Wednesday, December 9, 2009

North Korean Money Switcheroo Causes Violence and Women Cursing Gvt Officials

New reports emerged Tuesday of protests and deadly violence in North Korea as the country's authoritarian regime over the past week seized most of its citizens' money and savings via a new-currency issue, reports WSJ.

Open Radio for North Korea, a Seoul-based shortwave radio station that broadcasts news to the North, said police killed two men in Pyongsong, a market center outside of Pyongyang, on Friday after they divided their savings among a large group of people and urged them to exchange the money for them, attempting to get around the government's limit.

Chosun Ilbo, a South Korean newspaper, cited informants in the North in reporting that women working in the goods and produce markets of some towns "openly curse government authorities despite the risk of being arrested."

More from WSJ:
The reports suggest that North Korean officials may be experiencing more difficulty than expected in using the currency issuance to collar the expansion of private wealth in the country.

"They've tried to wind back the system, but they're potentially teaching the people that markets can't be controlled," says Shaun Cochran, head of Korea research at CLSA Asia-Pacific Markets, who published a report on North Korea's move...

Pyongyang announced Nov. 30 its decision to issue new currency and limit the amount of old currency that could be exchanged to the equivalent of about $40, based on unofficial exchange rates, a step that essentially scrapped all other private money.

Mr. Cochran said that the regime's money grab "could be the single most important event in defining North Korea over the next decade." He called it more significant than the headline-grabbing nuclear-weapons program, which North Korea uses for international influence, because the regime's power ultimately rests on its ability to make North Koreans believe that it controls their economic well-being...

Mr. Cochran, the investment analyst, said the biggest risk for the North's government is if, after taking people's money, it can't deliver goods and services the way the unofficial market could. "Most damaging to the regime would be if the people learned that it cannot control the real price of goods and that there is economic value to competing with the public system," he said.
My guess is that North Korean black markets will stop dealing in the N. Korean currency and switch to a foreign currency or some commodity. The dollar, the euro, China's yuan or the S. Korean won could emerge as the defacto currency.

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