February 18, 2018

North Korea Tension: Beijing Tries Balancing Act

13 August 2017, 07:12 | Glen Norman

President Donald J. Trump

President Donald J. Trump

President Donald Trump warned North Korea's leader he would "regret it fast" if he made any threat towards Guam or any other USA territory in comments that will fuel rapidly rising tensions between the two countries.

"Despite attempts by some US officials to calm sentiment, fears of escalating military tension between North Korea and the USA are dominating market attention", Dirk Willer, the head of emerging markets strategy at Citigroup, said in a research note on Friday, reports The New York Times. At the same time, some of the public's anxiety is about Trump and his off the cuff handling of the situation. The UAE for instance bought $100 million worth of weapons from North Korea to help Saudi efforts in Yemen. "And we are with you 1,000%".

The threat itself came after Trump warned of "fire and fury", urging North Korea to abandon its nuclear ambitions.

And Trump hasn't exactly been doing a lot to quell those fears.

But surely Kim knows that an actual attack on Guam, nuclear or otherwise, would be met with an overwhelming USA response that would surely mean the end of his reign and his life (along with those of perhaps hundreds of thousands of other North and South Koreans).

Newspaper: China should stay neutral if N. Korea fires first on US
This scenario does not come as a surprise to the world community as both the countries have always been engaged in a war of words. But if North Korea escalates, the US must be prepared to escalate to massive disarming strikes, including use of nuclear weapons.

Trump responded with an exceptional threat: Pyongyang would incur "fire and fury" the likes of which the world has never before seen, said the president.

"Military solutions are now fully in place, locked and loaded, should North Korea act unwisely", Trump tweeted on Friday.

Tuesday: "North Korea, best not make any more threats to the United States", Mr Trump tells reporters. "We still hope and believe that common sense will prevail".

"You know what, that could looks so handsome to me", Trump said.

The concern over China's reaction is important. While the comment earned criticism and was followed by a more restrained tone from the State Department, Trump doubled down Thursday. But sharp divides remain. She declined to say whether Germany would stand with the case of a military conflict with North Korea and called on the U.N. Security Council to continue to address the issue. The isolated nation, earlier this week, laid out a detailed plan to launch ballistic missiles into waters near Guam, a US territory. They know that North Korea has thousands of long-range artillery pieces and large numbers of missiles that could lay waste to Seoul, the capital of South Korea.

European markets open lower on Friday
The single-session equity put/call ratio jumped to 0.83 - the highest since April - and the 21-day moving average rose to 0.65. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, popped almost 11 percent to 11.02.

The decision brings a total of 62 people and 50 entities in line with United Nations sanctions against North Korea, while the European Union has autonomously slapped restrictive measures on another 41 people and seven entities.

North Korea's Kim dynasty has mastered the art of brinkmanship for decades: scare the world with missiles and nuclear tests, strike a deal with the West, and then watch the aid money flow in.

"And that's going to be diplomatically painful, but that's one the few levers we have left", Krejsa said, noting that the USA still needs these countries as allies.

As former NSA analyst John Schindler told PRI, it's much more hard to gather accurate intel on a country with which we have no diplomatic or trade relations, and what's more, the North Koreans know we're spying on them and do what they can to deceive us. "In this regard, North Korea's recently issued statements of threats are in direct opposition to the global community's consensus, and must stop immediately". "It shouldn't be Democrats or Republicans, it should everybody be unifying behind our president".

Stocks slide on continued concern over tension between USA and North Korea
If you think this is just rattling sabers, and it's just words, then you could view this as a buying opportunity". The Russian dollar-traded index RTS was down 1.49 percent, and ruble-traded MICEX fell 1.29 percent by midday.

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