Ruediger Frank at 38 North has this to say about the Cheonan incident:
The “cornered tiger” scenario is the only condition, beyond mental illness, under which Kim Jong Il would choose this option. One possible interpretation of the sinking of the Cheonan is that the situation in North Korea is so bad and the regime so desperate that it believes risking annihilation is its only option. But while it is hard to regard the situation in North Korea as rosy, it has been through worse times. With the currency reforms of 2009, the regime was able to win some time in its otherwise hopeless fight against the inevitable transformation of North Korea’s society when it expropriated the growing wealth from the newly emerging middle class and tried to partially demonetize the economy again. And as far as we know, prior to March 26, there was no intelligence pointing to unusual troop movements; no increase in communications that might have signaled something out of the ordinary was about to happen or signs that a change in the military’s alert status was about to take place.
Of all the possible scenarios for why North Korea would have been involved in the Cheonan incident, the one that should worry us the most is the possibility that it was NOT Kim Jong Il who gave the orders. While in 2008 one could have imagined, under certain circumstances, that a young recruit overreacted and shot a South Korean tourist at Mt. Kumgang, it is much less likely that the captain of a North Korean submarine had a short fuse and sank that corvette. He must have done so upon receiving orders, or at least a “go ahead” from someone above him. The higher up we move in the command chain, the stress motive becomes less likely. A lieutenant commander in his sub might think twice; a rear admiral will think ten times before pulling the trigger.
If the North Koreans torpedoed the ship, and if it was not done after a self-destructive order by Kim Jong Il, this may be proof of a destabilization of the current leadership in Pyongyang. Sinking the Cheonan without consent by the top leader would be an open act of insubordination. An autocratic leader who does not have his lieutenants under control becomes a liability to the system. It is fear and the unchallenged authority of the top that keeps an autocracy together. Many of us have argued that such considerations had allowed Kim Jong Il to take over power from his father so smoothly despite his very different personality: the elite knew that regime stability depended on a strong and undisputed leader, and he was the only realistic candidate for the job.
Ducks and Economics 