The ascendancy of Asia and in particular China is due to Western short term outlook whereas China takes a long term perspective. At the moment, China enjoys an unfair playing field. Why would they want to change this? As US China trade talks have been going on for decades, it is obvious that they are following a similar strategy to the Roman commander Scipio Africanus. Delay, delay until the time is right to strike. This is obvious what they are doing with their trade talks with the US. It is just impossible to have the current trade imbalance forever. Ceteris Paribus, China will become the technological superpower that could easily eclipse the US as they don't look at quarterly bottom lines but 10, 20 or even 100 years ahead. The western powers could easily be likened to Hannibal whereas the Chinese to Scipio. Hannibal was a brilliant tactician and had initial gains in Spain and in Italy. But the better strategist, Scipio ultimately prevailed leading to the total destruction of the Cartheginians. So perhaps the West should learn from history if it wants to remain the dominant economic world powers. I am not a fan of Trump but in his position vs China I support his stance. If unchecked, China will soon become the world's largest economy and all that entails like being able to outspend the US on defence. Will the world be a better place with China as the dominant super power? Think the Uighur community and the Tibetans might disagree that it would.
I have now exited the equity markets completely. So I am holding my capital in USD, Euro, CHF and GBP. Each currency has its own problems but my main worry is how the Italian debt situation will eventually affect the Euro. Greece's problems with its debt and the resulting economic catastrophe is well documented. But Greece's total debt is minute compared to Italy's debt which is further compounded by the amount of bad debts held by the Italian banks (estimated to be over Euro 350 billion). With total debt amounting to around 130% of GDP, Italy can't sustain this position forever. According to one major study, the conclusion was that a country which had a debt in excess of 90% of GDP can't sustain its economy - if this is true, Italy is set for a major crash like Greece. As one of the largest debt issuers in the world, a default by Italy would have global ramifications. And particularly so in my view on the Euro. It could also have a knock on effect on Spain and Portugal. So what is the probability that Italy, which is struggling with growth and public funding, will default on its sovereign debt? They definitely don't have the money to pump into the Italian banks. And what impact will this have on the Euro?