Tensions on Korean Peninsula Add to Global Economic Concerns

Wednesday, May 26, 2010
By Paul Martin


Already skittish about Europe’s escalating debt crisis, investors had yet another international development to worry about this week. Escalating tensions and war-like rhetoric emanating from the Korean peninsula helped send world stock markets tumbling on Tuesday.

Reports that North Korea was launching combat preparations and cutting off ties with South Korea were the latest news driving a wave of anxiety for investors. The move comes after South Korea — outraged after the sinking of a naval vessel that killed 46 sailors and was traced to a North Korean torpedo — vowed to take punitive measures, including halting some trade.

While saber rattling out of the totalitarian regime is hardly new, geopolitical experts were struck by the brazenness of North Korea’s aggression.

“If they want to get money out of people, there are lots of things they could have done,” said Ian Bremmer, president of consulting firm The Eurasia Group said in an interview with DailyFinance on Monday. “This is well beyond that in terms of escalation.”

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