NewsWatch: Asia and Europe

North Korea Threatens to Turn South Korea Into 'Debris'

North Korea's military warned Tuesday it would attack South Korea and turn it into "debris," in Pyongyang's latest response to what it says are confrontational activities by Seoul against the communist country. The threat comes a day after military officers from the two Koreas held brief talks at the heavily fortified border, their second official contact since the North broke off inter-Korean relations in February.

The North threatened to cut off all ties if the "confrontational racket" continues, citing a South Korean general's recent threats to launch a pre-emptive strike against its nuclear sites and the refusal of civic activists in the South to heed Pyongyang's demands to cease distribution of propaganda leaflets critical of its leadership.

"The puppet authorities had better remember that the advanced pre-emptive strike of our own style will reduce everything opposed to the nation and reunification to debris, not just setting them on fire," the North's military said in a statement carried by the state-run Korean Central News Agency.

Relations between the two Koreas have been tense since South Korean President Lee Myung-bak's administration took office earlier this year pledging to get tough with Pyongyang. Earlier this month, Gen. Kim Tae-young, chairman of South Korea's Joint Chiefs of Staff, told a parliamentary committee that his military was prepared to attack suspected nuclear sites in North Korea if the communist country attempts to use its atomic weapons on the South.

North Korea has demanded that South Korea stop activists from sending balloons carrying leaflets critical of the communist regime across the border, saying the flyers violate a 2004 inter-Korean accord banning propaganda warfare. The South Korean government has stopped official propaganda but says it cannot prohibit activists from sending the leaflets, citing freedom of speech.

Defying Pyongyang's demands, South Korean activists on Monday sent helium balloons carrying 100,000 leaflets to the North. Some noted Kim's reported health troubles and called for the North Korean people to rise up against the authoritarian leader. The North said it also was offended by recent comments by South Korean Defense Minister Lee Sang-hee about leader Kim Jong Il's health.

South Korean Defense Minister Lee Sang-hee told a news conference in Washington earlier this month that both the U.S. and South Korea believed Kim Jong Il remained in control, adding: "If we show him too much attention, then we might spoil him."

U.S. and South Korean officials say Kim suffered a stroke and underwent brain surgery in recent months, but the North has denied there is anything wrong with the 66-year-old leader. The two countries remain technically at war because the 1950-53 Korean War ended with an armistice, not a peace treaty. The peninsula is divided by one of the world's most heavily fortified borders.

Past Hardships Haunt Europe's Search for Financial Security

As Europeans grasp for security in the face of a financial storm that - at least so far - has affected them much less directly than it has many Americans, they are reflecting the history of their tortured continent that has weathered wars, revolutions and financial crises over the centuries. In America, wealth and retirement savings are much more tied up in the stock market, with a majority of people owning at least a modest stake. By contrast, only 13 percent of German households and 24 percent of French ones own shares, according to 2006 figures compiled by the European Savings Institute.

Pensions are still largely state-dependent, not 401(k)-style investment accounts. Even when it comes to the British, who look more like Americans in terms of credit card debt and mortgage exposure, only about 20 percent of them have invested in the market.

But history teaches Europeans that situations can go from bad to perilous in no time, and there is a long tradition of burying the family's treasures in troubled times. Today, tales of people taking money out of banks to keep it somewhere else are circulating in Paris bistros and London pubs. Companies selling or renting safes are reporting an increase in demand, though hard numbers are difficult to establish.

"History matters. In times of crisis you really get to know a country and its people," said Toni Pierenkemper, a professor of economic history at the University of Cologne. "Traumatic events are seared into the collective consciousness and often survive into the next generations."

Germany, where many people lost their savings twice in the 20th century, is one of the richest laboratories of European historical scars - welts that help explain the country's fears of inflation and its interest in maintaining a complex public-private banking system.

The network of 446 publicly owned savings banks, which have been guaranteeing their deposits for three decades, have proved popular in recent weeks as nervous Germans moved part of their savings onto their books. Even more striking, an overwhelming surge in the demand for gold has forced several Internet sites and gold vendors to temporarily shut down their sales operations.

"I've never seen anything like this. We're basically sold out until the end of the year," said Robert Hartmann, co-founder of ProAurum, a gold vendor based in Munich.

Despite the shortages, about 200 customers line up at his counter every day, he said, asking for coins and bars, not certificates. According to his estimates, "only about 5 percent of German investors" are interested in converting a small part of their savings to gold, "but it's enough to put suppliers under strain."

In France, gold sales have also increased, but people are more trusting of the government. The entire French banking system was state-owned as recently as 1987, and the state has played a prominent role in the economy since the days of Louis XIV. In contrast to the unease and suspicion among most Americans about the government's taking stakes in distressed financial institutions, many people in France feel comforted - even vindicated - in their belief that the state has a responsibility to look after the economy.

"We nationalize, we denationalize and we re-nationalize. That's the way it goes in France," quipped Bernard Candiard, director-general of Crédit Municipal de Paris, a 231-year-old pawnshop that is doing brisk business these days and is a state monopoly.

"Today we are again in the process of nationalizing banks," Mr. Candiard said. "It's a sign to the people. The government wants to give them confidence. And confidence in France is the state. We have a different tradition from America."

In Eastern Europe, where people were hardened by modest living standards under communism, the trust in government is more limited.

In Bulgaria, for example, more people are looking at moving their money to Western European banks that offer an unlimited deposit guarantee, said Adriana Alexandrova, a financial executive at the TV2 television station in Sofia.

"There is a great lack of confidence in the banks and in the government," said Ms. Alexandrova, whose parents had to close their pharmacy business after several Bulgarian banks collapsed in the mid-1990s. "Several of my friends have moved their money to safes."

The phrase "he likes gardening" has a double meaning in Bulgaria, she added. "Under communism it mainly meant people preparing jars of pickled vegetables to get them through the winter. These days, it mainly means someone is hiding money in their garden or under their pillow."

Will

AP/UPI Wire Reports