Does this sound familiar? It should – Un’s father Kim Jong Il made a career of making similar bold threats in order only to gain crucial concessions like oil subsidies and food aid when he backed off. Remember too, ginning up the masses against an ‘evil’ external enemy has historically a useful artifice in taking the populace’s mind off of the pitiful standard of living that exists in NK relative to their southern neighbors; a fact that North Koreans are increasingly aware of in the age of digital information transfer.
HOW MUCH DAMAGE CAN THEY ACTUALLY DO?
From what we understand, North Korean land artillery situated around the DMZ could potentially inflect heavy casualties into certain parts of Northern Seoul and perhaps even Japan. Certainly, NK has one of the world’s largest standing armies, at over 1mm troops…but the technology used is incredibly outdated, in many cases going back to the Cold War. Many Western experts believe a full-on military conflict wouldn’t last more than a few weeks at the most. The US and its allies have meaningful missile defense systems – the THAAD system is a sophisticated ballistic missile defense system operating in Guam, Hawaii, and since July, in South Korea. Clearly NK has made major strides in nuclear capability in recent years. Some military experts suggest current NK nuclear technology is about the same range as France had in the 1960s – enough to be nuclearized but not necessarily reliable. One should not necessarily take NK statements as ‘fact’ with regards to military capabilities, nuclear or otherwise.
A NOTE ON OUR ENEMIES
The West has many enemies…in the East, the Middle East and other areas abroad…and sadly, even a few among our ranks. Their unspeakable acts of terror have shocked and sickened the world, and understandably occupy a large amount of mindshare in the media (which, sadly, is exactly the aim of terrorism). But if you view terrorism as war (which we do), then terrorism isn’t nearly as effective at eliminating the enemy as it is in occupying mindshare. According to Statista, the number of casualties due to terrorism worldwide in 2016 was roughly 25,000 people, which is roughly the same number of people killed every year by rabid dogs. While any death due to terrorism is tragic, the figure needs to be set in the context of the West’s population of 1 billion people. Terrorism has a long history and has never succeeded in preventing global commerce.
This article was written by Chris Konstantinos, CFA, Director of International Portfolio Management at RiverFront Investment Group, a participant in the ETF Strategist Channel.
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