Firstly, via the Marmot's Hole, is this long background article about how capitalism has spread bottom up in North Korea and how, essentially, the Stalinist state controls are mostly gone. As he says, READ THE WHOLE THING.
Of course the problem with reading the above and thus feeling ever so slightly optimisitic about North Korea is that you then read the news and see that N Korea is threatening "to declare war" on Japan. The background to this is that, as some people may know, N Korea has over the years abducted many Japanese nationals in order to force them to train their spies. Recently N Korea returned some bones purported to be of one of these abductees, Megumi Yokoto. Unfortunately for N Korea, DNA analysis appears to show that these are not her bones and not surprisingly Japan is rather peeved and threatening to stop shipping food aid. It may also consider other sanctions.
N Korea, rather like a chap in a Victorian book about school boys, "burn[s] not with remorse or regret but with shame and violent indignation." because it has been caught fibbing again and of course it seeks to shift the blame as fast as it can. Many people are rather worried about the likely repercussions but it seems to me that in the longer term Japan will be better served by being resolute and, since a large proportion of the Japanese population is outraged at this latest trick, giving in would also carry a shorter term political price too. In some ways this reminds me of the events a few years back when the US caught N Korea utterly in breach of its "food for no nukes" agreements and, although the US does seem to be warning Japan to be cautious, I don't think the US will be too concerned if the Japanese try and push this some more. It could even be that the US is hoping to let Tokyo take on the role of "Bad Cop" for a while.
The danger for the Koreas is that the outside powers have totally lost patience with N Korea's continual bad faith and are no longer particularly interested in pandering to the regime. The likely result is that N Korean trade, such as it is, is likely to suffer even more - Japan could easily close its ports to N Korean registered ships and thereby significantly impact N Korean trade - and aid is likely to also decrease. The problem for the North is that Bush is now securely reelected in America, has Iraq mostly under control, and therefore is able to turn its attention to other members of the "Axis of Evil". It had seemed to me that up until this latest mess, N Korea was doing its best to split the US from its allies in very way possible. Now however it has managed, probably by mistake, to get the US and Japan firmly allied against it and this means that it is going to find it a lot harder to make its usual claim that everything is the fault of those bullying Americans.
This means that N Korea will depend on its pals in the South more and more, as well as the support of Beijing. I suspect that N Korea will attempt to get S Korea to make up all the aid not sent by Japan, the US etc. by some comibnation of threats and promises. The Roh government will probably bend over as usual but I predict that in a year or so the North will again do something utterly stupid and this time the insulted nation will be S Korea. What happens after that depends rather heavily on the S Korean political situation but I suspect that fraternal sympathy for their Northern relatives will become steadily shorter amongst more and more S Koreans. Alternatively the North could antagonise China somehow, how is not clear but I suspect the result will be similar as the N Korean government suddenly realises that it has run out of people willing to see it survive. It would not at all surprise me if the US doesn't somehow point out to the soldiers and generaly in N Korea that they (and their families) are far more likely to survive a coup against their leadership than a war against the US plus S Korea (plus Japan). What happens whan is unclear but I'm expecting some sort of endgame well before the next US elections.