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North Korea and the Fear of Total Destruction

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Days after warning that it couldn't assure diplomats' safety in the event of war, the news of the day is that North Korea is preparing for a missile test on April 10. Another day, another act set to raise the stakes in a standoff that heated up with surprising ferocity across the past month.

The stakes on the Korean peninsula are enormous. North Korea has a reported 13,000 artillery pieces at its disposal, the majority of which are close to the thin demilitarized zone that separates the two countries. While South Korea's capital of Seoul may not be "flattened" within the first 30 minutes of conflict, as past reports have concluded, the scale of destruction to a modern global metropolis would be unlike anything most have witnessed in their lifetimes if a full-scale war broke out.

How unique and dangerous of a situation is this? Imagine a 30-year-old despot sitting across a small 2-mile-wide zone in White Plains N.Y., ready to shell Midtown and move more than a million troops south to attempt occupying the remainder of the Tri-State area, and you essentially have the situation playing out in Korea.

The recent elevated bluster from the North is commonly dismissed as showmanship. North Korean leader Kim Jong-un is still a new "Supreme Leader" of the country and the youngest head of state in the world. The thought is that his saber-rattling builds credibility with a military establishment that's one of the few functioning establishments in the country.

Every few years, tensions rise on the Korean peninsula, such as in late 2010, when the two countries briefly traded artillery fire, only to settle back. The stakes of war are too high, and even Kim Jong-un and his father didn't want to risk a full-fledged war and the total destruction it would cause to the Korean peninsula.

Yet in a world that's recently been obsessed with "financial weapons of mass destruction" that led to the financial crisis of 2008, it's important to remember that we live in a world with real weapons of mass destruction. The financial crisis of 2008 came about because financial models deeply underestimated the risk inherent in their construction. In hindsight, many of the risks seemed obvious; of course insuring hundreds of billions in poorly constructed home mortgages for pennies on the dollar was riskier than believed!

So far, world markets have largely ignored the situation playing out in Korea. We've been there, done that. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is still up more than 11% on the year. Yet you can't help wondering if the risks in Korea are being miscalculated. Would it be such a stretch of the imagination that in five years the common refrain was "of course a 30-year-old unelected ruler of an impoverished country was likely to act out a bit too strongly and start a war"?

The odds are: that North Korea continues acting out for attention over the next few weeks, the United States and South Korea end their joint exercises on April 30, and the peninsula heads back to the status quo. The world is constantly sitting on the edge of danger, a few unforeseen events away from turning back from the relative peace that's marked the past half-century. This is just another political crisis, the vast majority of which lead to little to no escalation.

Yet what's spooky about North Korea is the instability of the leadership, its increasing capabilities, and its ability to inflict massive destruction across somewhere as populated as the Korean Peninsula, an area with more than 75 million people in it.

Aside from artillery pointed at the South, the country continues testing nuclear weapons. Its long-range-missile program has its share of failures, but it continues moving toward intercontinental missiles that could threaten the western United States. To think that these capabilities are in the hands of such a young ruler whose upbringing few know of or understand is truly terrifying.

While we fret about financial weapons of mass destruction today, history's greatest destroyer of wealth has been the physical kind of destruction. Maybe a world in which the greatest fear is the destruction caused by trillions of dollars' worth of financial derivatives isn't so bad after all.

Read/Post Comments (4) | Recommend This Article (13)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 07, 2013, at 8:07 PM, prginww wrote:

    13,000 artillery pieces and 19 soldiers. Sounds like a good plan.

  • Report this Comment On April 08, 2013, at 2:42 AM, prginww wrote:

    Oh please stop being a North Korean propaganda puppet! North Korea does not have an active 1.2 million person military, and they don't have 13,000 maned and functioning artillery batteries. The cost of purchasing weapons, ammunition, and maintaining then alone would be more than their total GDP. North Korean military might is based on deception and lies rather than reality. North Korea's only real defense against invasion is China.

  • Report this Comment On April 08, 2013, at 2:58 AM, prginww wrote:

    Don't believe the NK hype. They want you to think they are crazy. But they are perfectly rational. It's all just extortion. They have about 45 Million hostages, half in NK and half in SK, with guns to everyone's heads. Give NK food, cash, & fuel or some people die. The only way to stop this is to change the regime. Extortion is their lifeline. What better tool for extortion than some nukes? The stakes will only go up. So...are we worried about Kim Jong-Un's "mandate of the people"? The NK system is an abomination to all free peoples. Are we worried about the stock market? It soared at the beginning of the Gulf War in '91 with the expectation of all that spending. Are we worried about the legality of regime change? Does Kim Jong Un care about legality? He's already got 20 Million slaves. Are we worried about our morality? What about the morality of all those starving NKs? Get real folks, NK is a cancer on the human race. The issue is how to do it with a minimal loss of life, but keep in mind that NK lives are continually being lost as we dither and the stakes are getting higher.

  • Report this Comment On April 08, 2013, at 3:44 PM, prginww wrote:

    I think Obama will let Kim kill millions of people in Seoul before he acts. In fact, Obama may not act. He could be on the golf course with Tiger and just let South Korea become a dust bowl. That's what happens when the people elect a corrupt Chicago Democrat. Illinois likes to put them in jail before they leave office.

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