Tuesday, October 9, 2012

Economic Turmoil and Military Crisis

Events are moving very fast now, suggesting that substantive changes are approaching. With tanks on the streets of Venezuela, Turkish artillery shelling Syrian positions, unrest in Tehran and rising Sino-Japanese tensions, the danger of further shocks to the world economy cannot be ruled out. 

At the same time, the unfavorable impression made by President Barack Obama in his first debate with challenger Mitt Romney has now created the impression that Romney may win the election, leading to economic policy changes in Washington.

Is there going to be any good economic news between now and November?

Not likely. But as bad as the economic news may be, something worse may be in the offing. Recently North Korea’s vice-foreign minister, Pak Kil-yon, warned a meeting of the UN General Assembly in New York that Korea was the world’s most dangerous hotspot “where a spark of fire could set off a thermonuclear war.” North Korea’s state-controlled media says that South Korea is attempting to provoke a “war of aggression” against the North. In reality, of course, the North Korean regime is a barracks state where the people are starved to maintain a rigid socialist dictatorship. Since the country’s economy is near a state of collapse, since everything in North Korea goes into military preparedness – a constant war hysteria must be maintained, and a constant scapegoating of America. The fact that North Korea possesses nuclear weapons doesn’t make this an easy situation for anyone.

At the same time, military tensions between China and Japan continue – with negative economic results. Businessweek.com is reporting JPMorgan’s claim that the Japan-China row “may cause the Japanese economy to contract this quarter….” Contrary to received wisdom, conflict is not good for business and war would cause an even worse setback.

Is war between Japan and China possible today?

The answer must be yes, because politicians on both sides cannot back down without losing face. Read More