In a bid for foreign investment, North Korea has created a dozen special zones, so reports a South Korean newspaper. The country needs hard currency, thanks to lack of trading relationships and an economy that redefines "troubled." Raw material and power shortages have constrained heavy industry in North Korea, which has traditionally been the mainstay of its economy.

The new zones will offer new opportunities for economic growth, though the North's past experiments with special economic zones haven't been terribly successful.

North Korea's plan to limit wealth through a currency exchange has caused nothing but problems. Early on, it led to riots (and fatalities), and later the government eased the upper limit on wealth that could be held. The situation has become so difficult that the regime has even issued an apology. North Korean premier Kim Jong-il, according to a South Korean activist group, has come out and said the country is sorry.

"During a meeting of senior members of the Pyongyang municipal people's committee a few days ago, Kim Yong-il apologized for confusion and instability in the daily lives of people caused by wrongly fixed prices at state-run shops from the time of the currency reform to early this year," said the Good Friends newsletter.

Nobody -- and I mean nobody -- has been secure over the past year and a half as the recession has touched every leader in every organization in every country. Does 'every' sound a bit extreme? Well, the latest news out of North Korea warrants it. The top dog over at North Korea's secret treasury, Kim Dong Un, has been bounced, according to South Korea's Yonhap news agency.

North Korea's secret treasury, also known as Room 39, is one of the most secretive organizations in the most secretive country in the world. Its purpose is to bring foreign currency into a country whose own paper is of no value to anyone but coin collectors. Rumors abound as to how Room 39 actually accomplishes this, including forgery, drug trade and weapons trafficking among the means used.

Even though the regime has loosened some of the restrictions on currency exchange, inflation is still skyrocketing in North Korea. The government recently announced that it was moving to a new currency, and that the swap would involve a limit on how much could be traded. As a result, personal wealth was being consciously constrained, which led to the open questioning of the regime, defiance and rioting in some cases, and even a rare instance of flexibility among Kim Jong Il's subordinate decision makers.

Reports from inside the isolated communist state suggest that food shortages and price inflation have resulted from the new monetary policy, exacerbating a difficult situation with which the country already had to cope.

It took two dead and a few weeks for Kim Jong Il to realize that using a currency exchange to cap wealth was probably a bad idea. Earlier this month, the North Korean leader announced a currency revaluation – without giving any warning. Paired with a currency exchange, citizens of the most isolated country on the planet would not be allowed to swap more than $40 of the old bills for the new. So, even the (relatively) wealthy would be left with $40 and piles of worthless paper.

The response was surprisingly negative. And, the fact that there was a response was surprising. Normally, the regime does a solid job of preventing any significant visible disagreement. This time around, the situation was different. The country, hit hard by famines, power shortages and profoundly depressed morale, voiced its displeasure with the decision. A riot broke out in one city, leaving two killed.

The timing couldn't have been worse. Just as a U.S. envoy arrived in North Korea to meet with the reclusive regime's officials, protests and violence are reported to have erupted. The country is reacting to a new currency issue that is being used to seize most of the citizens' money and savings.

On November 30, 2009, the regime announced that it would issue new currency and cap the amount that could be exchanged at the equivalent of $40. This effectively rendered the money held privately worthless.

North Koreans don't need DVR technology any more. The most important purpose of these devices -- to fast forward through commercials -- no longer applies, now that the reclusive Communist state has banned television commercials from the airwaves.

According to the Yonhap news agency, North Korean leader Kim Jong-il was upset when he saw commercials showing up on Korean Central Television in early July. The report quotes a source close to Kim as saying the ruler's response to the ad was: "What is this? That kind of rubbish appeared when China started reforms and openness." He was obviously pissed and hasn't been open to suggestions that he follow China's lead in embracing a limited form of capitalism.

Oil prices hit a 6 week high today, as cold weather gripped most of the country.

Over the weekend the nation was hit with a cold front that reminded oil traders that the high demand winter season is on its way, and could help reduce a lot of the oversupply that the market is currently looking at.

The landslide victory of current president Mahmoud Ahmadinejad and the announcement of same, only hours after the voting polls closed, even though paper ballots had to be hand counted, has cast serious doubts about the election results.

Last week I wrote of Iran's great potential but today much of that potential has evaporated for the time being, and perhaps for another four years. The rulers of Iran have decided that the devil they know is better than the one they don't. Unfortunately, as far as politicians go, they may have gotten exactly that.

One of the things that really helps the U.S. balance of trade is weapons sales. In a recession, perhaps they should be encouraged more.

According to Reuters, Iran's Gulf neighbor, the United Arab Emirates, has signed a deal worth $3.3 billion to buy missiles from U.S. firm Raytheon (NYSE: RTN).

The Census Bureau reports that the October balance of trade was a negative $57 billion. A lot of that could be made up by selling missiles, tanks, rifles, and war planes. The Department of Defense has to approve most of the sales, but perhaps it should be annexed to the Department of the Treasury, at least until the recession is over. Some of the countries where a lot of sales are prohibited, like North Korea, could be added to the "OK to export weapons" list?

In September, The New York Times reported that "From tanks, helicopters and fighter jets to missiles, remotely piloted aircraft and even warships, the Department of Defense has agreed so far this fiscal year to sell or transfer more than $32 billion in weapons and other military equipment to foreign governments, compared with $12 billion in 2005." Up that number to $100 billion and think of the jobs it would create.

Weapons sales are not on the new Obama list of plans to create 2.5 million jobs by spending $800 billion. And, selling weapons does not cost the government at dime.

Douglas A. McIntyre is an editor at 247wallst.com.

Editor's Note: This post was written by Terry Woo, one of Minyanville's sharpest minds AND/OR brightest bulbs. For more perspective AND/OR insight, visit www.minyanville.com.

Crude oil is trading lower for a third day in a row.

Currently there's talk out there of demand destruction in other countries (i.e. China's slowing economic growth and slowing U.S. economy). But I don't think there has been enough coverage on financial television regarding Iran.

Remember crude's breakout when the world speculated Israel was preparing to attack Iran's nuclear facilities. And remember more upward pressure when Iran retaliated by test firing its long-range missiles.

As reported by CNN yesterday, Undersecretary of State William Burns is accompanying an EU delegation and will meet with a top Iranian nuclear official... something that hasn't happened in decades! It's a game changing event. That combined with North Korea (cooperating with the world in giving up its pursuit of nuclear weapons), I believe this is simply the Iranian risk premium being taken out of the price of oil.

According to the Financial Times, "Companies doing business in "terrorist-sponsoring states" could once again have their names under scrutiny under a controversial plan being revived by the Securities and Exchange Commission."

In June, the SEC sparked controversy by posting the names of companies that did business with Iran, Sudan, Syria, North Korea, and Cuba. The agency quickly removed the list amid complaints from companies, who complained that the SEC didn't research the materiality of the connections.

Now the SEC is considering putting the list back up, and rightfully so. This is all about disclosure and transparency: if investors don't feel that the connections are material, they can ignore the list. But there are people who want to know whether the companies they're investing in have ties to terrorist states, and the SEC has a role in making information available to investors who request it.

More information for investors is always a good thing and if companies are embarrassed about showing up on the list, maybe they should reconsider their ties to these countries.

What's up with those folks over at Wachovia (NYSE: WB)? It seems like they may have lost hold of the wheel. They've accidentally given up customers account balances to crooks. They have offered refuge to questionable funds. Now, it seems they've been sucked, with seven other banks, into a Federal investigation regarding the rigging of bids for government investment purchases. What has happened to the conservative Wachovia I used to know?

On May 20, Charles Duhigg had in The New York Times an excellent exposé regarding another nasty round of cyber crime. Wachovia was in no way at fault for the release of information leading to the account attacks, but its institution was one of many that apparently surrendered funds to criminals. I had always considered Wachovia to be an iron-clad safe institution. Someone must have missed a turn.

MAJOR PAPERS:

• Time Warner Inc (NYSE: TWX) senior executives are considering reducing the company's cable-TV holdings over time, reported the Wall Street Journal.

OTHER PAPERS:

• The $27B private equity buyout of Clear Channel Communications Inc (NYSE: CCU) is in greater jeopardy as the California Public Employees' Retirement System, or CalPERS, said yesterday that it plans to vote against the deal, reported the New York Post.
• According to diplomatic sources in Beijing, Iran and North Korea are working to "deepen cooperation" on the countries nuclear weapons technology, reported the Telegraph.
• India's Economic Times reported that Mid-sized Indian pharmaceutical companies including Orchid Chemicals, Strides Arcolab, Glenmark Pharma, Granules India, Shasun Chemicals and Plethico Pharmaceuticals are all looking for acquisitions in Russia, Europe and the United States.

WEBSITES:

• LightReading.com reported, citing a source close to the matter, that Sprint Nextel Corporation (NYSE: S) is considering a buyout of Vonage Holdings Corporation (NYSE: VG) and the two have been in talks to attempt to resolve Sprint's patent lawsuit against the VoIP provider.
• Rumors are swirling that "quality problems" may cause Apple Inc (NASDAQ: AAPL) to delay the launch of its upcoming iPhone, according to LoopRumors.com, citing Smarthouse News Australia.

While tensions in Iraq grab most of the military headlines, the geopolitical threat posed by North Korea remains ever-present. And with its dominant role in missile systems, no company comes to mind more readily than Raytheon (NYSE: RTN) as advisors and analysts assess these risks.

Indeed, Keith Fitz-Gerald, editor of The Skeptical Investor, sees this leader in missile defense as a "stellar choice" to protect one's long-term portfolio. Although involved in everything from "military radios to aircraft and satellite communications systems", the advisor is most attracted to the stock due to the firm's Phalanx weapons system, which he describes as a "super-high-speed close-in weapons defense system used aboard our naval vessels."

He says, "the Phalanx basically throws up a wall of lead and can track hundreds of targets simultaneously while prioritizing their threat level automatically." Fitz-Gerald notes that its Phalanx system is so quick and efficient that it could "actually shoot down an outbound missile if it had to."

These systems, he believes, are increasingly important due to North Korea. He says, "Raytheon has particular expertise in target identification, tracking and destruction-particularly when it comes to missiles and other weapons that some nut job like Kim Jong-Il or other rogue nations could try to rain down on our troops and allies in the future."

Meanwhile, the advisor views Raytheon as a conservative large cap stock, well suited to the current market and a worthy addition to his "Compound Growth Monsters" portfolio. And while he generally prefers a dividend higher than Raytheon's 1.9% yield, he concludes, "Given the extraordinary role this company is playing in our defense and the size of the defense contracts that are likely to come its way, I'm willing to make an exception."