The situation in South Korea is now so serious that the government has abandoned all pretence that little bits of tinkering are sufficient to stop the free-fall of the local currency, the massive drop in share prices and a general attack of jitters about the stability of the nation's financial institutions.
Yesterday, a day after the National Assembly showed itself incapable of passing urgently required finance reform bills, the Finance Minister Kang Kyong-shik stepped down to take blame for the crisis and was replaced by Lim Chang-yuel, 53, a former International Monetary Fund (IMF) executive director.
His hand has been strengthened by his additional appointment as deputy premier. The appointment sent a small breeze of optimism through the stock market where the blue chip index, which has been in free-fall in recent weeks, managed a modest 1.6 per cent rally.
Mr Lim has wasted no time in announcing measures which start to address the problems of Korea's chaotic, corrupt and clearly floundering financial system which is attached to one of the world's biggest industrial powerhouses but is light years behind the industrial sector in its development.
According to Mr Lim the nation's banks are saddled with non-performing loans totalling $28.5bn (pounds 17bn). The outlook for recovery is not good unless there is wholesale restructuring of the financial sector and a large measure of government assistance. For a start Mr Lim announced a trebling of the size of the government's bail out fund for financial institutions to $10bn.
Meanwhile, there is relentless pressure on the Korean won, which has devalued by more than 20 per cent in the past year. Yesterday it hit a new low of 1,035 against the US dollar. Mr Lim declared that the government would now allow fluctuations of up to 10 per cent, instead of 2.25 per cent, in effect sending the won into free float.
This measure will contribute to the greater convertibility of the won, which, in the short term, is likely to be something of a liability but in the longer term will contribute to greater internationalisation of the financial sector.
Mr Lim pushed this process along yesterday by announcing a series of reforms that were previously strongly resisted by conservative figures. Among the more important measures are : the opening of the corporate medium and long term bond market to foreign investors and the stepping up of sovereign loan raising overseas.
A move to give greater access to foreigners in the equity markets was also recently introduced but got rather lost in the scramble for the exit by overseas institutions who had been brave enough to deal in South Korean shares.
The South Korean market had been awash with rumours that Seoul would follow the example of the Thai, Philippine and Indonesian governments in seeking IMF assistance to alleviate the financial crisis. However fiercely nationalistic and independent Korea is loath to follow suite.
Mr Lim said yesterday that instead of going to the IMF he was looking for ``strong'' co-operation particularly from the US and Japan, which have extensive ties to Korea. He said that loans from American and Japanese banks would help their economies because of the strength of these ties.
Meanwhile, an emergency eleven-person committee is being established to urgently consider measures to tackle the crisis. Three of the committee's members will be journalists, providing yet another demonstration that Korea tends to do things differently from other countries.
The Korean economy is far bigger than that of Indonesia, Malaysia, the Philippines and Thailand combined. These countries have so far driven the Asian financial crisis. It is daunting to contemplate what may happen if the situation in Korea really gets out of hand.
Despite worries about this in Japan, domestic concerns yesterday were the main reason for the stock market falling over 5 per cent, its biggest single day percentage point decline in almost two years.
The sharp fall followed a two day rally which pushed the market up by 11 per cent as investors looked forward to government intervention to bail out ailing financial institutions. When it was made clear that this was not in the government's mind, sentiment rapidly swung negative.
Elsewhere in Asia markets were dominated by low volumes business as investors shied away from taking positions. The Malaysian stock market, which was badly shaken on Tuesday by what looked like a political motivated bailout of a company controlled by the ruling party, remained shaky with shares falling some 3 per cent in value.
Meanwhile, a fresh plunge in Japan's stock market boosted the dollar and US Treasury bonds. The Nikkei index fell more than 5 per cent to 15,842.46, its biggest drop since the January 1995 Kobe earthquake, after Ryutaro Hashimoto, the Prime Minister, denied that public funds would be used to rescue the ailing banking system.
In New York trading, the dollar surged to six month high of Yen127.34 against the Japanese currency.
The rise in the benchmark 30-year Treasury bond took its yield to the lowest for nearly two years in a pronounced ``safe-haven'' effect.