Deutsche Bank strategist Jim Reidom has prepared a study in which predicted a new era for humanity – “disorder”, the main motive of which will be the cold war between the U.S. and China. It is reported on Thursday, September 10
The disorder will define a new era, at least for a decade or more, analysts say the credit organization.
As the gap between the Chinese and American economies narrowes, the likelihood of the so-called Fukididido trap (a term referring to the risk of military conflict between two rival states, when one catches up with the other in economic power) will increase. Deutsche Bank notes that over the past 500 years there have been 16 such situations and in 12 cases it has led to war. However, analysts believe that nowadays a military conflict is extremely unlikely, and economic war is most likely to occur instead.
The economic conflict will be manifested by additional tariffs, sanctions, blocking of assets and prohibitions on technology transfer. This will definitely lead to the formation of country blocs – one led by China, the other led by the United States. China, Russia, the European Union and Turkey will compete for influence in the Middle East and Africa.
In Europe, the problem of large debts is growing. “In the future we will see more crises, more turmoil and even more money printing by central banks,” writes Deutsche Bank. A shift to a policy of “helicopter money” involving injecting liquidity into households or the real sector, rather than the financial sector, is likely to accelerate inflation.
The pandemic has also brought a number of new challenges to the world, such as economic inequality among people, which will increase at first but then governments are likely to start raising taxes for wealthy citizens and corporations. Closely related to inequality is the issue of age-related competition. Deutsche Bank estimates that after 2030, the number of voters belonging to the millenniums and younger generations in the G7 countries will be higher than those born before 1980. This will affect the results of political elections and, consequently, politics.
Younger generations are more concerned with climate change issues. The authors of the report believe that the world is likely to introduce a carbon tax in the current decade.
Finally, today’s exorbitant estimates of the value of technological companies will either prove to be justified, leading to technological breakthroughs, or they will mean a repetition of the dotcom bubble that burst in 2000. But in any case, according to Deutsche Bank, the technological race of the leading powers is seen as inevitable.
In mid-June Deutsche Bank presented a report “After Coronavirus: the next large-scale risk of an extreme event”, in which the probability of a global crisis associated with war, pandemic or natural disaster is estimated at 33.5% over the next 10 years.