceased.
While ramping up production capacity to meet the flood of orders, CarOS launched another new vehicle: the autonomous truck, T1.
Strictly speaking, it wasn't entirely new; it was an existing truck model produced by Eunsung Truck (which CarOS had acquired), now equipped with the autonomous driving system. Several successful unmanned driving and platooning tests had already been completed.
The basic system is the same as the AD series, but there are some differences in the modules due to the vehicle's larger size and different shape. Given its size, any accident could lead to a major disaster, so safety features were significantly enhanced.
Even before the launch, companies like AMZ, Walmart, and FedEx had pre-ordered hundreds of units and readily paid deposits.
Logistics demand had been steadily increasing due to economic development and the growth of e-commerce. However, the logistics industry suffered from severe labor shortages due to poor working conditions and low wages, and the aging driver population and overwork were serious problems. Major accidents caused by drunk or drowsy driving were frequent. There was even a sense of crisis that the logistics chain could break down at any moment.
Autonomous trucks offered a solution to these problems all at once, potentially revolutionizing logistics. Trucks moved in lines like train cars, and only one driver needed to be in the lead truck for contingency situations.
Labor costs constitute the largest portion of truck transportation expenses. While varying slightly by company, labor costs typically account for 40%, and fuel costs around 20%. It was confirmed that not only could labor costs be reduced by a factor of five, but fuel efficiency could also be improved by over 20% due to reduced air resistance and constant speed driving.
Daryl stated with conviction, "CarOS's T1 will significantly reduce logistics costs and dramatically decrease accidents."
CarOS partnered with Tenway to create a subsidiary, entering the logistics brokerage service market while also directly hiring drivers. They agreed with the drivers' union to improve working conditions for truck drivers, as well as provide retraining and priority hiring for displaced workers.
Believing profitability would improve due to reduced labor costs, the stock prices of related companies rose significantly.
As always, change arrives faster than people think. And people adapt to that change with surprising ease.
In the era of film cameras, people didn't perceive the inability to see results immediately or the need to take film to a photo lab for development as inconveniences. Those were simply the expected procedures. But the advent of digital cameras made those standard procedures feel inconvenient. Once people adapt to change, it becomes difficult to revert to the old ways.
Before CarOS launched the AD series, the prevailing prediction was that autonomous electric vehicles would struggle to completely replace existing cars. But now, it was clear. Just as the automobile made the horse-drawn carriage obsolete, autonomous electric vehicles will drive traditional internal combustion engine cars to extinction.
Another newly opened market was car infotainment.
Driving requires intense concentration. Looking away for even a second or two can lead to a fatal accident. But with autonomous cars, the driver doesn't need to pay attention. They simply need to sit there, ready for contingencies. Unlike before, the travel time could now be used for work, studying, or watching movies and dramas.
Related startups popped up like mushrooms, and existing companies also jumped into the fray.
Faceit entered the market leveraging its experience from the pornography industry. Content consumed by customers was collected as big data by CarOS, analyzed using Faceit's algorithms, and used to provide recommendations. Similar to operating systems on computers or smartphones, this opened up a path to generate revenue through content sales. If nurtured properly, it could become another cash cow.
Seosung Electronics was actively working to integrate its smartphones with vehicles. Using a smartphone like a remote control to start the engine, preheat the car, and input driving routes was basic (other automakers did this too), but they also enabled various tasks typically done on smartphones to be performed in the vehicle.
Gooble and MS announced their active cooperation in building the ecosystem, and Disney agreed to provide its content.
For a long time, the world's largest market capitalizations belonged to IT companies: Gooble, Npple, AMZ, MS, Facenote, etc. In terms of technological advancement speed and operating profits, automakers were no match for IT companies.
Autonomous electric vehicles, moving with electricity and equipped with various electronic devices after the barriers of engines and transmissions were removed, existed at the intersection where IT companies and automakers met. Therefore, IT companies had long sought to enter the auto market using their vast financial resources. But now, the situation was reversed.
A good company must have clear core business objectives.
CEO Daryl stated in an email to employees, "We have one goal: to provide people with the convenience and joy of mobility." This simultaneously defined their business scope as mobility and signaled their intent to dominate the entire mobility market.
There was still much to do: conquering overseas markets, launching electric trucks, entering the ride-sharing business, and more.
Good companies attract good talent, and good talent attracts even better talent. CarOS drew in diverse talent, including many who moved from Npple, Gooble, and Nikola.
CarOS, which started as a small startup, had grown into a mega-corporation standing shoulder-to-shoulder with IT giants.
***
Regardless of CarOS's success, not a single dollar flowed back to OTK Company.
In fact, CarOS had never paid a dividend since we acquired it. This was true whether they were making good money or not. Daryl and I agreed that even if it meant sacrificing immediate profits, we needed to continuously expand our business scope. As some expert said, there's no competitor more fearsome than a large corporation determined not to make a profit.
In such cases, companies usually need to continuously receive investments through bond or share issuances, but CarOS didn't need to worry about that. The holding company could provide funding whenever needed.
New technology creates new demand and opportunities. In this process, some companies grow anew, while others decline and disappear.
Korea, like the US, decided to allow autonomous driving within limited scopes, and the Ministry of Land, Infrastructure and Transport amended relevant laws. They also approved the import of CarOS's AD series.
Two practical reasons contributed to this. First, having seen China and Japan get successively beaten up by the US over automotive issues, they decided to proactively comply. Second, Eunsung Motors was collaborating with CarOS. Since they were already building an EV industrial complex domestically and Eunsung Motors was also undergoing a major transition to autonomous EVs, there was no reason to hinder the process.
The first batch of 300 imported units arrived in Korea through Pyeongtaek Port. The first buyer of an AD3 was Chairman Im Jin-yong of Seosung Group.