North Korea has done it again. This time, the intermediate ballistic missile flew over Japanese airspace. Financial markets from Asia to America dint like it but gold rose the highest this year to $1,326 an ounce. If a war is brewing, then gold as an investment can beat them all.
Many experts in the financial industry have been warning of a major correction in various asset prices in the financial markets. There is no good reason to doubt these experts. Everything seems to be in a bubble and as usual, politicians and policy makers are 'on top of their game’. Look at the stock markets, bond markets, forex markets and the real estate markets around the world. They have all hit all time highs but you cannot say the same of the global economy.
Many reasons have been given for this impending big correction that some experts have called the mother of all corrections. The U.S. is almost always cited as the number one reason. With the latest government debt to GDP at 106%, it is no longer farfetched to imagine that the U.S. may one of these fine days roil financial markets by defaulting on payment of some of its public debt.
The E.U. is usually mentioned soon after the U.S. Greece is an old problem that has never gone away but an equally big problem is the E.U’s banking system. Many banks in the E.U., especially in Italy, are weak and it is feared that some E.U. member countries are not in a position to bail out weak banks under their supervision if bailouts become the only solution. A banking crisis in Europe can precipitate a major asset price correction in the global financial markets.
China is another one. The corporate debt of the second largest economy of the world is 156% of GDP and China is also the world’s largest creditor. Many countries of poor credit standing including the U.S. are heavily indebted to China. China must really be praying for the status quo to be maintained. It cannot afford any internal or external problems. No wonder it is now at the forefront of every ‘good thing’ out there including climate change and urging for peaceful solutions to the North Korean problem.
Then here comes the black swan and the hot potato. As if the world does not already have enough problems, a belligerent North Korea fired a ballistic missile over Japan and roiled financial markets from Asia to America. But nature is just taking its course. How should a country besieged by sanctions and constantly threatened by war games from hostile and very powerful countries behave? On the flip side, how should sovereign countries threatened by a ‘rogue’ country react?
War between the U.S. and North Korea is inevitable. It must happen. Otherwise how will this situation resolve? The U.S. is conducting endless military drills with South Korea and North Korea is firing or is it testing missiles endlessly. No one is talking or listening to the other.
Kim Jong Un is either very smart or is the dumbest leader of to ever reign. Smart in the sense that the incessant missile tests are a race to the finish line of what he has been cooking for all these years. It appears that he is proving to himself and to his enemies of course, that he has perfected the technology that can deliver hell to his enemies wherever they are. So his enemies will be well advised to keep off his country.
He may be dumb in the sense that if all this firepower is not backed by some potent radioactive heat then he is mince meat. His nuclear powered enemies have the might and the will to grind him into mince meat and even incinerate him into super hot radioactive air. Their only deterrent is his ability to respond in equal measure. Many of us may have been wondering how mad this mad man is but it is possible Kim Jong Un has just been surviving the best way he knows how. The man is still alive today despite all his ‘epic madness’.
My assessment is that the occurrence of this war is a foregone conclusion. If you have ever eaten hot potatoes for lunch, then you have to admit that as much you can brag about demolishing the entire pile, the hot potatoes scored some points on you by singeing the insides of your mouth and throat and you probably had to skip dinner.
What could be happening right now is the ironing of the finer details of the war. The future of North Korea without Kim Jong Un is a key consideration here. Reunification with South Korea seems to be a natural outcome but North Korea shares a border with China and Russia and the U.S. has military bases in South Korea. Reunification will mean that China and Russia will now share a border with a country that hosts U.S. military bases which is simply not acceptable to both China and Russia.
But this can be a quick fix for Trump. He has on various occasions lamented about the wasteful nature of the expansionist empire tendency and democracy building endeavors of previous regimes. An agreement with China and Russia to let him 'swat' North Korea and then close the U.S military bases in South Korea is not something he looks like he can think a lot about. An alternative agreement is to have China and Russia have the greater say in determining the future of a post Kim Jong Un North Korea.
The other fine detail is tactical. If indeed North Korea is a hot potato, how can the war be fought without throwing the world into an apocalyptic nuclear crisis? Amy generals and electronic engineers are definitely hunkering down somewhere trying to figure this out. To succeed, they have to figure out how to electronically jam or corrupt North Korea’s nuclear capability to allow for an invasion without the danger of a radioactive retaliation.
This is how close this war is to being fought. Even Trump himself took time to respond to this latest provocation from North Korea lest the media calls him an all talk and no action president. He is definitely up to something. He is not about to lose his tough guy image. I can’t imagine what else is cooking in the war kitchens in North Korea and the U.S.
All I can say for now is that gold investors are really appreciating their wisdom.
Kim Jong Un has confirmed that North Korea is indeed a hot potato. The rest of the world has two choices to make; either to respect North Korea's nuclear power status or wage a vicious war against North Korea to strip it off its new found status