Even the best strategy for dealing with North Korea could be bad news for the stock market and economy. Of course, the worst strategy is even scarier. If we somehow end up in a fight with North Korea, millions of people in South Korea could be killed. According to the NY Times, North Korea could drop 300,000 bombs on South Korea in just the first hour of a counterattack, and that doesn’t include nuclear weapons.
Even in the best-case scenario, where we perfectly cripple North Korea’s military with only a small number of South Koreans killed, you still risk a devastating refugee crisis. We could see millions of hungry, uneducated people pouring into South Korea and China, which could destabilize the entire region, and cripple the world economy.
This is not a rant against Trump. Our last four Presidents should all get blame for North Korea. In their defense, it’s an incredibly tricky situation with ridiculously high stakes. That’s why I’m so grateful our current President is so thoughtful and level-headed…
Trump is doing at least one thing right with North Korea: He’s putting pressure on China. China is the lifeline that keeps the North Korean regime alive. If there’s any non-military way to pressure North Korea, it’s through China. So recently, Trump tweeted a threat that the US was considering stopping “all trade with any country doing business with North Korea.” That was a direct threat to China – which is precisely when the stock market began to pay very close attention. If we hit China with an economic punch, it’s very likely they will punch back. That could mean a trade war between China and America, which could really chill the markets and economy.
However, if we are serious about stopping North Korea, that might be what’s necessary. America may have to sacrifice a little bit to get China’s attention. But that brings up a very interesting conundrum, because I’m not sure Trump understands the fine art of delayed gratification.
The last thing Trump wants to do is hurt the stock market or the economy. So, to the extent that he understands the risks of a trade war, he’ll be hesitant to start one. However, he has also publicly vowed to not allow North Korea the ability to hit America with nuclear weapons. That’s a very difficult spot to be in.
Brad Blackburn, CFP®, is the owner of Blackburn Financial, Registered Investment Advisor. Blackburn Financial is located at 121 Cottage Ave, Cashmere. He can be reached at 509-782-2600 or email him at firstname.lastname@example.org
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