The modern world's most powerful nations, America and China, stumble into a Thucydides trap.

Fiona Sydney

2018-05-29 11:40:00 Tue ET

America and China, the modern world's most powerful nations may stumble into a **Thucydides trap** that Harvard professor and political scientist Graham Allison suggests in his recent book on Sino-U.S. relations. Through the lens of an ancient Greek military chief and historian, the Thucydides trap refers to the key notion that significant shifts in the relative strength of major powers can be a primary cause of bilateral conflict.

Financial market observers and economic media commentators may characterize superficial frictions and flashpoints as the key root cause of both bilateral animosity and hostility. Nevertheless, the real cause of bilateral conflict, or an open Sino-U.S. trade war, might reflect the fear and frustration of political leaders Trump and Xi on both sides. Allison hence emphasizes that if a Sino-American war is not inevitable, an open trade conflict is likely to emerge as a negative disequilibrium outcome in the medium run.

In recent times, the TIME magazine demystifies the 5 major myths that investors seem to misconstrue as new trends and inflection points in the U.S. stock market. Investor worries and concerns arise from volatile asset price gyrations, pervasive tech stock slumps, inflationary price pressures, faster Fed interest rate hikes and their overall adverse impact on real GDP economic output and employment, and a pervasive regime switch of investor favor from stocks to bonds and alternative investment vehicles such as credit default swaps (CDS) and many other financial derivatives.

TIME demystifies the common myths and puzzles from a fundamental perspective. The Federal Reserve accelerates the current interest rate hike at the neutral threshold that helps contain inflation when the U.S. economy operates near full employment. Fiscal stimulus effectuates in the form of both Trump tax cuts and infrastructure expenditures. It takes time for these fiscal measures to drive positive progress in real economic covariates such as real GDP economic output, capital investment, employment, and technological innovation. These economic insights shine new light on the current Sino-American bilateral trade relations and financial market conditions in the broader context of significant shifts in the relative strength of these major powers.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

Zillow share price plunges 20% year-to-date as Redfin and Trulia also experience an economic slowdown in the real estate market.

Daisy Harvey

2018-11-17 09:33:00 Saturday ET

Zillow share price plunges 20% year-to-date as Redfin and Trulia also experience an economic slowdown in the real estate market.

Zillow share price plunges 20% year-to-date as its competitors Redfin and Trulia also experience an economic slowdown in the real estate market. The real es

+See More

The Economist Intelligence Unit (EIU) continues to track major business risks in light of volatile stock markets.

Fiona Sydney

2019-01-11 10:33:00 Friday ET

The Economist Intelligence Unit (EIU) continues to track major business risks in light of volatile stock markets.

The Economist Intelligence Unit (EIU) continues to track major business risks in light of volatile stock markets, elections, and geopolitics. EIU monitors g

+See More

Business leaders often think from a systemic perspective, share bold visions, build great teams, and learn new business models.

Becky Berkman

2020-08-05 08:33:00 Wednesday ET

Business leaders often think from a systemic perspective, share bold visions, build great teams, and learn new business models.

Business leaders often think from a systemic perspective, share bold visions, build great teams, and learn new business models. Peter Senge (2006) &nb

+See More

AYA Analytica podcast provides fresh insights into the latest stock market news, economic trends, and investment portfolio strategies.

Andy Yeh Alpha

2018-12-29 09:32:00 Saturday ET

AYA Analytica podcast provides fresh insights into the latest stock market news, economic trends, and investment portfolio strategies.

Andy Yeh Alpha (AYA) AYA Analytica financial health memo (FHM) podcast channel on YouTube December 2018 AYA Analytica is our online regular podcast and news

+See More

Income and wealth concentration follows the ebbs and flows of the business cycle in America.

Amy Hamilton

2019-04-23 19:45:00 Tuesday ET

Income and wealth concentration follows the ebbs and flows of the business cycle in America.

Income and wealth concentration follows the ebbs and flows of the business cycle in America. Economic inequality not only grows among people, but it also gr

+See More

Berkeley tax economists Gabriel Zucman and Emmanuel Saez find fresh insights into wealth inequality in America.

Jacob Miramar

2019-06-27 10:39:00 Thursday ET

Berkeley tax economists Gabriel Zucman and Emmanuel Saez find fresh insights into wealth inequality in America.

Berkeley tax economists Gabriel Zucman and Emmanuel Saez find fresh insights into wealth inequality in America. Their latest estimates show that the top 0.1

+See More