noteconomist

North Korea causing trouble yet again

In International affairs on November 23, 2010 at 12:05 pm

North Korean dictator Kim Jong-Il, center with the funky glasses.

The South Korean Won (KRW) has dropped 100’s of pips and this is the second major attack by North Korea on South Korea this year. The first attack, as many of you will remember, came when the North Koreans torpedo’d a South Korean ship, killing dozens of soldiers. The South Koreans didn’t do anything back then, and there are signs that they will not escalate things yet again this incident. From Kenneth Quinones, former U.S. State Department director of North Korean affairs in Bloomberg:

‘‘This is one of the most serious North Korean provocations in at least two decades,’’ he said. The latest attack ‘‘was on a civilian-occupied island, unlike the Cheonan, which was a naval warship. This is very serious.’’

As mentioned before, KRW dropped in value (something the South Koreans have wanted to help boost export growth as of late), but also we’ve seen an explosion in the cost for Korean CDSes:

Korean CDS spreads post-conflict reported

It will be interesting to see how this develops — if South Korea is tired of getting smacked around or if they will continue to go the diplomatic route in the face of aggression.

NE

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