I don’t get it. Yesterday morning, North Korea launched a missile over Japan. The financial markets were set back slightly in the morning, and by the end of the trading day the markets closed higher, having shrugged off this threatening incursion into Japan’s airspace.
Let’s put this in perspective. Suppose Russia were to launch a nuclear-capable missile and send it over Kansas? How would Americans react? I suspect there would be significant adjustments in the stock, bond, and gold markets as appetite for risk gets priced in. What I wouldn’t expect is for everyone in the United States to simply shrug it off, and go back to business as usual. Yet this is exactly what just happened in South Korea and Japan, and across the rest of the free world. A day later nobody really cares!
North Korea is a threat to the region, and the world. They have antagonized neighbors by repeatedly firing missiles, by conducting certain nuclear tests, and now by sending a missile through Japan’s airspace. North Korea has a proven nuclear capability, and they have verbally threatened to use such weapons against their neighbors and the United States, including new threats this morning against Guam, a U.S. territory.
This is a dangerous global situation. The United States is, by treaty, obligated to protect Japan, and we would stand by other close trading partners in the region such as South Korea. North Korea, will have backing in one way or another from both China and Russia. If conflict breaks out, world war III is close at hand.
I don’t think the news media and investors are giving this situation the attention it deserves. Yesterday, it was the second or third story down the headlines, with Houston flooding at the top.
We will recover from hurricane Harvey. A nuclear conflict? That’s quite a different thing!