Tweet The North Korean Nuclear Threat: Did We Start The Damn Diplomatic Resolution of the Problem Yet?
We have heard the speculation that the United States led by the Obama Administration MAY place North Korea back onto the list of state sponsors of terror.
We have heard noise regarding U.N. sanctions that MAY be placed on North Korea which will ultimately have no effect on the current dictator (or most likely his son either) as the well being of the ordinary citizenry of this country is really of no great concern to the leadership.
We have heard some rhetoric out of Washington concerning the POTENTIAL of holding what they hope would be substantive talks with North Korean leaders in the hope of bringing them to their senses about giving up the nuclear arsenal in exchange for something that may be more meaningful to them.
Now I don't necessarily have the solution for this problem that has the POTENTIAL to escalate into an international disaster, but I do know that all of this blowing of smoke is not it. Here is just one of the statements coming out of Pyongyang:
"Our nuclear deterrent will be a strong defensive means...as well as a merciless offensive means to deal a just retaliatory strike to those who touch the country's dignity and sovereignty even a bit," said the commentary, carried by the official Korean Central News Agency." (Associated Press)
Mere bluster or the ranting and raving of a society out of touch with the rest of humanity?
How Appealing Are Our Treasury Bonds To Our International Customers?
One thing is for sure. In order to fund our huge requirements for government spending, we require a huge amount of government borrowing. If the current buyers of this debt move on to what they consider to be a safer or more stable vehicle for their investments, the only direction for our cost of capital will be straight up. Russia has made these threats before, and they come in front of a 10-year auction, made with the goal of pushing yields up.
The result of the auction was indeed that yields went up in order to satisfy the supply.
If there is any boycott in the form of foreign governments not participating in our auctions, it would translate into higher costs for our consumer loans, if we could get them in the first place. For the government, and you and I by extension, it will mean that higher mortgage rates will throw a roadblock in the way of any economic recovery.
These were the statements made by Russia: "Selling intensified after the Interfax news agency reported that Russian central bank Deputy Chairman Alexei Ulyukayev said that the nation plans to reduce the proportion of gold and foreign exchange reserves it invests in U.S. Treasury bonds. Mr. Ulyukayev said that reserves are just over 30%-invested in U.S. Treasurys at present, but didn't specify by how much that figure would fall." (Wall Street Journal)