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

Stock Synopsis: With a new Python program, we use, adapt, apply, and leverage each of the mainstream Gemini Gen AI models to conduct this comprehensive fundamental analysis of Tesla (U.S. stock symbol: $TSLA).

Jacob Miramar

2025-09-28 10:10:51 Sunday ET

Stock Synopsis: With a new Python program, we use, adapt, apply, and leverage each of the mainstream Gemini Gen AI models to conduct this comprehensive fundamental analysis of Tesla (U.S. stock symbol: $TSLA).

Stock Synopsis: With a new Python program, we use, adapt, apply, and leverage each of the mainstream Gemini Gen AI models to conduct this comprehensive fund

+See More

Anat Admati and Martin Hellwig raise broad critical issues about bank capital regulation and asset market stabilization.

Charlene Vos

2023-06-07 10:27:00 Wednesday ET

Anat Admati and Martin Hellwig raise broad critical issues about bank capital regulation and asset market stabilization.

Anat Admati and Martin Hellwig raise broad critical issues about bank capital regulation and asset market stabilization. Anat Admati and Martin Hellwig (

+See More

Sprint and T-Mobile propose a major merger in order to better compete with AT&T and Verizon.

Joseph Corr

2018-05-03 07:34:00 Thursday ET

Sprint and T-Mobile propose a major merger in order to better compete with AT&T and Verizon.

Sprint and T-Mobile propose a major merger in order to better compete with AT&T and Verizon. This mega merger is worth $26.5 billion and involves an all

+See More

Trump imposes tariffs on steel and aluminum in a trade war with some exemptions for Canada and Mexico.

Olivia London

2018-03-01 07:35:00 Thursday ET

Trump imposes tariffs on steel and aluminum in a trade war with some exemptions for Canada and Mexico.

Trump imposes high tariffs on steel (25%) and aluminum (10%) in a new trade war with subsequent exemptions for Canada and Mexico. The Trump administration&#

+See More

Amazon and Google face more intense antitrust scrutiny.

Apple Boston

2019-06-21 13:33:00 Friday ET

Amazon and Google face more intense antitrust scrutiny.

Amazon and Google face more intense antitrust scrutiny. In recent times, Justice Department and Federal Trade Commission have reached an internal agreement

+See More

The lean CEO encourages iterative continuous improvements and collaborative teams to innovate around core value streams.

Monica McNeil

2020-07-12 08:30:00 Sunday ET

The lean CEO encourages iterative continuous improvements and collaborative teams to innovate around core value streams.

The lean CEO encourages iterative continuous improvements and collaborative teams to innovate around core value streams. Jacob Stoller (2015)  

+See More