If you look at the price of credit insurance on debt of Korea, you will see it is spiking much higher. All those hedge funds and pension funds that own bonds issued by Korea are suddenly very worried they will not be repaid, so they are bidding up the price of credit-default-swaps. It is clear that investors worldwide are concerned about many things, but they are REALLY worried about South Korea being “nuked” by North Korea. It is the #1 worry.
As usual, John McCain was right when he predicted the world’s greatest geopolitical risk is the leader of North Korea, whom he understandably called a “crazy fat-kid”.
Investors worldwide agree!