December 15, 2011: In the north, the upper class is feeling the pinch of economic collapse. The most obvious example of this is how wives are going to work and not just any work. Wives of officers and Workers Party officials are now engaging in smuggling and black market trade. Families of officers and party officials are forbidden from doing this but cutbacks in government supplied food and other goodies has led to a growing number of higher class wives going into this business. When caught they are handled carefully. But the biggest shock to the security services has been the discovery that many of these women have been operating like this for years, some as far back as the 1990s. Some of these women are getting caught now simply because so much illegal trading activity is going on and the government has assigned more police to try and stop it.

In the north, increased efforts to shut down illegal markets and illegal activity in general have led to price inflation. That's because most of the new anti-corruption police will take bribes to ignore the illegal activity and warn traders when cops who can't be bribed are on duty. Even non-police officials are demanding bribes. Part of this growth in greed is prompted by opportunity and firsthand knowledge of how easy it is. But another factor is the growing shortages even among the privileged classes. The government is not supplying as many free goodies as it used to, nor is it able to get enough of the Western gadgets and fashionable clothing that everyone in the north has become aware of.  Yet the elite know of this stuff and are willing to do what they can to get it.

Meanwhile, the government has launched a large propaganda campaign encouraging all North Koreans to live more simply and cheaply. This is not a popular way to go in the north. But most North Koreans have no choice. Even people living along the Chinese border who have always had access to food imported, or smuggled, in are finding it harder to afford food. Between the unfavorable exchange rate (it costs more North Korea money to buy Chinese money because the North Korean government is just printing more cash) and more bribes the cost of rice has gone up over 20 percent in the last few weeks alone.

The government has lost many of its traditional sources of foreign cash (needed to buy foreign goods.) The growing number of embargoes, and especially the American use of banking controls, has cut down most North Korean arms and technology exporting. Desperate for foreign cash (needed to buy food and other goodies needed to keep the ruling class happy) the government has encouraged Western tourists to come for guided tours of the attractions around the capital. Tourists are overcharged for everything and accompanied at all times by a government "guide." It's a perverse version of a theme park. Other cash raising opportunities include strictly illegal activities like counterfeiting and recreational drugs. Proposals to auction off exit visas have so far been turned down by senior leadership. But the fact that a proposal like this was even brought up indicates how desperate the foreign cash shortage is.

It was recently revealed that last month eight North Korean soldiers fled across the China border (near the west coast). The fleeing soldiers were armed and two were killed by other soldiers during the escape across the Yalu River. The six soldiers are still being sought by Chinese police. The escaped soldiers are believed to have bribed the Chinese border guards on the other side of the river to look the other way. This is the largest escape of armed North Korea soldiers and is but one of many reports of poor discipline and plunging morale in the North Korea security forces. From the conscripts in the infantry to the elite secret police there is a feeling of unease and disbelief at how the North Korea police state is falling apart.

The U.S. and North Korea began negotiations in China over resumption of U.S. food aid to North Korea. Not much is expected from this as the U.S. has always insisted that it will only provide food and fuel if North Korea halts its nuclear weapons and missile programs. But North Korea believes these weapons are the only reliable defenses it has left. The regular armed forces have fallen apart because of two decades of poverty and declining morale and discipline.

This bad morale up north has hurt efforts to promote the young heir, Kim Jong Un, as a worthy ruler to replacing his dying father, Kim Jong Il. The government propaganda experts are working very hard to turn Kim Jong Un into a heroic figure. But it isn’t working. Kim Jong Un is a pudgy pampered young man in a country full of skinny malnourished guys his age. The number of jokes about Kim Jong Un are increasing, as is graffiti mocking the "respected general" (instead of "youth captain", to reflect a recent promotion.) Because of this succession problem there is fear of chaos when the current ruler (who is quite ill), Kim Jong Il, dies. In the north, there is an atmosphere of impending doom. Most North Koreans expect a collapse of their government. It’s no longer a question of if but when.

South Korea announced that it had, after five years of development, created a new anti-aircraft missile, Iron Hawk, that can also knock down most types of North Korea ballistic missiles.

December 13, 2011: Off the west coast, South Korean Coast Guard boats caught a 66 ton Chinese fishing boat illegally operating in South Korean waters. When the boat was boarded one of the Chinese fishermen knifed a South Korea coastguardsman, killing him. Violent resistance to South Korea Coast Guard patrols is not unusual. The illegal fishing usually takes place at night and sometimes large groups of Chinese fishing boats will operate together, the better to defeat discovery by one South Korean Coast Guard patrol boat. By escaping back into Chinese waters the Chinese fishermen avoid getting arrested, having their catch seized, and paying an $86,000 fine to get free. The catches are much more lucrative in South Korean waters and the Chinese government refuses to do anything to discourage Chinese fishermen from poaching. There's no such problem in North Korea, where the local Coast Guard just open fire on poachers.

December 11, 2011: As American and South Korean troops erected holiday lights on their side of the DMZ, North Korea warned of "unpredictable results" if the lights were turned on. The threat was ignored.