Deutsche Bank Predicts New World ‘Disorder’, Cold War Between US and China
The new report comes on the heels of predictions by market analysts and hedge funds that the US dollar could lose over a third of its value against the euro and slide against other currencies in the coming months owing to poor US economic performance and ballooning debt in the wake of the coronavirus crisis.
The world is “on the cusp” of a new era marked by instability, disorder and the fragmentation of the previous period of globalisation, Deutsche Bank, the largest bank in Germany and one of the largest financial institutions in the world, has predicted in a new report.
In a document for clients entitled the ‘Long-Term Asset Return Study’, the bank suggests that the coronavirus crisis has accelerated, but not caused, the coming about of what lead analyst Jim Reid refers to as the new ‘Age of Disorder’, in which deteriorating relations and divergent interests between the United States and China replace the age of “unfettered globalisation” (and smooth, easy profits) which began in the early 1980s.
“In terms of geopolitics, tension between the US and China should ‘characterise the era of disorder’ as China continues its path of restoring its historic role as a global economic powerhouse while preferring its own values to Western liberalism,” a summary of the report published on the bank’s website notes.
China is expected to overtake the United States in terms of nominal GDP by the end of the current decade, with the sea change expected to escalate a danger of the so-called Thucydides Trap (i.e. the heightened risk of military conflict between two rival powers when one catches up to another economically). The report recalls that wars took place in 12 of the 16 times that the Thucydides Trap has occurred over the past five centuries.