Trump Is Mishandling North Korea and Yet the Stock Market Doesn't Care – TheStreet.com

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“Talking is not the answer!” That’s the verdict on North Korea of President Donald Trump, who complains on Twitter that, in talking to Pyongyang, Uncle Sam has been paying “extortion money” to keep the three Kim dynasties in check.

Trump is of course talking to the masses. The question is where his rhetoric or action will lead after North Korea sent an intercontinental ballistic missile directly over long-time foe Japan and 1,700 miles in the direction of Guam.

Grandstanding has been the bulk of Trump’s personal plan for North Korea, although he has also mobilized military maneuvers and orchestrated a flyby here and there. Trump was finally talking the same language as North Korean dictator Kim Jong-un, he surely felt, and the message was getting through.

Trump was confident that his promise of “fire and fury” if Pyongyang did not cease its threats had worked. Delivered almost in time with the anniversary of the bombing of Nagasaki, the apparently off-the-cuff quote strongly suggested the use of nuclear weapons.

Kim got that message, the president said, then tried flattery, too. “I respect the fact that I believe he is starting to respect us,” Trump said at a rally in Phoenix, after a lull in North Korea’s tests. “Maybe, probably not, something positive will come out of it.”

Secretary of State Rex Tillerson added to the positive sounds from the administration. The pause in tests “certainly demonstrated some level of restraint that we have not seen in the past,” Tillerson said. “Perhaps, we are seeing our pathway to, sometime in the near future, having some kind of dialogue.”

Probably not. Any lull in action only appears to have been the time taken by North Korea to line up the next tests. Pyongyang launched another three short-range missiles this past Saturday, two of them traveling about 155 miles before hitting the water. That demonstrated they could reach U.S. forces in South Korea, as well as Seoul.

Trump certainly wasn’t thinking of a missile launch over Japan. It’s only the third time that North Korea has sent rockets over Japanese shores. On the previous two occasions, it at least pretended to be launching satellites into space. It’s made no such false confession this time.

President Trump. President Trump.

The louder Trump yells, the fewer options he appears to have. Fighting fire with fire is hard with a full-time arsonist.

Stamping out Kim’s missile tests and threats ignores the broader issue, too — that North Korea is nuclearized and simply working out how it can deliver those payloads. U.S. officials calculate that Kim now controls up to 60 nuclear weapons, according to The Washington Post.

Some independent sources doubt the figure is nearly that high. But one nuclear bomb is enough for North Korea to join the ranks of nine nations that possess such weapons. It has an arsenal that “probably comprises fewer than 10 warheads,” according to the International Campaign to Abolish Nuclear Weapons.

Rather than getting through to Kim, the attention of the U.S. president only seems to encourage a young dictator keen to portray himself as firmly in command. Faced with possible resistance to his rule from military men much his seniors, Kim has used persistent missile tests and staunch anti-American propaganda play to his own people as much as any international audience.

Meanwhile Trump keeps talking. He has also talked with Japanese Prime Minister Shinzo Abe. The two leaders have a “continuing, close cooperation” in addressing North Korea’s latest salvo, according to the White House. Abe says the call showed that “Japan and the U.S. stances are completely matched.”

Whether Trump’s plan is really supported in Japan or South Korea is unlikely. The president appears to be trying to push Kim toward the negotiating table. On the campaign trail, he said he “would have no problem speaking to him.” Then last April he said he would be “honored” to meet Kim as it was “appropriate.”

South Korea’s left-leaning president Moon Jae-in, whose parents were refugees from North Korea, might be willing to renew some form of the “sunshine policy” of openness to North Korea begun by his predecessor Kim Dae-jung. But the more warlike Kim becomes, the less likely that is. Abe, a hawkish conservative, has shown no such willingness to talk. He has instead proposed a change to Japan’s pacifist constitution to allow it to have a standing army.

There has been little fallout in the markets. Talk hasn’t translated into market movements, and even missile launches are forgotten in a day or two.

South Korean stocks, in the form of Seoul’s benchmark Kospi index, are down 3.6% from an all-time high in late July. The “fire and fury” comment caused a dip when it came but, despite the Japan launch, stocks are up very slightly since then.

Having strengthened to fewer than ¥100 to the U.S. dollar at this time last year, the Japanese yen has not been knocked off track by the missile “attack.” It has advanced from ¥118 to the greenback in December, and the latest distress has only seen it weaken from ¥108 and change to just north of ¥110.

Kim Jong-un, North Korea. Kim Jong-un, North Korea.

These latest tensions may have dented it slightly, then, but the currency is still viewed as a safe haven. Trump’s travails at home and inability to get anywhere at all with his agenda are having a much more significant impact than even hostile weaponry passing overhead.

In Seoul, the Bank of Korea on Thursday held fire at its policy meeting, with a statement that was virtually unchanged from the previous one. The main change in keeping interest rates at 1.25% was to highlight greater uncertainty over future growth thanks to the potential for worsening relations with China and turmoil over the North.

But the bank also says a stronger global recovery and successful policy from the Moon administration are potential positive surprises. Consumption, the bank predicts, will be stronger than previously foreseen, an unusual situation if South Koreans really are hunkering down in their bunkers.

North Korea, to me, has been acting like an attention-seeking teen, getting in trouble to get noticed. The silent treatment is probably the reaction such behavior deserves.

Ousted adviser Steve Bannon certainly had it right when he told The American Prospect that “There’s no military solution. Forget it.” The casualties in South Korea, North Korea and beyond would be catastrophic.

But it’s equally unlikely that Trump can stop talking to or about Kim. His repeated revisiting of Russia as a topic has protracted that topic of conversation. When questioned, there’s no way Trump will trammel his tongue.

The “big trap” of the current course of action, East Asia expert and ex-official Daniel Russel explains in The New York Times, is that North Korea will force this war of words to the brink of actual conflict, then lure Trump into direct talks. Such a deal-making opportunity may be hard for Trump to resist.

But it would ratify North Korea’s nuclear status and undermine the steady diplomacy and pressure from Seoul and Tokyo. By saying he’s no longer talking to Kim, Trump appears to want to start a dialogue again.

The art of this deal is most certainly not to offer one at all.

Editors’ pick: Originally published Aug. 24. This column has been updated.

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