About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Friday, November 26, 2010

The Koreas

The latest provocation from Kim IJ and son, an artillery and rocket attack on a primarily
residential SK border island, has created more than the usual amount of risk that incidents
on the peninsula usually do. One can hardly be sure, but Kim may want to foster a crisis
wherein Kim the younger can be portrayed as a hero to the folks in NK. In the meanwhile,
SK has upped the ante on retaliation for future attacks from the north, and the US has
dispatched a carrier attack group to the region. This area is infamous for mis-calculation
by the major parties including the US and China. The history of the Korean war shows
a pattern of legendary blunders that flowed from everyone often misreading the intentions
of their adversaries.

Since another attack from NK against SK is likely to trigger a retaliation of significant
consequence from SK, We can hope NK will have the good sense not to overplay its
hand, since there is little reason to believe further actions could easily be retrieved and
settled diplomatically.

The easy and shorter term way out of this standoff is for the US and SK simply to signal
they are willing to buy Kim and son off.  But there could be severe political consequences
for both the SK gov. and the Obama administration if they were to do so right in the
wake of the recent incident, especially since SK's bluff has been decisively called.

The antagonists have bruted about in and around the peninsula without major damage to the
area for over 50 years now, so it is not unreasonable to expect that inaction ahead would
again lead to a dissipation of tensions. Let us hope papa Kim sees it the same way.

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