At the moment, Bank of America (BAC) is up 14%, Wells Fargo (WFC) is up 22%, which is not unexpected, and financial is up all across the board. The main reason attributed to this rally in financial is the optimism that the new administration will move quickly to stabilize an ailing financial sector. However, hope and optimism are never trading strategy, and I don't expects this rally to last. The common strategy here is to buy into earning, hold it a day or two at best to see how things really play out, and then, back to the sell off. The truth of the matter is that for the economy, nothing has really change.
We are still losing jobs, banks are still in trouble, we still lack capitals, and overall confidence is low. Then we see that the new administration is planning to add about a trillion dollars ($1,000,000,000,000) to the national deficit, which mean we are potentially facing a national debt of over $10 trillions dollars. Even for a $13 trillions dollars economy, $10 trillions is a bit to much to handle, especially given the bleak economic situation we're in. Optimism? I think it is more of a delusion than is it optimism that is rallying this market.
Wednesday, January 28, 2009
Saturday, January 24, 2009
Stock Market
For many observers, the current market is nothing more than a big mess; unpredictable, and illogical. However, for trend traders, the market had never been easier to read. In the current environment, "investment" is shrouded in fear and uncertainty. The common tactic employed to fight fear and uncertainty is of course diversification which reduce the risk margin, while having the same marginal return. In a market like this, diversification seem to matter little as all sectors seem to be hit just as heavily as the overall economy deteriorate. In other words, in this environment, one rules by fear, uncertainty, high risk, and speculation; there is no long such thing as investment.
The buy and hold investors had long excited the market, leaving room for only the bravest souls looking for a quick buck. Viewing the market in this way, the market will be operating on a rally than dumb approach. If one go back and look at the market for almost any average/good companies within the last month (companies with a positive cash flow), than one can easily see this trend. One day the market will be down due to profit taking, and the next day, market again rally due to the price drop from the profit taking the day before. Then one just need to buy when the mass are selling, and sell when the mass are buying.
Of course this is merely my observation. If one is to "invest"/trade, one certainly would need to understand the risk involved, and do one own due diligent. Come to the game with a game plan, adjust to the market, but never let emotion/fear/uncertainty change the game plan. Only proper DD should be able to do that.
The buy and hold investors had long excited the market, leaving room for only the bravest souls looking for a quick buck. Viewing the market in this way, the market will be operating on a rally than dumb approach. If one go back and look at the market for almost any average/good companies within the last month (companies with a positive cash flow), than one can easily see this trend. One day the market will be down due to profit taking, and the next day, market again rally due to the price drop from the profit taking the day before. Then one just need to buy when the mass are selling, and sell when the mass are buying.
Of course this is merely my observation. If one is to "invest"/trade, one certainly would need to understand the risk involved, and do one own due diligent. Come to the game with a game plan, adjust to the market, but never let emotion/fear/uncertainty change the game plan. Only proper DD should be able to do that.
Thursday, January 24, 2008
The US Economy
I haven't posted on here for a long time, but with so much talks of the economy everywhere at the moment, I really feel like I have to say something about this situation.
Every politicians, at this point, are talking about tax cuts to stimulate the economy by increasing consumers spending. A popular and politically safe response, but is that really a solution? Consider this; in a politically and economically uncertain nation, how willing are you to spend your money frivolously? It is true that current consumers' spending had gone down, but that is not a cause of the current economic turmoil, but it is a result of the turmoil. Restoring consumers and investors confidences are a must at this moment, but it is not done with tax cuts or by reducing the interest rate, as these things are only short term solution for a long term problem. The root of the current economic woe is something much deeper, something much more integrated into the American economy that must be fixed, and tax cuts are not the solution.
What is causing the current problem is a very simple concept known as moral hazard. The problem with moral hazard in the United States is that it run deep, deep into the very blood of the United States economy, the people. America runs on credits, money that doesn't really exist. What fuel this credits demand? Foreign credits, and bad mortgages, and when these two things unravel, the economy unraveling along with it.
America got to this point because our solutions to every problems is to throw money at it, and hope it will go away. We got hit during 9/11, our response was to spend as much as we can because if we don't, the terrorist win. Our economy started to contract, our response was a stimulus check to stimulate consumers spending. Our wars was failing, let throw more money into it hoping it will be better. Always the short sighted response, never an analysis of the problem. This is all possible because of moral hazard as it is very easy to spend money that isn't there. Just look at the US government and it almost 10 trillions dollars deficit, and look at the American people saving rate and how much they spend. The credits have to come from somewhere. The current economic crisis is not just the blame of Wall Street and the many financials CEO (that should be in jail), but it is the fault of America as a whole. Our fundamentally un-sounded system that merely tout market principles, but hardly operate base upon those principles.
Every politicians, at this point, are talking about tax cuts to stimulate the economy by increasing consumers spending. A popular and politically safe response, but is that really a solution? Consider this; in a politically and economically uncertain nation, how willing are you to spend your money frivolously? It is true that current consumers' spending had gone down, but that is not a cause of the current economic turmoil, but it is a result of the turmoil. Restoring consumers and investors confidences are a must at this moment, but it is not done with tax cuts or by reducing the interest rate, as these things are only short term solution for a long term problem. The root of the current economic woe is something much deeper, something much more integrated into the American economy that must be fixed, and tax cuts are not the solution.
What is causing the current problem is a very simple concept known as moral hazard. The problem with moral hazard in the United States is that it run deep, deep into the very blood of the United States economy, the people. America runs on credits, money that doesn't really exist. What fuel this credits demand? Foreign credits, and bad mortgages, and when these two things unravel, the economy unraveling along with it.
America got to this point because our solutions to every problems is to throw money at it, and hope it will go away. We got hit during 9/11, our response was to spend as much as we can because if we don't, the terrorist win. Our economy started to contract, our response was a stimulus check to stimulate consumers spending. Our wars was failing, let throw more money into it hoping it will be better. Always the short sighted response, never an analysis of the problem. This is all possible because of moral hazard as it is very easy to spend money that isn't there. Just look at the US government and it almost 10 trillions dollars deficit, and look at the American people saving rate and how much they spend. The credits have to come from somewhere. The current economic crisis is not just the blame of Wall Street and the many financials CEO (that should be in jail), but it is the fault of America as a whole. Our fundamentally un-sounded system that merely tout market principles, but hardly operate base upon those principles.
Thursday, November 29, 2007
Oil Price: Then and Now
In the 1970s, OPEC cut oil supplies to created a price shock within the global economy which lead to a nasty global recession. Today, oil price hover around $100 dollars a barrel, and price seem to be climbing still. Why is it that the world's economies are able to absorb the new price change now whereas three to four decade ago, economies were at the mercy of the shock?
Lets first consider what an increase in oil price mean for the economy. An oil price increase is fundamentally an increase in production cost, or similarly, it can be view as an added tax on production and the costs of operation. Firms that use oil face a higher cost which force firms to increase price on its goods and services, this in turn force consumers to pay more for certain products which leave them with less income to spend on other goods and services. With increasing price of goods and services - inflation - people would want to find a better paying job, but due to higher operational cost, it become more difficult for firm to hire which fundamentally increase unemployment rate. As one can see, for an energy driven economy like the US, oil price increase mean a lot of things for the economy.
The differences, though, is that in the 1970, there was a shock whereas now, the change came at a pace in which the economy is able to absorbs and adjusts. For instance, what does an individual see what they see a certain price? Subconsciously, an individual would look at that price and compares it to their body of knowledge, determining if that price is a good price or not wherein the price would equal the expected price +/- some variability (market noise.) After such examination of the price, the individual would act accordingly. If the price is much higher than the price the individual expect, they would reason out what the market noise is if any.
In the 70s, when news of supply side shock and high gas prices reach the people, the rational behavior seem to be to run the pump to get as much gas as you can. Now, price climb at a steady pace instead of a rapid one, which allow people to see a general trend which allows people time to adjust their life style, and for company, it give them time to work around the new market price. As any classical economist would suggest, in the long run, everything even out, but life does not work in the long run alone. However, if change come slow enough, then expectation can changes alongside changes and adjustment can be made wherein there would be less market disruption. That is the different between the rational response to oil prices in the 1970s compared to now.
Lets first consider what an increase in oil price mean for the economy. An oil price increase is fundamentally an increase in production cost, or similarly, it can be view as an added tax on production and the costs of operation. Firms that use oil face a higher cost which force firms to increase price on its goods and services, this in turn force consumers to pay more for certain products which leave them with less income to spend on other goods and services. With increasing price of goods and services - inflation - people would want to find a better paying job, but due to higher operational cost, it become more difficult for firm to hire which fundamentally increase unemployment rate. As one can see, for an energy driven economy like the US, oil price increase mean a lot of things for the economy.
The differences, though, is that in the 1970, there was a shock whereas now, the change came at a pace in which the economy is able to absorbs and adjusts. For instance, what does an individual see what they see a certain price? Subconsciously, an individual would look at that price and compares it to their body of knowledge, determining if that price is a good price or not wherein the price would equal the expected price +/- some variability (market noise.) After such examination of the price, the individual would act accordingly. If the price is much higher than the price the individual expect, they would reason out what the market noise is if any.
In the 70s, when news of supply side shock and high gas prices reach the people, the rational behavior seem to be to run the pump to get as much gas as you can. Now, price climb at a steady pace instead of a rapid one, which allow people to see a general trend which allows people time to adjust their life style, and for company, it give them time to work around the new market price. As any classical economist would suggest, in the long run, everything even out, but life does not work in the long run alone. However, if change come slow enough, then expectation can changes alongside changes and adjustment can be made wherein there would be less market disruption. That is the different between the rational response to oil prices in the 1970s compared to now.
Sunday, October 21, 2007
Getting Excite
Excited Over the Growing Russian and Chinese Economies?
Russia and China’s economies are on the rise, and it certainly will become much more significant to the global economy with each passing day. It surprise me when I hear that people are getting excited about a more dominant Russian and Chinese economies because it can then take up more of the global burden held by the US. Consider this, what is different between Latin America and the US economy that allow the US to have deficit of up to $8 trillions dollars, and not crumble? The US is a unique market in that it is a strong and growing market, even in the faces of such a deficit, and it is a highly dependence upon economy by the rest of the world. The US economy not only draw in investor globally, new and old, but it stands as a symbolism for global capitalists. A fail US economy would leads to worldwide disaster, and it is in no one true interest to see a faltering US economy. The uniqueness in how important the US economy is to the world had, in the past, allowed the US to live way beyond its limit. What does a growing Russian and Chinese economies mean for the US then?
First, lets look at an important case in economic development concerning Japan. The Japanese Keiretsu system had, in the past, been accredited to Japan’s success as a developed economy, uniting Japanese culture with business and work. However, the Keiretsu system, like its predecessor the zaibatsu, is a very uncompetitive system that allows for heavy investment into research and development by eliminating competition from the market. This gave Japan a great advantage in rapidly developing itself as a global economic power, and made it one of the most important economy in East and Southeast Asia. This, though, mean that the Keiretsu system is a very inefficient system that does not work well against competition as Japan is starting to find out against Korea and Taiwan.
What had allowed Japan to became so successful in the past waas not so much its economic system, but instead, it was due heavily to the lack of competition in Asia when Japan economy started its boom. Without the option of going elsewhere for the value added good , especially in the area of electronic, Japan made itself into a niche market in the Region.
How does this all applies to the US situation? The US is, like Japan, a niche economy. The US strong stable growth, its size, and its symbolism serves to give it huge global market power, demanding investment from people everywhere, and at the same time, preventing run even in the faces of any bump in the road. Consider that there really is no alternative to the US market in the past, and it is such a large and important market that, like old industries, most investors feel safe enough about any turmoil that the US can recover, and the US had always recovered; the US is extremely special. However, that special-ness is not going to last.
As China and Russia grow, like the growth of Korea and Taiwan in Asia, they become alternative to the US market as Korea and Taiwan became alternative to Japan. When the US economy look weak, there will be alternative, and this will, I repeat, will hurt the US economy as a whole. If you had been reading my articles up to this point, you will know that I had been saying all along, the US have been living way beyond its mean, and the world eventually will have the option of closing its wallet when it see fit to do so. The World Bank and the IMF had been worries about its relevancy in the coming future concerning global economic, while I on the other hand see that they will be facing the greatest of challenges their institution had ever face in the coming future, and their relevancy will be determine by how they will handle something as big as the US. The scary thing about this situation is that it is only a backdrop to other glooming threat to the US current economy: increasing foreign holding of US debt, larger and larger trade deficit, energy crisis, sub-prime lending, unstable wall-street, and a war with a myriad of other things. I believe we are at a turning point in history, and I’m just hoping for the best right now.
Thursday, October 4, 2007
On the Road to Recovery
In the face of a flue like economy, the Dow Jones passed 14000. Why is that? Consider this: real estate is a way of storing wealth, but when signs point to a devaluation of said wealth, any economic agents would try to move that wealth to something better, in most cases, it is either money, or stocks and securities. So, which would it be?
With a weaken economy, holder of US currency, formerly a great way of storing wealth, might not want to hold US dollars. With over 50-70% of held currency being held by people outside of the US, an expectation of losing value would lead many to run for better harbor. This would creates a shift in demand for money downward, creating the lose of value that was expected, which would then creates a vicious cycle. The intensity of the lose is dependent on how people adjust their expectation as they read the market and compare it to their own experience. This is good for the US because the US economy is big, and it had preformed admirably in the past, which would greatly dampen the intensity of expectation. Nevertheless, people will see that money value is dropping, and money demand should still shift downward. In other word, having to choice between storing one’s wealth in stock or in money in this situation, it seem obvious which is the the better choice. Adding to that the rate cut be the Fed help in providing more credit to the market as a stimulus, the stock market seem a good place to move to.
This situation then would help to provide some positives to our ailing economy. For starter, to any observer, it is clear that the US has benefit much from global trades as it allows the US to live way beyond its mean; however, in doing so, the US had built up a huge trade deficit that would someday become unsustainable. The drop in the value of the dollar relative to other currencies should helps to increase US export and decrease US import, a first step toward balancing the trade imbalance.
Secondly, our stock market had be a little more than volatile in recent months, and it need stabilities for our economy to recover to good health. The credit influx into the market, because there really is no where else to store it, should help our market recover. Added to that is the descrease in financial confidences due to the subprime mortgages and increasing rate of default, a strong Wall Street should help in restoring some confidences.
Thirdly, the current turmoil will help to teach lenders to be less complacence and to be more responsible with their lending, and to rely on more than just the market to tell if someone is going to be a good borrower. It is true that as lender, one must lend money with incomplete information of the borrower; hence collateral help to make the lending less worrisome. However, as real estate value increase, more collateral become available, which lead to more lending, which will help to increase demand on real estate; resulting in a vicious cycle that lead to a bubble. This is why lenders must not become complacence and to learn to step back from the market to see what is developing, and sometime to slow down lending before it actually become a problem like it already have.
From my point of view, I think the US economy is in a good position to recovers before any real recession take root, and at the same time it will become a stronger economy. However, the key to recovery still remain in restoring confidence in the market, especially the financial market. But, this is not a new path that America now faces as the story is very similar to the 1990s, and again, the US will recover.
With a weaken economy, holder of US currency, formerly a great way of storing wealth, might not want to hold US dollars. With over 50-70% of held currency being held by people outside of the US, an expectation of losing value would lead many to run for better harbor. This would creates a shift in demand for money downward, creating the lose of value that was expected, which would then creates a vicious cycle. The intensity of the lose is dependent on how people adjust their expectation as they read the market and compare it to their own experience. This is good for the US because the US economy is big, and it had preformed admirably in the past, which would greatly dampen the intensity of expectation. Nevertheless, people will see that money value is dropping, and money demand should still shift downward. In other word, having to choice between storing one’s wealth in stock or in money in this situation, it seem obvious which is the the better choice. Adding to that the rate cut be the Fed help in providing more credit to the market as a stimulus, the stock market seem a good place to move to.
This situation then would help to provide some positives to our ailing economy. For starter, to any observer, it is clear that the US has benefit much from global trades as it allows the US to live way beyond its mean; however, in doing so, the US had built up a huge trade deficit that would someday become unsustainable. The drop in the value of the dollar relative to other currencies should helps to increase US export and decrease US import, a first step toward balancing the trade imbalance.
Secondly, our stock market had be a little more than volatile in recent months, and it need stabilities for our economy to recover to good health. The credit influx into the market, because there really is no where else to store it, should help our market recover. Added to that is the descrease in financial confidences due to the subprime mortgages and increasing rate of default, a strong Wall Street should help in restoring some confidences.
Thirdly, the current turmoil will help to teach lenders to be less complacence and to be more responsible with their lending, and to rely on more than just the market to tell if someone is going to be a good borrower. It is true that as lender, one must lend money with incomplete information of the borrower; hence collateral help to make the lending less worrisome. However, as real estate value increase, more collateral become available, which lead to more lending, which will help to increase demand on real estate; resulting in a vicious cycle that lead to a bubble. This is why lenders must not become complacence and to learn to step back from the market to see what is developing, and sometime to slow down lending before it actually become a problem like it already have.
From my point of view, I think the US economy is in a good position to recovers before any real recession take root, and at the same time it will become a stronger economy. However, the key to recovery still remain in restoring confidence in the market, especially the financial market. But, this is not a new path that America now faces as the story is very similar to the 1990s, and again, the US will recover.
Sunday, September 23, 2007
China/Russia Alliance
I've been hearing some worries about the new Russian/China alliance, and how it would proves to be a power balancing move against the US. First, lets look at a few thing about China and Russia. China is the second largest market in the world, and Russia is the second largest oil producer. China is a rapidly growing country with double digit GDP growth in 2007, and is projected to continues growing at around 10% each year. China is a net exporter and is quickly becoming an exporter capital worldwide, China have a huge trade surplus ($300 billion) with the US. China is the second largest holder of US treasury securities ($400 billion). Russia, although a shell of its former self, is a strong economy with a 1.7 trillion USD GDP, 6% GDP growth, net exporter, and stock piles of nukes. Combine, we have two of the world greatest super power that does not like the US very much. Certainly sound like something to worries about.
The true, though, is that thing isn't as bad as it sound. Economic growth has become significantly important for all developed economies, or up and coming developing economies, and this is why a Russia/China unity might not be as scary as say a decade ago.
For China, after the fall of the Soviet, Communism has taken a hard hit to its cridibility as a form of government; and China has only been able to legitamized its rules base upon economic prosperity. However, rapidly growth demand resources, resources that either is highly competitive worldwide and resources that China does not have, among with is oil. Russia, then, seem a perfect partner for a country that need to secures oil resources to maintain its growth. China have two choice in this situation; they could either fight with Russia over the resources as they did in the past, or they can partner up with Russia and gain access to a much larger among of resources. For Russia, a partnership with China mean a market as well as global support on their own agenda. China is the second largest market in the global economy, and it is rapidly growing to eventually become the largest market.
Russia, as an economy trying to recover from the failure of the Soviet rules, need a market to sell too, and who is better to do that with than China in a more or less unilateral bases? Secondly, Russia has large stockpile of nuke as well as the dealiest none nuclear bomb, but their army is a shadow of their former self. China is a rapidly growing military while investing heavily in its military each year on almost the same level as the US. Combined, these two will prove to be a match for US military hegemony.
To dispell fear, we must first look at a few things. One of the fear that people have is due to China holding of USD. It is true that China holds a lot of US’s securities, but would China threaten the US if it was to sell it all off? It might, but not likely. The power that China hold over the US in this situation is a monetary one that could aversely affect the US economy. If the US was fighting back inflation, China would mess up any monetary policies to cut inflation by selling off their holding. Sound scary does it not? Not really if one is to take a step back and look at the situation from a global prospective, not a unilateral one.
Scenario one: US is fighting back inflation and China want to weaken the US long run well being by forcing in inflation by selling their holding. If the world is facing a growing US economy, the only result from a Chinese sell out would be other countries buying USD, which would not affect the US overall. On the contrary, it would push Chinese inflation up because they are buying Chinese Yuan when they are selling off their holding of US securities. Secondly, there is much interest at stake in the US economy, and its fall would spell disaster for the world around; hence, many countries will not sit by to watch the US economy fall if it could do anything to prevent it. Just look back at the dollar crashing in later 2006, and how fast it recovered the next day. Countries from around the world quickly bought USD to help bring the USD back up.
Scenario two: US is facing a weakening economy, like what we are face with right now. In this case, China really can’t do much. If China sell off their holding, then it would only help the US recover or help to weaken a blow from recession. Although, taking other things into consideration, a China sell out could could turn out to be bad for the US as this could lead to a flight of USD if other also see the huge swing in sell and decide that they too would not want to hold USD. Or it could lead to a slow down of foreign investment, which as I state in the post below, that could really hurt the US as we are living way beyond our mean. However, the US economy have to be doing extremely bad and to have lost the trust of people all over the world for this to happen.
Ultimately, the Russia/China alliance is one of convenient. China need to support its oil need, and Russia is the perfect provider. Russia on the other hand get access to the Chinese market, something long sought after by many.
There are other major political implications, such as the two security council veto which mean US unilateralism have some check. Russia military and China rapidly growing military combines could also prove to be a balance to US unilateral military power in past decade. However, this does not mean we’re returning back to the time of Cold War. Economic growth is to important at this time as symbolize by the important of the Olympic from China’s prospective. We must also remember that China and Russia are no friend either, and it is a little egocentrically to think that they join merely to counter US interest. All this mean is that US hegemony might not hold true for long, but it is not going to lead to war. As long as the US does not threaten Chinese or Russian securities or interests, or vise versa, then there really is no problem. With the current globalize world, advancement of technologies, and the advancement of the global monetary system over the years; there is just to much at stake to growth for China/Russia to fight the US.
The true, though, is that thing isn't as bad as it sound. Economic growth has become significantly important for all developed economies, or up and coming developing economies, and this is why a Russia/China unity might not be as scary as say a decade ago.
For China, after the fall of the Soviet, Communism has taken a hard hit to its cridibility as a form of government; and China has only been able to legitamized its rules base upon economic prosperity. However, rapidly growth demand resources, resources that either is highly competitive worldwide and resources that China does not have, among with is oil. Russia, then, seem a perfect partner for a country that need to secures oil resources to maintain its growth. China have two choice in this situation; they could either fight with Russia over the resources as they did in the past, or they can partner up with Russia and gain access to a much larger among of resources. For Russia, a partnership with China mean a market as well as global support on their own agenda. China is the second largest market in the global economy, and it is rapidly growing to eventually become the largest market.
Russia, as an economy trying to recover from the failure of the Soviet rules, need a market to sell too, and who is better to do that with than China in a more or less unilateral bases? Secondly, Russia has large stockpile of nuke as well as the dealiest none nuclear bomb, but their army is a shadow of their former self. China is a rapidly growing military while investing heavily in its military each year on almost the same level as the US. Combined, these two will prove to be a match for US military hegemony.
To dispell fear, we must first look at a few things. One of the fear that people have is due to China holding of USD. It is true that China holds a lot of US’s securities, but would China threaten the US if it was to sell it all off? It might, but not likely. The power that China hold over the US in this situation is a monetary one that could aversely affect the US economy. If the US was fighting back inflation, China would mess up any monetary policies to cut inflation by selling off their holding. Sound scary does it not? Not really if one is to take a step back and look at the situation from a global prospective, not a unilateral one.
Scenario one: US is fighting back inflation and China want to weaken the US long run well being by forcing in inflation by selling their holding. If the world is facing a growing US economy, the only result from a Chinese sell out would be other countries buying USD, which would not affect the US overall. On the contrary, it would push Chinese inflation up because they are buying Chinese Yuan when they are selling off their holding of US securities. Secondly, there is much interest at stake in the US economy, and its fall would spell disaster for the world around; hence, many countries will not sit by to watch the US economy fall if it could do anything to prevent it. Just look back at the dollar crashing in later 2006, and how fast it recovered the next day. Countries from around the world quickly bought USD to help bring the USD back up.
Scenario two: US is facing a weakening economy, like what we are face with right now. In this case, China really can’t do much. If China sell off their holding, then it would only help the US recover or help to weaken a blow from recession. Although, taking other things into consideration, a China sell out could could turn out to be bad for the US as this could lead to a flight of USD if other also see the huge swing in sell and decide that they too would not want to hold USD. Or it could lead to a slow down of foreign investment, which as I state in the post below, that could really hurt the US as we are living way beyond our mean. However, the US economy have to be doing extremely bad and to have lost the trust of people all over the world for this to happen.
Ultimately, the Russia/China alliance is one of convenient. China need to support its oil need, and Russia is the perfect provider. Russia on the other hand get access to the Chinese market, something long sought after by many.
There are other major political implications, such as the two security council veto which mean US unilateralism have some check. Russia military and China rapidly growing military combines could also prove to be a balance to US unilateral military power in past decade. However, this does not mean we’re returning back to the time of Cold War. Economic growth is to important at this time as symbolize by the important of the Olympic from China’s prospective. We must also remember that China and Russia are no friend either, and it is a little egocentrically to think that they join merely to counter US interest. All this mean is that US hegemony might not hold true for long, but it is not going to lead to war. As long as the US does not threaten Chinese or Russian securities or interests, or vise versa, then there really is no problem. With the current globalize world, advancement of technologies, and the advancement of the global monetary system over the years; there is just to much at stake to growth for China/Russia to fight the US.
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