Watch out for America and China in 2010.

Will the world financial order remain ever the same?

It may not seem to be a very untimely and irrelevant question.

The various events that took place in the last decade would definitely suggest that something fundamentally is changing in the world. The world has witnessed a major change in the rate of development of various countries including both developed and developing nations.

Whatever may be the reasons behind this, are we ready to face it and embrace further consequences?

There were expectations in the market place something drastic may happen during and after the recent financial crises contributed mainly by the US Financial Institutions through subprime crisis. USA with its huge foreign and domestic private debt is really sitting on a time bomb. A simple recall or withdrawal by the major investors in the US Treasury Instruments will do the trick. In that event, the US may excuse defaulting its obligations. One may recall the event when China reneged on its Chinese Railways Bonds, some decades ago!

Well. Will it happen? A million dollar question indeed.

This question itself may not be inappropriate, as I am reminded by the observations of Nobel Laureate Nouriel Roubini on United Socialist State Republic of America.

Well. Another equally important country to watch out in the year 2010 would be China.

With its huge diversity and disparity in wealth distribution, standard of living and basic facilities within its various zones there could be a cause for revolt and major concern. Internally there could be a major strife. May be to get over this, China is already preparing by diverting attention and taking on nearby neighboring countries by occupying their territories, calling them disputed in the first place.

Externally, there could be a major action from its main trading partner – US – to demand restorative and corrective currency action to restore parity. With Obama in total command, US could invoke suitable trade responses if no satisfactory actions forthcoming from China on this.

Thus, in my view America Risk and China Risk are two major risks to watch out for in 2010.

Are we ready?