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The Noose Tightens

August 4, 2006: There appear to be some high-level internal political rifts in the North Korean regime. Allegedly, "Dear Leader" Kim Jong-il approved the recent multiple missile tests under some pressure from a particularly hard-line faction in the party and military establishments. The attempts to placate the hard core (old school Stalinist) and reformer factions causes the wild gyrations in public policy up north.

August 3, 2006: North Korea appears to be building underground missile launching facilities along its east coast. These missiles would be aimed at Japan. Why North Korea would do this is anyone's guess. Perhaps to threaten Japan and extort money, and other concessions, from the Japanese.

August 3, 2006: Although three major storms hit North Korea in July, leaving hundreds dead, and over 100,000 homeless, North Korea has refused all offers of aid from foreigners.

August 1, 2006: China and Japan are putting increased restrictions on North Korean access to their banking systems. This is in reaction to the discovery of how much of the North Korean money in these accounts was used for bribery and illegal purchases.

July 31, 2006: For the first time in about a year, there was gunfire on the DMZ. Not a lot, and it may have been an accident. North Korean border guards fired two shots, and South Korean troops fired six in return, and that was it.

July 30, 2006: China and Japan are threatening North Korea with more trade restrictions if the northerners refuse to negotiate a deal to halt North Korean missile and nuclear weapons research.

July 29, 2006: Analysis of the North Korean Taepodong 2 missile launch on July indicates that the equipment was not ready for testing, and that the value of the "test" was very low. The test also indicates that North Korean scientists and engineers had not made much progress in producing a longer range missile.

Meanwhile, North Korea insists that it will not resume negotiations over its missile and nuclear weapons programs, unless the U.S. lifts restrictions on North Korean use of the international banking system. China has put banking restrictions on North Korea, in support of American restrictions. These restrictions were imposed to interfere with the distribution of North Korean counterfeit hundred dollar bills. These are very high quality counterfeits, which have been showing up in increasing numbers over the last decade. A lot of these counterfeits end up in northern China, where users of these notes suffer losses (confiscation of the notes) when the notes are detected by major banks. These "supernotes" are still in circulation. Since earlier this year, when the U.S. restrictions went into force, North Korea has been spending the supernotes inside North Korea. Merchants (foreign and domestic) have been accepting the counterfeits, because they are of such high quality.