China Vs. United States

Noah (the head trader) and another trader in my office are having a very interesting conversation. Regarding North Korea, the other trader (I don't know what his name is) is saying, why does US need North Korea? Both China and US need North Korea, because US wants to have a presence in Japan and in South Korea, and without North Korea as an enemy, those two countries will refuse to be allies with US and allow US to keep a military force there.

It's a lot like what my dad says. US has to have a war in order to continue economically. He says that with the deficit growing higher, there is little chance of increasing the money supply in order to boost the economy. So either suffer a double dip - or start a war, which will boost profits in the short-term.

However, I think this idea has faults. The deficit itself is only bad if the USD loses its status as the world's reserve currency. Until then, no one will stop investing in T bonds, and the deficit, while high, will still be relatively harmless compared to what is happening in other countries.

If everyone has their own nuclear bombs, it's not in China's best interest either that North Korea to have Nuclear Bomb. If America leaves, then NK will get these capabilities. Therefore, both of them want America to still be in North Korea, and stay the way it is right now. The US is also cooperating with China right now, because they don't want the situation to escalate.

China is in an unique spot right now. Environment, one child problems, corporation corruption problems. They are quickly growing, but they have to take care of their own disputes. According to the trader, China's thinking is still in the Qing dynasty. Same with the USSR - all the people born before the Communist party, still have the same ideas and concepts. Only the new, younger generations can eventually change the world.

China's operations in Africa - they are currently a "force for good," according to Noah. China is building a lot of infrastructure in Africa, especially for very cheap prices. However, with such a huge footprint in Africa, they get nervous about foreign influences. In Zimbabwe, there was a strike because the mines are owned by the Chinese - and according to Noah the Chinese just started shooting everybody. So everyone is thinking how about what happened in the past (15-20 years ago), where China had no human rights. However, it is also that without China, Africa would not be where it is right now. US and Europe still do not have markets in Africa because of logistical reasons, and therefore the introduction of China is critical for Africa to grow.

In terms of food, all countries HAVE to produce their own food in order to survive. They cannot allow their food supply to be relied on imports. 2% of America produce food for the entire country, and they are subsidized because of it. Even though people have been moving into cities in all countries in the world, without food production a company simply cannot survive. Same with energy - you do not want to import your energy from anywhere else.

As a Kenyan, Noah has a very unique perspective on all the geopolitical events that are occurring. There will be a geopolitical shift soon, and time will only tell.