Geopolitical risk in East Asia

So it’s official. Bad hair Kim Jong Yi did it.

Rumors were circulating barely days after the Cheonan sunk that it had been torpedoed by the North. But since the allegation is grave and the tension on the Korean Peninsula is high, the South has held back from finger pointing, until now.

Spokesperson from the South sounds pretty stern and vows to take the matter to the UN Security Council to press for tougher sanctions against the North. The White House calls it an act of aggression. The Korean media reported that the Chinese ambassador to South Korea, on the other hand, maintains that there’s not enough evidence. North Korea, for its part, has adamantly denied any involvement and is going to send its own commission to inspect the evidence from the explosion. It is also threatening war should any new sanction be imposed.

How is this going to play out? What do I know?! But this surely doesn’t sound good. North Korea’s earlier currency reform failed miserably and is in great economic stress right now. Crazy and irritating the regime is, its collapse will be even more scarier. Rumor was that China had 100K soldiers deployed at the border last time North Korea suffered a severe famine back in the 90’s, in preparation for the collapse of the regime and an expected flood of refugees. Geopolitical turbulence right at your border is the last thing you want now.