Wednesday, April 27, 2005

War in Asia is Close

North Korea shut down their nuclear reactor at Yongbyon to harvest the uranium necessary to make nuclear bombs. They are doing all this more or less in the open to signal their intent to test a bomb.

The North Koreans are desperately hoping to get American into bilateral discussions. This latest gambit, in their eyes, makes one on one discussions more likely because the other participants in the Five Party talks will withdraw from the table, leaving only the US and NK to negotiate. China would very much like to pull away, but stays in for fear that leaving the table while Japan remains with the US will make it seem to the rest of Asia that Japan is comparatively stronger. China cannot afford to lose face. Russia stays in to make mischief when they can. So, North Korea will find that the threat of a nuclear test is insufficient to induce a pullout of the participants, so they will feel forced to go the next step, and actually detonate one if they can.

The big drawback for the North Koreans to detonating the bomb is that is opens up the range of acceptable responses by the US to include a pre-emptive nuclear strike. In fact, for the US NOT to respond means that the US would be susceptible to blackmail by the North Koreans, and later by Iran. The US would probably immediately retaliate with a nuclear strike on Pyongyang, possibly from a submarine from inside the Bohai Gulf so that China could not even conceivably claim that the US missile was actually fired at the Middle Kingdom and thereby not risk a response. War in Asia is very close.

Regardless of the US response, a nuclear test by North Korea will cause the US stock market to tank immediately, although such a detonation will not immediately effect the fundamentals of the American economy. The Asian economy will face a serious challenge which will effect the American economy soon after. Sell you stocks and buy precious metals. I have.