Weekend Wars: North Korea vs. South Korea

S. Korea is a huge economy and trading partner. Any full scale war would devastate Seoul and other industrial areas. We would surely win any war against the North, but we would increase Chinese tensions seven fold. The North is not going to be easily assimilated into the South (just look at the reunification of Germany) and we are already fighting two wars. Last thing we need is a real war to drain us of cash and man power.

This thing will get negotiated out. China will mediate. Nothing will happen.

any 1 know if goldman sachs is selling derivatives on this ?

I find two really interesting dynamics about the whole North vs. South Korea conflict

1) A disincentive for reunification -- welfare

I know S. Korea sends food and supplies to the North but there's a huge disincentive for any war with the North just because if the two were ever reunified (North wouldn't win), N. Koreans would become a huge welfare burden of the South. In many ways, it's easier to have a crazy neighbor to the North that you send some food and supplies up than to have millions of starving people to take care of.

2) China's choice between military might vs. economic might

One thing I've learned recently is that N. Korea and China are controlled more by military strategy than communist ideology. A reason why China has always been an ally to N.Korea is because they acted as this burdensome buffer to keep American bases from coming too close. At the same time, China's shift to red capitalism makes it dependent on America (and to a much lesser extent, S. Korea) to fuel its growth. I'm really interested to see how China is going to balance the two motivations.

If that peninsula is going to erupt watch crude oil prices for a heads up. Despite recent discoveries of advanced nuclear enrichment in North Korea odds are any war over there will be a conventional war. Conventional war could lead to China and N. Korea vs. US and S. Korea. Simply put, both sides will need oil to fight and the market knows it. If crude prices rise in conjunction with the dollar that could mean trouble - I hope I am wrong.

I find it difficult to believe that if it actually came down to a physical war, China would side with North Korea. I think if it ever got that far, China has plenty of incentives to just join NATO and South Korea and just get rid of the North.

the cannon balls fly. When can both sides unite?

Disagree, no need at all for the South to hit back.

http://www.businessinsider.com/north-korea-artillery-could-level-seoul-…

For the record, Seoul is the second largest metropolitan area in the world (Total Metropolitan Area Pop. of about 24.5 million people). As mentioned above, S. Korea is a very large economy (13th largest worldwide). No need for the Korean's to put themselves in harms way and risk losing a very strong industrial complex just to send a message. The North knows S. Korea won't attack, and they know that the Americans don't have the political capital in their home country (I'm not sure if they have the political capital abroad either, after the last two wars, and seeing just two weeks ago the Americans were being dumped on by everyone at the G20) to launch an attack either.

Thus, the North is playing its cards well. I'd say the Americans will also use this to their advantage (at least, its certainly a possibility) to get the S. Koreans to sign the trade agreement that wasn't signed when Obama was in Seoul.

There won't be a war. Why would the North Korean incumbent leaders want to lose their shirts out of this? They are more concerned with prolonging this situatation as much as possible until they die. As more younger guys move up the ladder, the political parties in the North will gradually lose their power and open their economy and society ultimately. And I believe that this is the most desirable situation for all of us in the world.

China is not like the US. People can clamor for war or peace all they want, but what really drives policy is the few politicians in power at the top of the power structure. The guys at the top are able to maintain power by developing China as fast as possible and turning it into a (the?) major power. A war against the US risks all that, thus a war against the US is against the ruling members' best interests. I'm not saying they would lose, but they can't be ignorant of the fact that they COULD lose. On top of that, they wouldn't be battling the US, but likely every single Western ally as well. Military leaders in EVERY country think they should 'punish' other countries and 'upgrade' military infrastructure. It doesn't mean that the country is going to do what they clamor for. That's rare.

The situation with China and North Korea is different from most other 'alliances' that dragged countries into wars, and is certainly different from the war 50 years ago. Then, North Korea was a brand new communist nation in the middle of the Cold War. Now, North Korea is a rogue nation with unpredictable leadership and a constant source of headaches for the Chinese. NK is more or less a failed state, and we are no longer engaged in a Cold War. Furthermore, China and US are now economically co-dependent. The only reason China doesn't want a failed North Korea is because of the storm of refugees that would cross borders into China.

China won't do what their economist nor their generals say. They'll do what the elite ruling group wants, and I will put money on it that what they want (and what the US mutually wants) is to avoid an all-out war against the other world power.