The death of North Korean dictator Kim Jong Il adds a new, unexpected challenge to the global economy as 2011 comes to a close.

"This is a very dangerous time," says Ian Bremmer, president of Eurasia Group.

By his own admission, "no one knows" how the transition from Kim Jong Il will play out, Bremmer says. The key issue now is whether Kim Jong Il's designated successor, his youngest son Kim Jong Un, will be able to consolidate power.

What is known is North Korea is an incredibly poor, incredibly isolated nuclear power led by a totalitarian regime with a sudden power vacuum at the top. "All of the things we've been most concerned about ... suddenly those are real and they're much more imminent," Bremmer says.

Those fears, what Bremmer calls "tail-end events," include military attacks against South Korea, or the implosion of the North Korean regime, leading to a refugee crisis on China's southern border. In either scenario, there's a good chance both U.S. and Chinese troops will be active on the Korean peninsula, putting pressure on already strained relations between the two superpowers.

An outright shooting war between the U.S. and China is "very unlikely," Bremmer says, "but the potential for U.S.-Chinese relations to deteriorate significantly in the [event] of a bad North Korean outcome is very great."

And while Kim Jong Il's death does raise the possibility of a better outcome — of a new regime seeking to reform North Korean society or even reunification with the South — that hopeful scenario is months away at best, he says.

"Anyone that's taking over, the first order of business - you walk into a room and shoot the first person you see and then the first person that moves," Bremmer predicts. "There are going to be purges in North Korea because you need to establish that iron fist before you can start opening it a little bit."

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com

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Korean stocks are rebounding after last night's death of Kim Jong-Il spurred a steep sell-off.

Korea's Kospi is up 0.9%.

North Korea's economy is largely isolated from the rest of the world.  But fears of an aggressive military action from the unstable nuclear power has investors edgy.  Eurasia Group's Ian Bremmer warns, "This is a very dangerous time."

For now, most Asian markets are trading up.

Japan's Nikkei is up 0.7%.

Australia's S&P/ASX is up 0.3%.

Hong Kong's Hang Seng is up 0.4%.

U.S. futures are also pointing higher.

DON'T MISS: MORGAN STANLEY: This Is What South Korea's Economy Will Be Like In 2012 And 2013

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Before you actually trade North Korean bonds, you should realize that doing so would be boosting the liquidity in a bond market that is used to finance a regime that oppresses its people.  For more on this, read this.

Having said that, here's the deal with the North Korean bond market.

Reuters' Daniel Bases did some investigating, and here's what he found:

Obscure North Korean debt certificates, tied to long-defaulted syndicated loans from the 1970s, traded in the market on Monday with a bid/ask spread around 14/18 cents on the dollar in London, up from a range of 13/15 cents last week, according to London-based Exotix Ltd, a specialist frontier market brokerage firm.

According to Stuart Culverhouse of Exotix, the bonds trade so cheaply because they have been "in default 20 to 30 years."

It's interesting to note that these are pretty serious investors who are playing this obscure and controversial bond market.  From the report:

But before mom and pop investors get too excited, Exotix notes that the typical deal size is around $5 million, meaning institutional investors are likely the only ones able to trade the debt.

So, based on what you've just read, it should be no surprise that these markets are highly illiquid.  Bases reports that it can take days to find a party to trade with, and this particular market often goes on for weeks with no trades.

Read the whole report here >

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With the passing of Kim Jong Il, North Korea prepares for a major leadership transition and potentially a new path. What will the future North Korea look like? How might it change? Where could we look to see an alternative?

South Korea presents an interesting example of the possibilities for North Korea.

Ethan Wilkes, a grad student at Columbia University's SIPA and Editor-in-Chief of The Morningside Post, has spent time traveling in both North Korea and South Korea.

On hearing the news of Kim Jong Il's death he reviewed photos from his trips and put together a stunning photo essay comparing and contrasting the two countries. Originally, featured on The Morningside Post, we have a selection of his photos here. The complete set is fantastic and you should also check it out for yourself.

Wilkes explains in his piece:

"Sitting at the crossroads of one of the most economically dynamic regions of the world, the dismal state of decay that this country currently finds itself is not a product of poor geography, but of decades of maligned politics and policies.

When stepping off the Tupolev Tu-154 and onto the tarmac at Sunan International Airport in Pyongyang, the impression is an immediate and profound “it doesn’t have to be this way.” Once seeing South Korea that impression is only reaffirmed tenfold."

Pyongyang: Airport

Seoul: Airport

Pyongyang: Subway

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The Korean Central News Agency, an official arm of the North Korean government, said in a statement today that former U.S. President Jimmy Carter sent a message of condolences on the death of the country's dictator Kim Jong Il.

We've reached out to a Carter spokesperson for confirmation.

Take this with a grain of salt, given the former "axis of evil" nation's penchant for inventing news.

Here is the statement from state news agency:

Pyongyang, December 21 (KCNA) -- Kim Jong Un, vice-chairman of the Central Military Commission of the Workers' Party of Korea, received a message of condolences from Jimmy Carter, ex-president of the U.S. on Dec. 19.

In the message Jimmy Carter extended condolences to Kim Jong Un and the Korean people over the demise of leader Kim Jong Il.

He wished Kim Jong Un every success as he assumes his new responsibility of leadership, looking forward to another visit to the DPRK in the future. -0-

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PYONGYANG, North Korea (AP) — North Korea on Sunday aired footage showing the uncle and key patron of anointed heir Kim Jong Un wearing a military uniform with a general's insignia — a strong sign he'll play a crucial role in helping the young man take over power and uphold the "military-first" policy initiated by his late father, Kim Jong Il.

The footage on state television shows Jang Song Thaek in uniform as he pays respects at Kim Jong Il's body lying in state at Kumsusan Memorial Palace. Seoul's Unification Ministry says it's the first time Jang, usually seen in business suits, has been shown wearing a military uniform on state TV.

Little by little, North Korea is offering hints on the details of Kim Jong Un's rise and the future composition of his inner circle as millions continue to mourn for his father, who died one week ago. North Korea has also begun hailing Kim Jong Un as "supreme leader" of the 1.2-million strong military as it ramps up its campaign to install him as ruler.

The new title, a public show of support from top military leadership and the symbolic appearance of Jang in uniform send a strong signal that the nation will maintain Kim Jong Il's "military first" policy for the time being.

South Korean intelligence has reportedly predicted Kim Jong Un's aunt Kim Kyong Hui, a key Workers' Party official, and her husband Jang, who is a vice chairman of the powerful National Defense Commission, will play larger roles supporting the heir.

Jang and his wife have risen to the top of North Korea's political and military elite since the succession campaign began two years ago. Both 65, they also have the weight of seniority so important in a society that places a premium on age and alliances.

Kim Jong Un made a third visit Saturday to the palace where his father's body is lying in state — this time as "supreme leader of the revolutionary armed forces" and accompanied by North Korea's top military brass, according to the official Korean Central News Agency.

Earlier, the newspaper Rodong Sinmun, mouthpiece of the ruling Workers' Party, urged Kim Jong Un to accept the top military post: "Comrade Kim Jong Un, please assume the supreme commandership, as wished by the people."

Kim Jong Un, who is in his late 20s and was unveiled in September 2010 as his father's choice as successor, will be the third-generation Kim to rule the nation of 24 million. His father and grandfather led the country under different titles, and it remains unclear which other titles will be bestowed on the grandson.

Kim Il Sung, who founded North Korea in 1948, retains the title of "eternal president" even after his death in 1994.

Son Kim Jong Il ruled as chairman of the National Defense Commission, supreme commander of the Korean People's Army and general secretary of the Workers' Party.

Kim Jong Un was promoted to four-star general and appointed a vice chairman of the Central Military Commission of the Workers' Party. He had been expected to assume a number of other key posts while being groomed to succeed his father.

His father's death comes at a sensitive time for North Korea, which was in the middle of discussions with the U.S. on food aid and restarting talks to dismantle the North's nuclear weapons program. Chronically short of food and suffering from a shortfall in basic staples after several harsh seasons, officials had been asking for help feeding its people even as North Koreans prepared for 2012 celebrations marking Kim Il Sung's 100th birthday.

North Korea has emphasized the Kim family legacy during the sped-up succession movement for Kim Jong Un. State media invoked Kim Il Sung in declaring the people's support for the next leader, comparing the occasion to Kim Jong Il's ascension to "supreme commander" exactly 20 years ago Saturday.

At the Kumsusan Memorial Palace, Kim Jong Un and senior commanders paid silent tribute to Kim Jong Il, "praying for his immortality," KCNA said. The military also pledged its loyalty to Kim Jong Un, the report said.

"Let the whole army remain true to the leadership of Kim Jong Un over the army," KCNA reported — a pledge reminiscent of those made when Kim Jong Il was named supreme commander.

The call to rally behind Kim Jong Un, dubbed the "Great Successor" in the wake of his father's death on Dec. 17 from a heart attack, comes amid displays of grief across North Korea. The official mourning period lasts until after Kim's funeral Wednesday and a memorial Thursday.

In Pyongyang, workers at beverage kiosks handed steaming cups of water to shivering mourners, including children bundled up in colorful thick parkas. A throng of North Koreans climbed steps and placed flowers and wreaths in a neat row below a portrait of Kim Jong Il as solemn music filled the air and young uniformed soldiers, their heads shaved, bowed before his picture.

A sobbing Jong Myong Hui, a Pyongyang citizen taking a break from shoveling snow, told AP Television News that she came out voluntarily to "clear the way for Kim Jong Il's last journey."

Despite the grief, there are signs that the country is beginning to move on, with people going to work and "not giving way simply to sorrow," KCNA said. "They are getting over the demise of their leader, promoted by a strong will to closely rally around respected Comrade Kim Jong Un."

The Korean peninsula has remained in a technical state of war since the Koreas' 1950-53 conflict, but two groups from South Korea have permission from the South Korean government to visit the North to pay their respects, Unification Ministry spokesman Choi Boh-seon said Saturday in Seoul.

One group will be led by the widow of former President Kim Dae-jung, who held a landmark summit with Kim Jong Il in 2000, and the other by the wife of a late businessman with ties to the North.

On Sunday, North Korea accused South Korea of blocking many other groups from visiting Pyongyang to pay respects, warning the action would trigger "unpredictable catastrophic consequences" in relations between the countries. The statement by an unidentified spokesman at the Committee for the Peaceful Reunification was carried by the official Korean Central News Agency.

Seoul's Unification Ministry said it will allow only the two groups to visit the North.

___

Associated Press writers Foster Klug and Hyung-jin Kim in Seoul, South Korea, and AP Korea bureau chief Jean H. Lee contributed to this report. Follow them on Twitter at twitter.com/newsjean and twitter.com/APKlug.

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The death of North Korean leader Kim Jong-il on December 17, 2011, escalated the uncertainty surrounding the regime change in Korea, which was preparing for a leadership transition in 2012. Very little is known about Kim Jong-un, the young man who is taking on the role of dynastic head. Some analysts feel that the death of Kim Jong-il sharply increases the risks and uncertainties from the secretive Pyongyang regime, which has significant consequences for security on the Korean peninsula and beyond. South Korea and Japan are most immediately threatened, but China and the U.S. are also deeply involved with vital stakes in North Korea’s future.

We believe Kim Jong-un, being untried and young, may not be entrusted with the power his father had, at least initially, and there is a chance that he will be affected by the rest of the Kim family. We think there is a potential risk that the regime may undertake some type of military activity or nuclear tests in an effort by the new leadership to demonstrate to the outside world that there has been no regime policy change, internal strife or reunification with the south.

However, uncertainties and risks in Korea have been with us for a long time, since the end of the Korean War in 1953. There has always been a threat of invasion from the north, and this threat has been amplified by the various actions taken by the North Koreans over the years. Therefore, some foreign investors have become inured to the situation. 

We suspect this regime change is unlikely to create any immediate substantive impact on other North Asian financial markets for the moment, but any increase in tension on the Korean peninsula may result in some capital moving from South Korea into markets like China, Japan and Hong Kong. However we do not see that happening at this stage.

On a more optimistic note, we expect the new leaders may be willing to adopt Chinese-style economic reforms, which could result in a much more relaxed political environment. We feel the fundamentals for South Korea remain strong generally and the country has continued to show resilient growth on a longer-term basis. In November, South Korea ratified the free trade agreement with the U.S., which could result in increased trade between the two nations upon its implementation in January 2012.

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During this slow holiday week, we have new cartoons that are all about a merry Christmas and a happy New Year.

There is also colorful commentary on Putin's reign in Russia and Bashar al-Assad's in Syria.

Our favorites include Occupy Wall Street at the North Pole and the gift in Kim Jong-un's stocking.

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North Korea's economic practice of self reliance has resulted in one of the world's most isolated economies with minimized trade relations and  discouraged foreign investment.

As North Koreans took off work to mourn Kim Jong-il and the world observed the enigma of Kim Jong-un take over as Supreme Leader, inquiring minds wonder what he might do in an attempt to revive North Korea's stagnant economy. 

North Korea's GDP is $28 billion.

North Korea's GDP per capita is $1,800 and ranks 194 in comparison to other countries. North Korea's GDP is barely 3% of South Korea's estimated $1 trillion GDP.

Source: CIA Factbook

47.8% of North Korea's GDP comes from the industry sector.

Machine building and manufacturing of metallurgical products, military products, and textiles are responsible for a large part of the industry sector. The metallurgy production is supported by North Korea's vast mineral resources.   

Source: U.S. Department of State

31.5% of North Korea's GDP comes from the services sector.

Service industries such as financial services and tourism are government run in North Korea. In November, the North Korean government tried to increase its revenue by opening the Mount Kumgang tourist resort.

Source: The Washington Post

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North Korea has just started publishing its official newspaper, Rodong Sinmum, online. Like everything about North Korea, it's weirdly compelling: You don't know whether to be delighted, saddened or angry at what passes for media in the hermit kingdom.

The headlines in the "Newspaper of the workers" seem to be emanating from an alternative reality. Here's a sample:

• "Stone Processing Industry of DPRK with Promising Future"
• "Kim Jong Un Sends Books to Grand People's Study House"
• "150 000 Cubic Meters of Earth Blasted"
• "University Students Conduct Socio-Political Activities at Power Complex"
• "Natural Stones and Patriotism"

We have Lyndsay Lohan, they have earth-moving news, I guess. Both are pure PR, of course.

The image above is from their front-page scoop, "Kim Jong Un Inspects Construction Projects Undertaken by KPA."

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The supreme leader of North Korea Kim Jong Un made an official visit to a military school to congratulate the students and teachers on the lunar New Year.

The young leader acted very presidential – shaking hands, trying out the bunk beds of the students, tasting their lunch, and sitting in on some classes.

Needless to say, the students flipped out when they saw him.

Watch below a clip from a North Korean broadcast via AP.

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Kim Jong Un might be dead. Or he might be on the run. Or there's a coup to remove him from power. It could have been an assassination.

Or it could be nothing.

Nobody's really sure what's going on right now in North Korea, but the Internet is freaking out about it.

It started just a few hours ago when Twitter and its Chinese equivalent, Weibo, began exploding with rumors after it was reported that several black cars had rushed to the embassy in Beijing where Jong-Un, the 28-year-old recently appointed leader of North Korea, was staying.

The Atlantic Wire was the first to jump on the story. Now major news agencies including Reuters, Forbes, and The Huffington Post are fueling the buzz about the rumors. Still, nothing has been officially confirmed or denied. 

Since news from North Korea is controlled by the government and very closely restricted, a confirmation will be hard to come by, and the truth even harder still.

Gawker is trying to use crowdsourcing of information from its readers in China to find an answer.

Meanwhile, an interesting point to consider: Last month, MSNBC reported that Jong-Un's half-brother, Kim Jong Nam, said Jong-Un won't "last long." Whether this statement has any connection to the current situation has not been determined.

UPDATE: Gawker thinks it has gotten to the bottom of how and where the rumor started.

Click here to see an incredible rare look at life in North Korea. 

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No word out yet on whether the rumors are true about the death of Kim Jong Un. 

Meanwhile, Twitter is still buzzing about North Korea's leader, and it's not all sympathy and concern.

As The Atlantic Wire's Adam Martin noted today, Jong Un's name and his weight make for perfect "Twitter-meme territory."

We decided to find out if that is true. And boy is it. 

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North Korea could finally be considering capitalist methods to combat its long-running economic crisis, if reports by a major Japanese newspaper are to be believed.

Kim Jong Un allegedly urged officials of the ruling Workers’ Party of Korea to debate economic reforms at an event in January, the Japan's Mainichi Shimbun claims. The paper says it is in possession of records of his statements.

The records appear to show Kim stating he was aware that economists and officials were afraid of reforms and that he wanted to allow more room for debate. Kim is quoted as saying:

"When the economic division ... (campaigners) and economists present economic management suggestions and say, 'How about doing things this way?' they are viewed from a biased perspective and criticized as 'trying to introduce capitalist methods.' Because of this, even if they have opinions on methodology relating to economic management, they don't voice them."

North Korea remains one of the few countries with a completely state-controlled economy.

When the paper questioned a member of the party, he said that they had been ordered by Kim to find new economic methods “whether they are Chinese methods or from Russia or Japan” so they could provide “better supplies and civilized lives” for the “wonderful” North Korean people. According to foreign estimates, about three million North Koreans are on the verge of starvation, news agency ITAR-TASS reports.

But despite his good intentions, it could all come to naught. Hardline politicians in Pyongyang have always opposed interactions with other states, worried it could undermine the government’s power and increase South Korea’s influence, according to Voice of Russia.

“The key is how much power the economic reformists have in North Korean society. If Kim lacks the support of these reformists he is unlikely to succeed, no matter how determined he is,” a government official told South Korean newspaper Hankyoreh.

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Last week Kim Jong Un, North Korea’s new leader, made a subtle yet clear allusion to possible economic reform in his speech at his grandfather’s centenary birth celebrations, telling the crowd that the party was determined to ensure the people would never have to “tighten their belt again”.

While it may not appear much to Western ears, to North Koreans it's an important sign. Such talk has been pretty much unheard of in the hermit kingdom, where the former leader, Kim Jong Il, not only never made public speeches, but always exhorted personal sacrifices for the greater good.

The more affable, Swiss-educated younger Kim has been deviating from his father’s aloof public image — he invited foreign journalists to view the (failed) rocket launch for instance, and there have been (unconfirmed) reports in a Japanese newspaper of Kim’s desire for new economic policies. 

Kim Jr’s breaks in tradition have given many hope he will follow it up with real change. “He represents the younger generation which has aspirations about the future...a better life,” Brad Babson, a former World Bank official and expert on North Korea at Johns Hopkins University, says. Kim seems to know foreign investment is needed, but this is easier said than done.

Kim currently derives his legitimacy not from good governance, but from maintaining a belligerent international stance (as evidenced by the recent missile launch). He needs to make North Koreans believe South Korea and the United States are the enemy, and the Kims and the military are protecting them through isolation to stay in power, even though this is deterring foreign investment.

There’s definitely need for drastic improvement. The Democratic People’s Republic of Korea (DPRK)’s economy has stagnated for decades, owing to restrictive economic practices, limited trade, and insufficient foreign investment. GDP per capita is $1,800, putting it in 193rd place out of 226 countries. Its policy of self-reliance is failing, and Myanmar’s case proves it needs to end its self-isolation to attract foreign investment and bolster its economy, according to The Economist. This may be behind Kim’s attempts at greater international transparency.

Special enterprise zones on the border with China and South Korea haven’t stimulated the domestic economy: most people outside the capital Pyongyang still live in poverty. And while most North Koreans are too concerned with the hardships of day-to-day living for discussions on the country’s future, they are waking up to the government’s unfair policies, as the 2009 protests against currency revaluation prove. Increased exposure to the outside world through more cell phone connectivity, trade with China, and visits by foreigners has helped too.

In an ideal situation, Kim would institute measures to make citizens’ lives better. But for all the mythology that surrounds the Kims in North Korea, the military are Kim Jong Un's key supporters, and until he establishes himself, he needs to keep them happy, according to Time. The recent missile launch in violation of a recently concluded food-for-arms deal with the U.S. was a way for Kim to assure the military he was looking after their interests. It is also why, in the “guns versus butter” battle, DPRK has always chosen guns.

“As a younger person whose rise has only been prepared for for a maximum 2-3 years... he doesn’t have the connections or the seniority [of Kim Jong Il],” says Aidan Foster-Carter, a professor at the University of Leeds and author of ‘North Korea after Kim Il Sung’.

The Pyongyang elite are another group interested in maintaining the status quo, but for different reasons. They have been the one group that has actually prospered under the draconian regime, thanks to the Kims’ willingness to grease their palms to ensure their continued support, according to The Economist. If the regime began negotiations and opened up the country to capitalism, the elite are afraid it would weaken their clout.

“North Korea is being hamstrung by its own discourse,” says Foster-Carter. So even though Kim Jong Un and his father have (often obliquely) promised reforms, change has been minimal.

But this hesitancy can’t go on forever. China has supported North Korea politically and economically for some time now (as a buffer state to the pro-U.S. South Korea), and the assurance of Beijing’s backing has emboldened Pyongyang. But China has been growing impatient with Pyongyang’s aggressive ways and lack of reform, and trade with China forms a majority of North Korea’s earnings, so it would do well to keep Beijing happy.

Sustaining the loyalty of the elite in the future could also pose problems, according to Babson. The current economic model can hardly continue making them rich indefinitely if they are not eventually allowed access to free markets. If Kim strengthens the economy, it would help strengthen the state, allowing capital to flow in and make both the rich and poor prosperous.

"The internal resources of the society hardly exist anymore, there’s no way to raise capital, everything needs replacing, and externally, with the whole policy of militancy, of nuclear defiance, the result is, you get another round of sanctions from the UN, everybody thinks you’re weird, and nobody is going to come and invest," Foster-Carter says.

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Kim Jong Un recently took a trip to a North Korean theme park, Mangyongdae Funfair, The Telegraph reports, and in comments broadcast on state television, the young ruler offered an unusually damning opinion on the park.

"Pathetic" he said as he noticed a damaged path near a Viking-themed ride. He also pointed out peeling paint and faults with a rollercoaster.

"I had no idea the park could be so pitiful," Kim reportedly said.

Apparently the fate of the park is so important that Kim now has a vice-marshal in the People's Army in charge of the renovation.

We found this promotional footage from the park online. It doesn't look that bad, but perhaps we have low standards.

WATCH:

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In September of last year, graphic artist Eric Testroete and his girlfriend spent nine days as tourists in North Korea. They went back in February for Kim Jong Il's birthday.

Testroete said he was always fascinated by the thought of going into such a restricted country and booked a trip through a travel agency.

Even though he was well-aware of the extent of government control and poverty, many images still shocked him.

Testroete shared exclusive images from his visit and described what was happening in his own words.

"Students and dancers perform at the Arirang Mass Games in Pyongyang, the capital city of North Korea. The background mosaic is made up of children holding large books opened to a certain color to create the image. 100,000 performers are said to participate in the show."

Source: Eric Testroete

"The Koryo hotel in Pyongyang after sunset. Since North Korea has had power issues since the 90's, much of the city remains dark at night with many apartments only lit with a single fluorescent bulb. However, many of the cities most important landmarks are lit with floodlights."

Source: Eric Testroete

"Children perform at the Mangyongdae Children's Palace, a school that allows students to study extracurricular activities. The children here are extremely disciplined as well as talented."

Source: Eric Testroete

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A North Korean state concert for new leader Kim Jong Un had unusual guests this weekend — Mickey and Minnie Mouse.

The AP reports that performers dressed as Disney characters — also including Winnie the Pooh and Tigger — took to the stage in what many saw a rare acknowledgment of Western culture from the Hermit state. Kim himself is said to have established the groups that performed, perhaps a sign that he is willing to be more tolerant of outside influences.

Unfortunately North Korea hasn't yet acknowledged Western copyright laws. A representative for Disney confirmed that the use of their brands was "not licensed or authorized by The Walt Disney Company."

The Telegraph has some footage of the news broadcast that announced the show.

WATCH:

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Following this weekend's somewhat bizarre Disney-themed North Korean event, everyone was left with one question — who was the young woman who seemed to be seated so close to young leader Kim Jong Un?

Outside of the North Korean elite, no one seems to know (considering we don't even know how old Kim is, perhaps this is no surprise), but her sudden appearance has got tongues wagging, and is making headline news in the South. Some are saying it is Kim's little sister, Yeo-jong, while others believe that the woman must be Kim's wife, Chosun reports.

It's unclear if the woman is the same spotted last December, who was at the time rumored to be his "secretary", according to Chosun. A photo of a woman believed to be Yeo-jong also appeared in December, and appears to be a different woman than the one seen at the weekend.

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Rumors are still swirling about the identity of the mystery woman seen with North Korean leader Kim Jong Un at the weekend. His wife? His sister? His secretary?

Perhaps the most complete theory so far has emerged from Korea Joongang Daily, who say that the woman appears to be Hyon Song-wol, a former vocalist of the Bochonbo Electronic Music Band.

The paper reports that the pair were thought to have had an affair after Kim returned from his education in Switzerland, but Kim's late father Kim Jong Il apparently disapproved of the relationship. Now the couple appear to have rekindled their romance after the death of the elder Kim.

Hyon is best known for her song "Excellent Horse-Like Lady", according to Joongang (that's their translation, not ours). Photos from a recent performance by Hyon definitely bare a resemblance to the lady seated with Kim, but its hard to tell.

If you're wondering about the "Excellent Horse-Like Lady" song in question, by the way, here's a video that seems to be it (Korea watchers, please get in touch if you can shed more light on this).

See Also: Inside The Terrifying North Korean Gulag >

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