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Mark's Market Blog

#430 8-13-17: North Korea

By Mark Lawrence

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On "news" that N.Korea will nuke Guam and Trump will nuke N.Korea, stocks plummeted almost 2%. Almost. We're still on a record setting pace for longest time since the last 5% correction and longest time since the last 10% correction. Stocks are incredibly complacent.


S&P 500 February 18 2017 to August 11 2017

Last week I noted that the Chinese army was massing along the disputed Indian border and threatening war. A couple days later India evacuated a nearby village. Friday India moved some serious troupes into the area. If China wants a war, it appears there are neighbors willing to accommodate them.

Last week Congress effectively started a trade war with Russia. Saturday Trump warned China that the trade war with them starts on Monday. No one wins trade wars, and all too often they lead to shooting wars. Remember I've noted that because of aborting female fetuses, China has more 20-something unmarriageable men than California has people? China is already itching for a shooting war with someone.

A bunch of norks gathered in their main square to protest the awful americans. When Americans protest, everyone is wearing something different, there's dozens of incomprehensible signs, and everyone is milling about and shouting. The norks are obviously far more disciplined. Nice straight lines. Everyone dressed alike. One sign, and it's large and completely professional. I'm impressed. In a couple months the movie "A Wrinkle in Time" is coming out. That movie has something to say about this behavior.

What's going on with N.Korea? The norks are playing a very dangerous game, trying to separate the US from S.Korea. By making nukes they hope to put the south in a position where they either have to follow us into a war that's very destructive to their country, or sue for peace, which will entail throwing out the US. China is perfectly content to see this unfold, as the US has been using the norks for several generations as an excuse to occupy S.Korea and use that as a major base for our containment policy on China, the same policy we used to keep the USSR out of the middle east and western europe. They would love to see the US tossed out of Korea. China is S.Korea's main trading partner, so in the event of a war the s.koreans get their main city - Seoul - blown up and lose a huge amount of trade. Greater Seoul accounts for roughly half of S.Korea's population and more like two-thirds their economy; a massive bombardment would cripple S.Korea and knock 1% off world GDP.

Trump doesn't want to be thrown out of Korea, nor does he want the norks to have the ability to strike our mainland. He, and the deep state, are leaning heavily towards a surgical strike. Where this leads, no one knows. The dream is we take out their nukes and reactors and they don't respond. In this dream Kim realizes escalation = death, acceptance = live another day. There are maybe half a dozen people in n.korea who have a clue what kim is thinking, no one outside n.korea has even the slightest clue.

Something you'll never hear in our press is the norks have many times vowed not to be the ones to fire first. Of course. They would lose any war and they know that very well. Their logistics stink - our navy makes a blockade, no oil comes in, the route to China is over mountains, they will not get resupplied in any decent amount. The norks just want to use the threat of war to drive a wedge between the US and S.Korea. Their statement that they will launch missiles at Guam was a mistake - we would happily use that as an excuse. And their statement was misreported in the US press: they said we flew bombers ten kilometers from the DMZ, so they will drop missiles in the ocean 35 km from Guam. It was a threat of a show of force, not of an attack. Their statement on never giving up nukes was also misreported: the original korean statement was one sentence, reported in the US press as two sentences. What they actually said was they will pursue nukes until the US satisfies their security concerns by withdrawing from Korea, etc. The "etc" is unclear. The american public is being led around by the MSM like ignorant sheep. The MSM also wants a war.

We're putting THAAD missiles in S.Korea. These are almost useless against the norks, but their powerful radars and missiles are a direct threat to China's strike ability. This is a message for China, not for the norks.

Do the norks really have nuclear strike capabilities? Remember, they're attempting to duplicate 1950s technology, things the soviets made using vacuum tubes, and the norks have the entire Intel and National Semiconductor catalog available. Yah, they have nuclear strike. And by far the easiest strike is an EMP, which some think would kill 85%+ of the US population and cripple us for several generations. I happen to agree with this. If you want to hit LA, you need your missiles to re-enter the atmosphere, which requires massive heat shielding and all your devices to be able to withstand the enormous shaking. An EMP gets blown up at 100,000 to 300,000 feet, your missile never has to re-enter. Personally I think the norks having ICBMs and nukes is completely unacceptable, and I would go for the surgical strike. Even knowing the risk to the S.Koreans. I'm an American first. The Russians and Chinese have EMPs etc, but they know our submarines would take them out too. Kim doesn't care a bit if we take out much of the n.korean population. If he thinks he's dying, I think there's a good chance he'll decide to take the US with him. While I think such a decision would lead to huge repercussions in the afterlife, it still leaves my grandchildren and my country dead.

Why don't we talk and settle? This is extremely unlikely. Bill Clinton signed a treaty with the norks - they were given two reactors and $5 billion in return for giving up missile and nuke development. The norks reneged in about a year. (Don't think Hillary would find a peaceful solution here - much as I hate her, she's not anywhere near dumb enough to be fooled twice.) On the norks side, they have watched Gaddafi gave up nukes, pay reparations and make peace, then get killed anyway; and they also watched while Saddam gave up nukes and made peace and wound up dead anyway. Neither side trusts the other in the slightest.

I believe Trump, faced with the options of leaving the US mainland at nuclear risk or attempting a surgical strike, will opt for the strike. The calculus here is pretty simple: would you rather lose 10 million americans, or 10 million koreans. In this he has the backing of the entire government, they want this too. The only question is the justification. Historically the US either produces a false flag or goads the other side into striking first. The norks know this very well and will attempt to not be drawn into something stupid. Unless they shoot missiles near guam, in which case you'll hear how their stupid missiles missed and that we've had enough.

This "crisis" is not about Kim's or Trump's personalities, it's about our long term foreign policy of containing China and the safety of the American people.

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