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

Capital structure theory and practice

Jonah Whanau

2022-03-15 10:32:00 Tuesday ET

Capital structure theory and practice

Capital structure theory and practice  The genesis of modern capital structure theory traces back to the seminal work of Modigliani and Miller (1958

+See More

President Trump refreshes his public image through his presidential address to Congress.

Daisy Harvey

2017-02-01 14:41:00 Wednesday ET

President Trump refreshes his public image through his presidential address to Congress.

President Trump refreshes his public image through his presidential address to Congress with numerous ambitious economic policies in order to make America g

+See More

House of Representatives considers a government expenditure bill with border wall finance and so sets up a shutdown stalemate with Senate.

Laura Hermes

2018-12-23 13:39:00 Sunday ET

House of Representatives considers a government expenditure bill with border wall finance and so sets up a shutdown stalemate with Senate.

The House of Representatives considers a government expenditure bill with border wall finance and therefore sets up a shutdown stalemate with Senate. As fre

+See More

Disney acquires 21st Century Fox in a $52 billion landmark deal.

Amy Hamilton

2017-12-15 07:42:00 Friday ET

Disney acquires 21st Century Fox in a $52 billion landmark deal.

Disney acquires 21st Century Fox in a $52 billion landmark deal. This deal has a total value of about $66 billion while Disney assumes $14 billion of Fox

+See More

Warren Buffett shares his key insights into life, success, money, and interpersonal communication.

Rose Prince

2018-09-09 13:42:00 Sunday ET

Warren Buffett shares his key insights into life, success, money, and interpersonal communication.

Warren Buffett shares his key insights into life, success, money, and interpersonal communication. Institutional money managers and retail investors ca

+See More

America expects to impose punitive tariffs on $7.5 billion European exports due to the recent WTO rule violation of illegal plane subsidies.

Apple Boston

2019-11-07 14:36:00 Thursday ET

America expects to impose punitive tariffs on $7.5 billion European exports due to the recent WTO rule violation of illegal plane subsidies.

America expects to impose punitive tariffs on $7.5 billion European exports due to the recent WTO rule violation of illegal plane subsidies. World Trade Org

+See More