The picture of ponds and waterways idealized with flocks of swans is always the colour scheme of white on blue. Black swans are the rare but true occurrence. They are unpredictable in their arrival, their impact, and their consequence. Their departure is noted, if at all, simply by the lack of, rather than the studied history that now watches for the next one.
Black swans also have a place in world finances, politics and end of the world modelling in both fields. As the swans themselves, these events are almost always unpredictable, in occurrence or consequence, and despite the historical truth of existence, are never watched for or prepared for, but rather ignored as too rare to worry about.
Among the white plumage currently swimming on our pond who and what might turn out to be a black swan. North Korea was clearly highlighted by departing President Obama to incoming President Trump as at or near the top of the list but with the skeptism of nothing can reasonably be done. It is also true that the consequences of action could be so severe that we believe no one could possibly light the fuse and any other choice must simply be accepted. This is pretty much the black swan spotted just before every major conflict between nations in the last hundred years. Why then might anyone light this fuse?
Increasingly nations find themselves dealing with lawless circumstances. Seeking to engage effective national governments or the intervention of the United Nations or international bodies has become an ineffective and nonfunctional option in much of our world including the Korean Peninsula. When clearly faced with lawlessness, countries are less and less hesitant to intervene directly and will cross into preemptive action if the threat is dire and imminent. This is not an assessment of right or wrong, but is an accurate description of how the world is now operating, and disbelief offers no defence.
Why of the many lawless circumstances might North Korea be the Black Swan of clearest and present danger. The costs of ballistic missile technology and nuclear weapons, is very high and requires the purchase and delivery of materials and support from outside North Korea. A country as apparently isolated and sanctioned as North Korea should not be able to offer this level of spending gold or acceptable international currencies without exceptional cash flow into the country, agreements by others to sell product to a sanctioned country, and agreements by other outside nations to provide access to the international banking system in order to hold and transfer money as both income and expenditure.
The banking surrogates for North Korea will be China and Russia. Cash flow will be generated by North Korea’s foreign student and worker programs, and the sale of ballistic missile technology, likely into the Mid East moras and a new monied Iran looking to bolster their military reach. The net result is decades of sanctions to no real effect and a total lack of interest by both Russia and China in helping by exercising their influence. China in particular was asked to bring influence to bear and agreed, but since agreeing, trade between the two has increased 40%.
The international community, the U.S. in particular, regardless of president or party, will not accept a North Korea acquiring weapons capable of harming their country, while persistently and chronically threatening to do so. The ghosts of Pearl Harbour and Sept. 11 voice the imperative of never again, and no more serious charge sits on the President’s desk, particularly when the threats are real and uttered by a country who continues to insist that, at war, is our status.
Faced with North Korea’s continued progress and the realty of no help from China the arrival of the Black Swan might take this shape. Korea can only truly be impacted through their surrogates principally China. The tools available will all, in one way or another, look like an economic and trade war. China could be named as a currency manipulator. Chinese banks will be named and cut off as the illegal authors of financial processing for North Korea. The result will be the separation of the Chinese financial system from the world system. To a certain extent this will apply to Russia and all other third parties involved in these transactions. Visa programs, foreign worker programs, all activity that creates foreign cash flow for North Korea, even if through these third parties, will be restricted and shut down. As these events occur the Black Swan will become visible from across the pond.
By Al Collins