Wednesday, October 25, 2006

Uh-oh

msn.com mentions the new warning from North Korea to the South, saying:

"South Korea, forced by the United States, has already halted inter-Korea humanitarian projects and is moving to stop cooperation in other areas. The South is even revealing an intention to join U.S.-led military operations aimed at blockade against us," the spokesman was quoted as saying.
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"South Korea’s participation in the U.S. racket to put pressure upon the North ... is a serious provocation leading to a crisis of war on the Korean peninsula," the spokesman reportedly said.

"If South Korea joins the U.S. ploy to pressure us, we will consider it as a declaration of a showdown and take corresponding actions," the spokesman added.


More disturbingly (?), Japan may respond:

Japan’s Defense Ministry could not confirm media reports that Tokyo was considering deploying several destroyers and patrol aircraft to its western and southern coasts to conduct warning and surveillance activities.

Japan’s defense minister, Fumio Kyuma, indicated it all depended on the United States.

"Japan must keep a close eye on what America decides to do and if it goes ahead must cooperate in various ways or carry out activities of its own," Kyuma told a news conference.


I have mentioned previously that Japan's air force is in no way prepared to take action against North Korea. Also, I've mentioned a billion times, though not only here, that if Japan, rather weak at this moment against North Korea, rattles sabers like a 1939 Poland, overrating its defense capacity, it could be calamitous to the world's economy.

I've considered it urgent, for some months now, that some government, financial newspaper, or unofficial body do a study on what the possible impacts of a North Korean conflict with Japan might be upon the world's economic and financial systems (remembering, of course, that North Korea is largely divorced from these capitalist systems, and cares nothing about them, but will care a great deal about prosecuting this war thoroughly and not half-heartedly, should it occur). Consider that Japan is a crucial link in our supply chain. Consider that their holdings of US dollars, which they've just begun to sell off in 2005, have been one of the main props keeping the dollar's value afloat; also that China, North Korea's putative ally, which didn't start selling dollar bonds last year, but only stopped buying them, has also been just as crucial to the dollar's value as well. Though both countries already stopped supporting the dollar last year, what effect will war have, as goods and components can no longer be brought with such safety into and out of East Asia?

What if China takes up with North Korea again, as an ally, as they did a half-century ago? Will China's formidable purchasing power, mentioned in The Economist this week as approaching the United States', be given over to Europe, at the expense of America's already decimated manufacturing sector? Will Taiwan's industry be forced to take up the slack for a hostile China and a Japan under siege, if the latter two are less able or willing to supply us? And, as I've been crying for three years, what if China engineers a precipitate fall in the dollar, by selling with alacrity? Will interest rates rocket, to attract foreign investment to the dollar again? Will US housing fall still further? Will this drop in housing impact the wider US economy?

No crisis on earth has worried me more than North Korea. We need to plan. Not only should the US government write reports on the matter, but someone needs to actually read them.

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