There are many market crash in the US – notably the Great Crash (1929), Black Monday (1987), Dot Com crash (1990) and Financial Crisis (2007). The inherent market instability is dictated by human emotion of greed and fear. Despite various tools and regulations such as circuit breaker, real-time monitoring, and marginal requirement, government at times fail to stamp out excessive speculation and crash. Chinese stock market is no exception and crash is part of the cost of capitalism.
1
It is admittedly difficult to feel sorry for hedge fund managers and other institutional investors when a government puts its thumb on the scale of the market. After all, these entities often rely on their own version of special access to information and tools of market manipulation to make money and they aren't used to being put at a disadvantage. Now you know how the rest of us feel! Notwithstanding, the real problem here as I understand it is that China explicitly encouraged its own citizens to dive into the market and it does not want to take responsibility for the wholesale losses that recent investors are experiencing, especially those who bought on the margin. Reforming the margin requirements might be a better concrete step that China could take to protect Chinese individual investors. Otherwise, this just looks like panic, and like it or not, you might be able to prevent big institutional investors from selling, but it will be a lot harder to force them to invest in the first instance.
Unfortunately, 7 years after our markets collapsed due to criminal activity that Walls Street companies have paid massive fines for, the Feds are only now going after individuals responsible for the 2008 fiasco. Let's hope some of the U.S. hedge fund operatives who rattled the China markets spend time in a Chinese jail.
3
This is an interesting dichotomy. You can't have a semi-free market. Some controls and rules are necessary, but the heavy handed approach that the Chinese government is taking is contrary to any free market economics. For the Chinese market to work it has to have the up and down adjustments of a free market or investors will take their money elsewhere.
2
How do you value a company whose stock can only be bought, but not sold? How do you value a country that takes your money, but won't give it back? The answers should be obvious.
2
This is just China's perception of how its non-existent SEC should be shaped. To suggest that China's build-up and crash wasn't caused by some expert manipulators is simply naive. China has to act harshly if it wants to attract foreign investment.
Three points come to mind here. Firstly, the actions by the Chinese government reported here will mostly serve to accelerate the flight of investment capital, both foreign and domestic from the Chinese market. Although this is only likely to be a short to medium term phenomenon, its effects will serve to make the Chinese government's efforts to "stabilize" the market that much more difficult and expensive.
Secondly, it is ironic that the world's sophisticated investors are suddenly discovering the reality that finance, like everything else in China, is subject most importantly to the whims of men rather than the rules of law. Many bought into the concept that as the Chinese state pursued its commitment to its own self interest, the policies that would flow from this would always coincide with the interests of the business investment community.
Perhaps most significantly, it is surprising that the highly educated technocrats within the Chinese government, whose goal of reduced market volatility is laudable, did not take away the obvious lesson inherent in the U.S.'s own recent failures in this regard. Paraphrasing Carville, "It's the leverage stupid."
Secondly, it is ironic that the world's sophisticated investors are suddenly discovering the reality that finance, like everything else in China, is subject most importantly to the whims of men rather than the rules of law. Many bought into the concept that as the Chinese state pursued its commitment to its own self interest, the policies that would flow from this would always coincide with the interests of the business investment community.
Perhaps most significantly, it is surprising that the highly educated technocrats within the Chinese government, whose goal of reduced market volatility is laudable, did not take away the obvious lesson inherent in the U.S.'s own recent failures in this regard. Paraphrasing Carville, "It's the leverage stupid."
2
Curious here. How does China's financing trillions of US debt factor into their thinking/policies? Or does it. BTW the last paragraph of the article reminded me of "Hotel California".
China's fxs = their foreign exchange reserves. And these have shrunk by more than $1T in the past quarter - to their alarm. Much of their fxs consists of U.S. notes and bonds - paper picked up a base rates as their exchange ration grew favorably v. the interest being spun off. Therefore, the cost of engaging in 'market correction activity,' has caused some shock and consternation in the CP. That is probably what is motivating them to use the seemingly less expensive method of threatening 'market naysayers and shorters' with jail, instead.
1
We simply don’t know what a slump in 21st-century China would look like. Will it be short and sweet, allowing the economy to cleanse itself of a huge backlog of toxic bank loans before emerging invigorated? Or will it mark the beginning of the end of the Chinese dream. The greater concern is whether the current Chinese leadership is capable of keeping calm and carrying on.
The last time China’s economy actually shrank was in 1976. Back then, a recession in the People’s Republic of China would have been of only peripheral concern to the outside world. Now, it could drag the whole world economy down with it. Little wonder that alarm bells are sounding in Beijing and beyond.
The last time China’s economy actually shrank was in 1976. Back then, a recession in the People’s Republic of China would have been of only peripheral concern to the outside world. Now, it could drag the whole world economy down with it. Little wonder that alarm bells are sounding in Beijing and beyond.
1
The U.S. is more clever,when it interferes in the markets.China needs better salesmen,to sell their program.
1
I can't believe that the self proclaimed technocrats of the Beijing dictatorship, the same dictatorship that denies basic human rights and commits genocide in Tibet, a free and subjugated nation (please don't complain about Japan until you leave Tibet), has dealt with economics with the same corrupt and dictatorial hand with the economy. They are not capitalist, they are fascist. And competing with a fascist company, located in fascist China, is difficult. Cheating, product adulteration, anything goes. The dictators, on behalf of their princelings, are covering their collective behinds.
4
China spent a lot of efforts but had been fixing the wrong issues and has turned the situation into a farce. Without intervention, the stock market probably would naturally fall back to its original normal but expected range and the government can focus on necessary financial and industrial reforms to ready a healthy investment atmosphere. Why would its state media have encouraged swarms of people without investment knowledge into the stock market in the fist place? It's the invitation for a crash. Throughout its economy, if there are issues, lack of transparency and credibility is the issue; lack of substantial support for private enterprise is the issue. Utilizing propaganda and directives to control financial market is another issue because it simply is against the nature of free market and disrupts the healthy reforms needed for a financial market. And, without transparency and fair competition, the whole investment atmosphere will be dominated by speculation. It's the soul that has to be changed, not the flesh or the skin.
1
Gee, I wish our government went after the Wall Street cheats, too.
9
The clueless leadership of the Chinese Communist party is the Peter Principle on steroids. Markets only go up, not down? No corrections? Foreign investment firms, representing only 1 percent of market investments, are the problem? If China's leadership doesn't get a lot smarter, and soon, their equity market will become a pointless endeavor and their economy will pay dearly for it.
Eclectic Pragmatist — http://eclectic-pragmatist.tumblr.com/
Eclectic Pragmatist — https://medium.com/eclectic-pragmatism
Eclectic Pragmatist — http://eclectic-pragmatist.tumblr.com/
Eclectic Pragmatist — https://medium.com/eclectic-pragmatism
The free market, including the worldwide stock market, is based on democratic principles, not Communist political ideologies aimed manipulating world markets and promoting economic warfare. Sounds like Capitalism is an enormous surprise to Communist leaders -
1
Free market is based on capitalism. Capitalism is to maximize profit for a firm and ultimately to the stock holder. One way to maximize the profit is to control and monopolize the market. Government use various antitrust laws and regulations to prevent monopoly and harming the public. Capitalism and democracy are incompatible in goals because democracy is based on equality and capitalism is based on capital.
Ah, the joys of finance capitalism when pandoras box is opened.
2
Markets don't go down because of short sellers. Far more of those get burned by rising markets than who ever make money. Markets go down because of a lack of buyers. Thus the phrase "catch a bid." Prices have to drop to find someone willing to buy. Just like an auction.
What they are doing is scaring buyers away. Phase Two of the crash of 2015 in US and China now underway.
What they are doing is scaring buyers away. Phase Two of the crash of 2015 in US and China now underway.
"Western style financial market" - sounds good but in reality it is hollow. Your markets are manipulated by the big players. In the financial sector, "HFT" is a nonsense where the big players are making money by creating volatility.
Whereas the purpose of financial markets in market capitalism is to allocate funds and financial resources 'efficiently'. With more and more deregulation - and close nexus between Treasury appointees and Wall Street, your economies are being ruled by the Wall Street thugs.
Apart from the subprime crisis caused by callous oversight of the regulators, AAA ratings given by the rating agencies to nonsensical and absurd subprime assets, LIBOR manipulation, Goldman Sachs consults with Greece to bring that economy to ruins, IMF and the World Bank manipulating to convert private debt into public burden, and public assets into private gains - the list is endless - and you still feel proud of the term "Western style financial market"?
You praise Clinton, who got rid of the Glass-Steagall Act! Your economy promotes waste not in small quantities but in ocean-like quantities - food dumped as garbage by super markets (the authors should watch John Oliver's Last Week Tonight: https://www.youtube.com/watch?v=i8xwLWb0lLY). As John Oliver reveals, 40% of the food produced in the U.S. never gets consumed; the American economy wastes USD 165 billion (YES BILLION!) worth of food EVERY YEAR!
Show me what is efficient and benign in your 'Western style markets' !!!???
Whereas the purpose of financial markets in market capitalism is to allocate funds and financial resources 'efficiently'. With more and more deregulation - and close nexus between Treasury appointees and Wall Street, your economies are being ruled by the Wall Street thugs.
Apart from the subprime crisis caused by callous oversight of the regulators, AAA ratings given by the rating agencies to nonsensical and absurd subprime assets, LIBOR manipulation, Goldman Sachs consults with Greece to bring that economy to ruins, IMF and the World Bank manipulating to convert private debt into public burden, and public assets into private gains - the list is endless - and you still feel proud of the term "Western style financial market"?
You praise Clinton, who got rid of the Glass-Steagall Act! Your economy promotes waste not in small quantities but in ocean-like quantities - food dumped as garbage by super markets (the authors should watch John Oliver's Last Week Tonight: https://www.youtube.com/watch?v=i8xwLWb0lLY). As John Oliver reveals, 40% of the food produced in the U.S. never gets consumed; the American economy wastes USD 165 billion (YES BILLION!) worth of food EVERY YEAR!
Show me what is efficient and benign in your 'Western style markets' !!!???
12
I agree with every word, but perhaps you could spare a few for the truly innovative Nikkei, which has been sitting for TWENTY-FIVE YEARS at between 1/4 and 1/3 of its peak value.
1
Why doesn't China do what the U.S. did and cave in, wring their hands and give them whatever they want. We here in the U.S. know how their "wall street geniuses" obviously are distressed and need billions to make their fall more comfortable. Called wellfare for the rich!
16
Our financial industry has worked long and hard to make high finance incomprehensible to those of us who don't have twenty-five hours per day to keep up with it. They have succeeded. Now they imagine that we will spend fifteen minutes reading an article and leap the conclusion that they are being wronged. The world needs its great minds for curing cancer and saving the planet. We've no time for this nonsense.
3
At least the Chinese authority is promptly investigating the potential crimes in the stock market. I haven't heard anything from news media about our own SEC and other government agencies investigating the 2008-2009 financial crisis. So far, no Wall Street titans has been served time behind bar. Only today Ms. Lynch, our new attorney general, put new order to investigate individual who may cause any problem in financial market. It has been 7 years in the making - to reach this far.
5
Why do we think we can judge the world? China has problems and we have plenty too. Maybe we should be looking more closely at our own financial issues and resolve them before we arrogantly find fault with theirs? Hedge funds, short selling, insider trading....All classic symbols of greed, not progress. Our own Congress had to pass its own law prohibiting insider trading. The existing laws weren't good enough for them. Is that so much different from the Chinese officials leveraging their government positions? So many want to jump on Trump's "Make America Great" theme and do so by ignoring the problems. America is great! But China is too. Get over trying to be the world's moral conscience.
7
I am not surprised by China's current financial crises, nor its responses. I have always believed that societies built on wealth and greed are like building castles on the shoreline....we ultimately have no control over their safety. They are also susceptible to corruption as the heady aroma of great wealth breeds greed like a pervasive mold.
Stock markets, while in their conception and as a theoretical tool supposedly can build an economy by "investment". But one has to look at where the money comes from, and how its purpose has been defeated over time.
First of all, only people (don't forget the SCOTUS decided that corporations were people too) that have expendable money can be investors. And once they invest, they want a return that is larger than what they put in. Kind of like a farmer expects his crops to grow. The difference is that the investor doesn't have to do anything else! And when the heady intoxicant of large returns happens, it is too hard to go back to moderate gains.
The unfortunate part of the system is that it "privatized" many middle income earners retirement funds as well who had little choice or say in how their money is used, and as we saw during the Recession, the losses were devastating.
So I don't cry for China's current woes...and I sometimes think we didn't fall hard enough during the recession because we are still riding the same old horse.
Stock markets, while in their conception and as a theoretical tool supposedly can build an economy by "investment". But one has to look at where the money comes from, and how its purpose has been defeated over time.
First of all, only people (don't forget the SCOTUS decided that corporations were people too) that have expendable money can be investors. And once they invest, they want a return that is larger than what they put in. Kind of like a farmer expects his crops to grow. The difference is that the investor doesn't have to do anything else! And when the heady intoxicant of large returns happens, it is too hard to go back to moderate gains.
The unfortunate part of the system is that it "privatized" many middle income earners retirement funds as well who had little choice or say in how their money is used, and as we saw during the Recession, the losses were devastating.
So I don't cry for China's current woes...and I sometimes think we didn't fall hard enough during the recession because we are still riding the same old horse.
2
The Chinese are avid readers of history, particularly economics. Thus, CCP's leadership is quite aware of the economic history of the 20th century.
The stock market crashes of 1929-2009 (epicenter Wall Street) did propel the global economy into recession and unemployment, including a major war in 1939. The policy lessons learned from these two crashes are quite straightforward.
Stock markets are inherently unstable and subject to ups and downs. They can be regulated but never disciplined by political command and control. How can Chinese authorities expect to control the actions of buying/selling stocks by 90 million Chinese investors?
The stock market crashes of 1929-2009 (epicenter Wall Street) did propel the global economy into recession and unemployment, including a major war in 1939. The policy lessons learned from these two crashes are quite straightforward.
Stock markets are inherently unstable and subject to ups and downs. They can be regulated but never disciplined by political command and control. How can Chinese authorities expect to control the actions of buying/selling stocks by 90 million Chinese investors?
2
The article makes out that the Chinese government is doing something wrong. They are doing what the US government should have done after the 2008 crash...
3
The disconnect here is that regulators and the SEC should be holding fraudulent actions accountable that intentionally overvalue stocks, hide corporate liabilities and mislead investors intentionally to make investments in stocks that are known to be problematic, for example a pharmaceutical company that knows its field research is showing its top pipeline drugs to be ineffective. But, that's not what appears to be the case here.
From all reports their government is targeting those who questioned the soundness of companies and possibly sold short. There have been a lot of financiers who have wanted to jail short sellers (and worse) for what they perceived as their unjustified adverse impact on a stocks value - or intentional devaluing of it, in order to obtain control of a target more cheaply. Bear raids, as they are known, where a frequent tactic in the late nineteenth into the early twentieth century and beyond with variations. But, short selling can also be a simple hedge against a future, or it can be based on a market analysis that questions the premise for valuing a stock price too highly based on an assessment of future earnings and growth or a turning market.
Threatening short sellers with jail as if they are making a market by betting there will be a further market correction can backfire by stoking the fear that the market is being provided with an artificial bottom.
From all reports their government is targeting those who questioned the soundness of companies and possibly sold short. There have been a lot of financiers who have wanted to jail short sellers (and worse) for what they perceived as their unjustified adverse impact on a stocks value - or intentional devaluing of it, in order to obtain control of a target more cheaply. Bear raids, as they are known, where a frequent tactic in the late nineteenth into the early twentieth century and beyond with variations. But, short selling can also be a simple hedge against a future, or it can be based on a market analysis that questions the premise for valuing a stock price too highly based on an assessment of future earnings and growth or a turning market.
Threatening short sellers with jail as if they are making a market by betting there will be a further market correction can backfire by stoking the fear that the market is being provided with an artificial bottom.
1
So much for free markets in China. It is now virtually impossible for anyone to gauge the value of the securities traded on the China based exchanges because of the government intervention. The prices are not real. They are what the government would like to try to make them. Ultimately, no one, other than the government, will be willing to buy them.
And the downside to that is????? Let China fail...they deserve it.
America should grow up , toughen up,, bite the bullet and learn to survive and prosper without the collusion with this gang of rapacious, thieving, immoral thugs who want to ruin us. We would get more honorable and safe assistance from the mob. China has no good will toward America.
America should grow up , toughen up,, bite the bullet and learn to survive and prosper without the collusion with this gang of rapacious, thieving, immoral thugs who want to ruin us. We would get more honorable and safe assistance from the mob. China has no good will toward America.
2
I cannot help but laugh myself silly. First the greed of Wall Street and American Mega-Corporations go running to China for decades now in their never ending search for slave labor; and now they are Shocked that the Communist gov`t. does not act like the Capitalists expect them to. Round up the usual suspects...talk about the blind leading the blind!
3
Their fxs bled out 1/4 - 1/3 of their reserves with their recent intervention strategy. The Shanghai is still 37% off of where it was and is uneasy. This foray into attempting to ''Jailbone'' their market into being ''more positive - less negative'' is about as obvious as it looks. When it rains blame the man who made money selling umbrellas.
The announcement of massive interventions after great losses set in motion a natural phenomenon - traders looking for a way to find short-term trading gains quickly learned to time those interventions and use the futures markets in Hong Kong to lay off and profit. Markets now alerted to false valuations are scrutinizing the profits and sales reported by the companies reporting in troubled sectors. Commodities provide a quantum gauge of gross market directions.
You can jail the umbrella vendors but the market will improvise and use newspapers to cover their heads instead.
So far none of the measures implemented by the Chinese Central government impress on tackling the fundamental issues challenging their market's growth stalling. There is a continued disconnect between their central economic engine and their regional capital expenditure coming online with functioning ghost cities and supports. There is wariness with the financial opacity of about 80% of the markets supporting the exchanges leading to suspect ratios.
Jailboning is no more effective that jawboning except in political terms where it satisfies authoritarians.
The announcement of massive interventions after great losses set in motion a natural phenomenon - traders looking for a way to find short-term trading gains quickly learned to time those interventions and use the futures markets in Hong Kong to lay off and profit. Markets now alerted to false valuations are scrutinizing the profits and sales reported by the companies reporting in troubled sectors. Commodities provide a quantum gauge of gross market directions.
You can jail the umbrella vendors but the market will improvise and use newspapers to cover their heads instead.
So far none of the measures implemented by the Chinese Central government impress on tackling the fundamental issues challenging their market's growth stalling. There is a continued disconnect between their central economic engine and their regional capital expenditure coming online with functioning ghost cities and supports. There is wariness with the financial opacity of about 80% of the markets supporting the exchanges leading to suspect ratios.
Jailboning is no more effective that jawboning except in political terms where it satisfies authoritarians.
2
Though I may not agree with the entirety of your post, "Jailbone" is probably the best new term I've encountered this year. Kudos for coming up with it. Sad that we understand it.
I have to admire the Chinese for being audacious enough to draw the logical conclusion from the fact that the current stock & financial market is entirely subjective and based wholly on psychology: it can be controlled by force.
In the West there's still an industrialist view that stocks and finance is controlled by output and revenue, and that force therefore is pointless -- you can't, after all, increase industry production or get customers to buy more products by threatening the CEO.
That said, I wonder how long something as slow and lumbering as the Chinese state can keep up with and dampen the inherently unpredictable mood swings of the finance and stock market.
In the West there's still an industrialist view that stocks and finance is controlled by output and revenue, and that force therefore is pointless -- you can't, after all, increase industry production or get customers to buy more products by threatening the CEO.
That said, I wonder how long something as slow and lumbering as the Chinese state can keep up with and dampen the inherently unpredictable mood swings of the finance and stock market.
5
I am amazed by the graph showing the amount of China exports to the US.
I am sure that China's exports to Hong Kong flow through to the US in the same ratio so trade imbalance is phenomenal !.
At first blush , it would seem the US has a lot of leverage with China but if there was a trade embargo, where would US companies get goods to sell to US
consumers in the short term? The US is screwed into the ground!
I am sure that China's exports to Hong Kong flow through to the US in the same ratio so trade imbalance is phenomenal !.
At first blush , it would seem the US has a lot of leverage with China but if there was a trade embargo, where would US companies get goods to sell to US
consumers in the short term? The US is screwed into the ground!
1
R Graham... We could try to make stuff ourselves if our consumers would not force our businesses to prostitute themselves for the absolute bottom feeding price.
We need a government that has enough honesty to admit we blew it with stupid trade give aways and hostility to American businesses. We will have our last chance to save America from the Wall Street and Congressional crooks in 2016 and we better not blow it or else start teaching Chinese in our schools if we have any teachers able to go beyond self esteem and minority history feel good classes.
We need a government that has enough honesty to admit we blew it with stupid trade give aways and hostility to American businesses. We will have our last chance to save America from the Wall Street and Congressional crooks in 2016 and we better not blow it or else start teaching Chinese in our schools if we have any teachers able to go beyond self esteem and minority history feel good classes.
Apple, Walmart,Time Warner, Disney, CocaCola, the list is endless. None of these companies want the truth to be known concerning the true nature of the heinous Chinese Communist Party and these greedy corporations control the Western media. The CCP is a gangster regime that has murdered eighty million of its own people since 1949 and is now attempting the blood-thirsty genocide of the tens of millions of Falun Gong practitioners who live in Red China. This genocide consists of torture, slavery, organ harvesting and murder. The weak U.N. even appointed the vicious CCP a seat on its Human Rights Council last year. Shameful. All brought about by insatiable greed.
Personally I can't wrap my head around the fact that China is Communist, and yet there is such great wealth disparity. That makes no sense.
Recently the farming community in China has undergone major upheaval, being forced to vacate the land they worked for centuries and forced into these futuristic pop up cities, condominium cities that put the now out of work farmers into debt, destroy their livelihood--there is major upheaval taking place in China and the market has been overinflated for about ten years, at least the last five. The time to get out was about two years ago. If the housing bubble bursts, the market will react appropriately. Very poor planning, plus ultimate cruelty against the very hardest working and meek, is never a recipe for success. China's government can put as much money into the market as they want. They will soon begin to devalue their currency and foreign investors will leave.
Recently the farming community in China has undergone major upheaval, being forced to vacate the land they worked for centuries and forced into these futuristic pop up cities, condominium cities that put the now out of work farmers into debt, destroy their livelihood--there is major upheaval taking place in China and the market has been overinflated for about ten years, at least the last five. The time to get out was about two years ago. If the housing bubble bursts, the market will react appropriately. Very poor planning, plus ultimate cruelty against the very hardest working and meek, is never a recipe for success. China's government can put as much money into the market as they want. They will soon begin to devalue their currency and foreign investors will leave.
1
Despite being a communist party, China adopted a capitalist economy under party chairman Deng. This actually created an uproar in Chinese Civilians from both sides of the political spectrum. This tensions release amounted to the incident in Tienanmen Square. I believe the current economic system is called a 'socialist market economy', which of course is an oxymoron.
The Chinese government is responding to a bubble in stocks rather as the U.S. government responded to the housing bubble in 2008. The Chinese TARP is at $235 billion and counting, less (so far) than the $1 trillion we spent to prevent the collapse of the U.S. economy. More fundamentally, China is seeking to rig the game and guarantee positive outcomes, a policy that can only lead to more problems down the road.
"Officers have bluntly told some fund managers to just stop selling."
IRS officials bluntly told some conservative organizations to stop their activity.
It didn't start with creatively defining the word "is" but that was when the main street media joined forces with the Progressive political elite to undermine and pollute a couple centuries of progress for the peasant.
Venezuela here we come!l
IRS officials bluntly told some conservative organizations to stop their activity.
It didn't start with creatively defining the word "is" but that was when the main street media joined forces with the Progressive political elite to undermine and pollute a couple centuries of progress for the peasant.
Venezuela here we come!l
1
Bob.... Far too true to be published. uffdaron
1
King Canute tried to prevent the tide rising, and the Chinese Communist Party will have a similar outcome trying to prop up stock prices. In the long run the price of a stock will depend on the underlying value of the business.
To read this article and many of the comments is like being in a time capsule from the Cold War era. It's not about ideology folks, it's about a governance system that appears to place more emphasis on what is good for the country as a whole than on protecting the profits taken from the country as a whole by those in a position assert their individual "rights" to take advantage of the financial system without regard for broader economic and social consequences. If one reads about the corruption that pervades our government, corporations, health care and financial systems and the impact of all this on the "rights" of the 99% of the population not in a position they can exploit for extraordinary and usually unearned profit, then perhaps we can discuss objectively how China's government is doing under its unique circumstances - including responsibility for almost five times the population of the US. What a shame that the NYT and many of its reader still view the world like children who believe in Santa Claus.
Never did understand why American Corporations went to a communist nation to do business when their government could just lock them all down just to get cheap labor.
stonehilllady.. Probably because there are still enough of us old Americans alive that remember 1776...it could happen again if we can get our??? government under control.
1
I have little doubt that all kinds of shenanigans go on in the high strata to keep the global investment house of cards propped up. It's not just China. The whole industry is dependent on naiveté and the public belief that the market is sound, no matter what the real situation is, so the market is promoted with vague terminology and convoluted theories as to why it's doing this or that at any particularly moment - as if it's a science - when the truth is, it's being manipulated. There's never going to be a "correction" again, because everybody in the know is too terrified of the consequences. The global economy is not in good shape. What would happen worldwide if the realization set in that no company could possibly achieve its current, ridiculous valuation in the next five hundred years? Public rage is what would happen. Isn't it a wonder how the market boomerangs so dramatically the day after the stock market merely edges toward realistic valuations?
The market looked like the classic pump and dump the last 9 months. Some people made a great deal of money off that on the way up and before the dump. Maybe the fast tough approach works better than the nonsense we use of analyzing for years and then fining a few people half a decade after the trickery is long forgotten. We should be watching and learning from them every much as they should be watching and learning from us. Petulantly writing off China as another 1920s US is not the whole story.
I cannot believe that there is any confidence in the Chinese markets. The gov't has propped up shares by buying stocks. They force investors to hold stocks which they want to sell. The economy is suffering, stale and overrated. I cannot believe that any investor outside of China would still have any investments there. Based on a false value of BIG TIME.
In The Times today, I read “In China, a Forceful Crackdown in Response to Stock Market Crisis” By Edward Wong, Neil Gough and Alexandra Stevenson. This article was about China’s financial crisis. This is all because of the sale stocks. According to the article, “Senior executives at China’s biggest investment bank have been arrested on suspicion of illegal trading.” Since there have been trading rules, some of the workers went against them and now they can no longer be a senior executive. There have been many questions asked about the whole problem. Some of them were why the managers sold sales when the market was going down. There was something suspicious about it. That is why many of the Chinese authorities have downloaded data to figure out why the managers did this. The stocks have fallen more than 50% since this issue. They have spent over $235 billion buying shares and supporting them. The Chinese government is very upset with them. They are not accepting any help from other countries either. They feel that other countries will just be using them. With this problem, China’s currency will be lowered. Their currency, also known as “Yuan” is going against the US currency. It is bringing it down. China has had problems like these in 2008 , but this is worse than the last crisis in the past. I chose this article because there have been many stories on the news about this. Also, I have heard that traveling to China will be much cheaper since all of this has happened.
1
The entire Chinese economy, including the nominally private companies, is owned by or under the control of the Central Committee of the Chinese Communist Party.
THE CCCCP will do whatever it likes...and we in the liberal, democratic, freedom-loving capitalist west...will go along with whatever the CCCCP does.
THE CCCCP will do whatever it likes...and we in the liberal, democratic, freedom-loving capitalist west...will go along with whatever the CCCCP does.
1
More importantly, when does the next thingamabob from Apple, made in a Communist Chinese sweatshop, come out?
I MUST HAVE IT!
I MUST HAVE IT!
2
(Reference: the 2007-2008 U.S. market crash)
CHARLES FERGUSON: Why do you think there isn't a more systematic investigation being undertaken?
NOURIEL ROUBINI: Because then you will find the culprits.
Inside Job (2010 film)
CHARLES FERGUSON: Why do you think there isn't a more systematic investigation being undertaken?
NOURIEL ROUBINI: Because then you will find the culprits.
Inside Job (2010 film)
14
There may turn out to be more real justice on this matter in the Communist China than in our own "democratic" U.S.
1
As my high school math teacher said in the '50s, "You pays your money and makes your choices." You shouldn't be investing unless you spend a lot of time doing homework. Even then you will make some mistakes and lose money from time to time. What do you think you'll get out of owning bonds, excepting better junk bonds, or bank savings? I grew up in Buffetland. He just bought Burlington Northern with the justification that it would make money in 10 years. We'll see.
Jane Taras Carlson
Jane Taras Carlson
1
After reading this, I am convinced that China is doing exactly the right thing. The next Oresident should go after Wall Street and corporate executives with a set of retroactive laws that will see them in prison for the mere suspicion of wrong doing. We could tone it down, as they did in Iceland, but we need to destroy the stranglehold big business and investors have on this country.
8
That's the government you want to live under? So, if you're caught freely trading stocks then it's prima facie "Up against the wall ______ ______!" I believe tickets to China are still available.
oh yes, entirely to much personal freedom in the country. people running around doing whatever they want. We need more government control of our lives.
Although it is important that the government place regulation on some trade to prohibit illegal trading, it's not conducive to have secret interrogations and limits on trading with no time limit stated. This will only lead to confusion among traders as they're unsure of what's illegal and what's not. I think that it would be beneficial for the government to be less opaque with their dealings. Doing this will lead to more confidence in the markets and a faster return to normalcy. If this continues for longer, it will put greater financial strain on the Chinese market.
1
I suspect the uncertainty is part of the plan. If the traders don't know what's legal, they will tend to err on the side of caution.
The opacity that troubles me is the secret dealings on wall street.
1
Fear/greed = market behavior.
1
Whoever invests in China stocks is a very big risk taker or crazy. What kind of "market" is this supposed to be, where any bad news are simply suppressed and you may not be allowed to sell? It is just a big lie with only the leading comrades in the know and presumably making the profit.
6
Risky Business, that, of interceding during the events rather than waiting more than a decade after the plundering to say, in theory, that our justice system will hold individuals responsible for wrecklessly and ruthlessly playing for profit with others' hard earned money; their futures. Doesn't mean China's government is pure in spirit, or assure fairness will win, but putting smug greed on a leash could have better outcomes than what we have in the U.S.-the rebuilding of the same institutions with the same leaders and the same mentality of cheating others for profit and ignoring how money and human misery are intertwined.
5
I certainly don't approve of China suddenly buying stocks to support its stock market, but the other actions it is taking may ultimately be viewed as very responsible. A little fear injection into sudden actions by stock traders is not a bad thing.
At the same time I think China should not have intervened at all beyond maybe its actions to freeze trading by high volume accounts which amounts to a sort of circuit breaker action. When the market went up 70% this year the Chinese government should have anticipated losing some of that because it isn't like the Chinese economy is suddenly worth 70% more and recessions do create a drag on stock markets.
At the same time I think China should not have intervened at all beyond maybe its actions to freeze trading by high volume accounts which amounts to a sort of circuit breaker action. When the market went up 70% this year the Chinese government should have anticipated losing some of that because it isn't like the Chinese economy is suddenly worth 70% more and recessions do create a drag on stock markets.
1
An interesting Chinese way to produce a toxic mix of pseudo socialism and pseudo capitalism all under an ironclad policy frame that divides the winners and lovers at will.
6
Oxymoron come to life: capitalism in communist China.
12
Most definitely true. Bodes not well for genuine freedom -- of anything. Where freedom doesn't live, capitalism can't either.
4
http://www.nytimes.com/2015/09/10/us/politics/new-justice-dept-rules-aim...
September 9, 2015
Justice Dept. to Put Focus on White-Collar Criminals
By MATT APUZZO and BEN PROTESS
New policies prioritize the prosecution of individual employees and put pressure on corporations to turn over evidence against their executives.
[ I am grateful to the President and Attorney General. Also, I am reminded that Chinese President Xi began with just such a necessary effort on taking office and I believe the effort of Xi will of pronounced economic significance for China and possibly we may better understand and appreciate the Chinese in light of our own. ]
September 9, 2015
Justice Dept. to Put Focus on White-Collar Criminals
By MATT APUZZO and BEN PROTESS
New policies prioritize the prosecution of individual employees and put pressure on corporations to turn over evidence against their executives.
[ I am grateful to the President and Attorney General. Also, I am reminded that Chinese President Xi began with just such a necessary effort on taking office and I believe the effort of Xi will of pronounced economic significance for China and possibly we may better understand and appreciate the Chinese in light of our own. ]
3
In America, we invent new ways every day for financial sharks to use high frequency trading and structured products to profit off the misery of others and spend trillions in public funds to protect white collar criminals from paying for their crimes. In China, they threaten un-patriotic, selfish thieves with jail.
20
If anyone doubted that President Xi was not a hard core Communistm this should make it clear. We now have to wonder whether China will return to Mao-era purges and yet another "Great Leap Forward" or "Cultural Revolution".
1
Our oligarchy have so much more freedom. True.
This is a stock market that is headed to, as Dean Wormer would say, "zero point zero".
5
The Chinese stock market is unlikely to drop below what it was a year before the market turmoil in China started. After all the underlying assets of the huge manufacturing sector in China are in the tens of trillions of dollars in worth.
1
https://research.stlouisfed.org/fred2/graph/?g=1qyW
August 4, 2014
Real per capita Gross Domestic Product for China, Japan, United States
and United Kingdom, 1976-2014
(Indexed to 1976)
http://research.stlouisfed.org/fred2/graph/?g=10NY
November 1, 2014
Total Factor Productivity at Constant National Prices for China,
Japan, United States and United Kingdom, 1976-2011
(Indexed to 1976)
August 4, 2014
Real per capita Gross Domestic Product for China, Japan, United States
and United Kingdom, 1976-2014
(Indexed to 1976)
http://research.stlouisfed.org/fred2/graph/?g=10NY
November 1, 2014
Total Factor Productivity at Constant National Prices for China,
Japan, United States and United Kingdom, 1976-2011
(Indexed to 1976)
1
So what happens when the little guy wants to sell?
Does the Communist Party forbid the sell? Guess that means the little guy can't take his money out BUT I suppose the Party Elite have ways around these restrictions.
Does the Communist Party forbid the sell? Guess that means the little guy can't take his money out BUT I suppose the Party Elite have ways around these restrictions.
2
What is all this nonsense about "free markets"? When the too big to fail US banks over-leveraged themselves and caused the crash in 2008, government (we taxpayers) bailed them out. That's hardly free-market.
20
Yep - a lot of Republicans would agree with you. And that's why they feel that more companies should have been allowed to fail.
4
The Chinese government suspects there may have been illegal trading? Give me a break. The entire system - as this writer has said in NYT Comments for years -is a house of cards propped up by unsecured loans, manipulated prices and fake numbers at every level. It was encouraged by the Party and swallowed whole by a culture addicted to gambling and short term gains. Even now, tamping down the rout by intimidating investors only throws a light - at least I hope it does - on how out of touch the Party is, and has always been. As I said last week on these pages. This is far from over and the results will be felt by us all.
4
Why is anyone surprised this is happening in China? I'm not a market specialist, but the fact that the Chinese government is in control and can intervene whenever it wishes should not surprise anyone.
Never, ever start believing the Chinese government believes in capitalism.
Never, ever start believing the Chinese government believes in capitalism.
6
I'm not sure too many in the west believe in it any more either !
This article is seriously missing, perhaps somewhat intentionally, of a very large issue in the Asian markets that is not present in the USA. It has been fairly easy, especially in the past, for someone to open a brokerage account, or bank account in the USA using a local address. When securities are bought on an overseas market the shares are aggregated with any other holdings of the brokerage that originated the trade and registered in the name of a nominee entity. The security holder's identification is secret. This is done without even for the asking. Someone could easily be an insider. None of the particulars in this article such as the kind of questions asked by the police are so far afield of what an investigator might ask in making sure that the broker has complied with KYC etc (Know Your Customer) that we should assume anything less devious than just identifying gross violations of insider trading that in the US would be very egregious. Just ask Martha Stewart. In Thailand for example the biggest market cap firm hardly ever has any 59-2 reports filed, which an insider must file. But other SET listed companies, much smaller but that we all know of as straight forwardly run companies, shall we say, has almost daily volumes of these same reports filed. This is a much different issue than having buy side police, as the article seems to be attempting rather than stepping on our own unconcern that we do not screen bank customers which keep banks quite happy.
2
Well duh, you can't have free trade in a fascist state. The CCP rules all in China, it's a fascist oligarchy, there are no personal rights, there can be no actual capitalism. Anyone who invested in China is a fool, and a fool and their money are soon parted. If this causes some kind of global recession, well so be it, maybe people will learn something this time. I guess with some people they don't catch on until they get run over by a tank.
15
It's almost impossible to know what is going on over in China concerning their slowing growth rate and stock market rout. The country's oligarchy is so powerful and connected to the big money that they virtually run the game from who comes into the casino, to how much they are able to bet to where the ball drops in the roulette wheel slot. But they can't control the rest of the world's reactions to how they attempt to rig their own game.
We also have a rigged financial system, but it isn't entirely controlled from top to bottom like theirs is, otherwise we wouldn't see the Airbnbs and the Ubers streaming out of Silicon Valley like champagne bubbles on the surface of a frothy stock market. Perhaps, that freedom to develop questionable companies, from the bottom up, is the chief difference between us and them. Once a company makes it big here, the fix gets put in place because everyone wants a piece of the action after that. The shills and the lobbyists line up for their money-making stints with such firms.
14
China. Doing what the US should have done in 2008. We're so behind.
2
@Anthony. If we did that, the market would never find a bottom because EVERYONE would resolve to sell and move to a market that had real prices. If I want fantasy prices I can buy penny stocks.
3
I find nothing wrong with the Chinese effort to limit or at least for a time end what has been harmful stock market trading.
8
What about the harmful central planning?
1
Wrong? Just about everything: Police, arrests, major restrictions on sale of stock. "Officers have bluntly told some fund managers to just stop selling." Disappearance (and later denied) of top hedge fund manager "taken into custody to assist police inquiry into market volatility." Governments often take action to control markets. But it's the means, the procedures taken by China which has raised fundamental questions of fairness, justice and the wisdom of massive use of police and China's security apparatus.
3
Central planning has wrought a Chinese economic per capita and total factor productivity growth wonder since 1977.
2
Can someone confirm: Did the Chinese government encourage the over-inflated market by allowing people to buy on margin?
3
"Did the Chinese government encourage the over-inflated market by allowing people to buy on margin?"
According to Harvard's Jeff Frankel, quite the opposite.
http://www.jeffrey-frankel.com/2015/09/07/misinterpreting-chinese-interv...
September 7, 2015
Misinterpreting Chinese Intervention in Financial Markets
By Jeffrey Frankel
According to Harvard's Jeff Frankel, quite the opposite.
http://www.jeffrey-frankel.com/2015/09/07/misinterpreting-chinese-interv...
September 7, 2015
Misinterpreting Chinese Intervention in Financial Markets
By Jeffrey Frankel
4
@Nancy Great Neck:
Thanks. But the article says the following near the bottom:
"Yes, the extraordinary run-up in stock market prices from June 2014 to June 2015, when the Shanghai stock exchange composite index more than doubled, was fueled by an excessive increase in margin borrowing. Reasons for the increase in margin borrowing include its original legalization in 2010-11; easing of monetary policy by the People’s Bank of China since November 2014 in response to slowing growth and inflation; and the eagerness of an increasing number of Chinese to take advantage of the ability to buy stocks on credit."
And since posting my question, I found this NY Times article that says:
"The panic, in part, is being driven by concerns about the huge amount of borrowing. Some analysts estimated that margin buying reached about $550 billion, or as much as 15 percent of the value of all tradable shares on the two major exchanges."
http://www.nytimes.com/2015/07/09/business/international/stock-sell-off-...
If I am missing something, let me know - thanks.
Thanks. But the article says the following near the bottom:
"Yes, the extraordinary run-up in stock market prices from June 2014 to June 2015, when the Shanghai stock exchange composite index more than doubled, was fueled by an excessive increase in margin borrowing. Reasons for the increase in margin borrowing include its original legalization in 2010-11; easing of monetary policy by the People’s Bank of China since November 2014 in response to slowing growth and inflation; and the eagerness of an increasing number of Chinese to take advantage of the ability to buy stocks on credit."
And since posting my question, I found this NY Times article that says:
"The panic, in part, is being driven by concerns about the huge amount of borrowing. Some analysts estimated that margin buying reached about $550 billion, or as much as 15 percent of the value of all tradable shares on the two major exchanges."
http://www.nytimes.com/2015/07/09/business/international/stock-sell-off-...
If I am missing something, let me know - thanks.
2
In the USA the free market fairy makes everything fair, regulations aren't necessary.
In China the state market troll beats until you project confidence, free choice isn't welcome.
Surely we can find a common ground of some freedom and some regulations, something between the extremes of anything goes social darwinistic capitalism and nothing goes totalitarian communism?
In China the state market troll beats until you project confidence, free choice isn't welcome.
Surely we can find a common ground of some freedom and some regulations, something between the extremes of anything goes social darwinistic capitalism and nothing goes totalitarian communism?
5
In what way does capitalism entail social darwinism?
In the US capitaist system, we do not have laissez-faire economics, we have strong anti-trust laws
1
I welcome law and orders restored in the Chinese stock markets. Any time insiders using loop holes and grey areas to make huge profits at the expense of ordinary investors should be prohibited and punished for the crimes they did. I am still waiting for the Wall Street titans to serve the time behind bar for their effort to the 2008-2009 financial crisis in here.
7
Those companies like Fannie Mae and Freddie Mac SHOULD go under. They made bad loans to people who could not pay back and undermined the underwriting standards for loans in general. They started a snowball effect of securitization of bad loans and then lost control over the market for these bad loans, which directly led to the subprime meltdown and almost sent us back to the stone age. If anyone belongs behind bars it is the politicians who promise something for nothing and nearly bring down our economy in the process.
1
Why traders ever thought that China somehow would leave them alone if equities trading there was going south is beyond me. What they should have done was maintained skeleton staffs within China proper to keep the lights on and established their trading operations somewhere where laws meant something. Better yet, establish exchanges in Hong Kong and move EVERYTHING, including transactional capabilities, off the mainland entirely.
Now, because of the fear that has been drummed up, international trading in Chinese stocks likely will tank even further, because there's a greater-than-normal concern that valuations are being manipulated to serve the government's perceived interests.
Now, because of the fear that has been drummed up, international trading in Chinese stocks likely will tank even further, because there's a greater-than-normal concern that valuations are being manipulated to serve the government's perceived interests.
4
Too big to fail?
Thought that Bush and later Obama rammed that one through in 2008.
Anyone who believes that the Chinese mafia, the unelected dictatorship that controls every aspect of the great People's Republic, would allow free markets for equites is in for a major surprise.
China will continue to manipulate its markets to favor those who run things, not the investors. Allowing the market to simply run its course is anathema to them.
Of course, we have "circuit breakers" where, for example, the NYSE can halt all trading if the market declines " too fast". They can do this for when it suddenly declines 7%, 13%, and 20%. Dow follows similar policy.
No such policy if the market goes up too much.
Trading in equities is legalized gambling. No casino would allow itself to be destroyed economically. If things go south, it can do whatever it wants to hang on to its money.
So China is just a rather blatant example of this.
When dealing with mafioso don't be surprised at anything they do or say.
These are not nice people. They play by whatever rules suit them.
Thought that Bush and later Obama rammed that one through in 2008.
Anyone who believes that the Chinese mafia, the unelected dictatorship that controls every aspect of the great People's Republic, would allow free markets for equites is in for a major surprise.
China will continue to manipulate its markets to favor those who run things, not the investors. Allowing the market to simply run its course is anathema to them.
Of course, we have "circuit breakers" where, for example, the NYSE can halt all trading if the market declines " too fast". They can do this for when it suddenly declines 7%, 13%, and 20%. Dow follows similar policy.
No such policy if the market goes up too much.
Trading in equities is legalized gambling. No casino would allow itself to be destroyed economically. If things go south, it can do whatever it wants to hang on to its money.
So China is just a rather blatant example of this.
When dealing with mafioso don't be surprised at anything they do or say.
These are not nice people. They play by whatever rules suit them.
17
In a "true" free market there would be zero intervention when markets decline, which just proves that the idea of a free market is a myth or world finance is fraud...take your pick.
1
China's rich and powerful seem to be just as corrupt and greedy as some of our own hedge fund billionaires and CEO's. As the old adage goes: power corrupts and absolute power corrupts absolutely .
14
probably more so as the Chinese political elites are also major shareholders. They can directly bring the power of the state to play in their interests.
3
There is a difference between corruption and greed. One is illegal, the other is not.
What about the power wielded by politicians/bureaucrats etc, does it corrupt?
1
Lots of red out there again today - America this time.
http://www.bloomberg.com/markets/world
http://www.bloomberg.com/markets/world
Please note:
Red in the Chinese Stock Markets means the STOCKS are UP NOT DOWN.
Red in the Chinese Stock Markets means the STOCKS are UP NOT DOWN.
2
Ya just gotta love the Chinese government. They are doing what Occupy Wall Street and the Tea Party have been wanting to effect here:
"Police officers under the Chinese Ministry of Public Security specializing in economic crimes have joined agents from the nation’s securities regulator on inspections of investment funds and brokerage firms."
I think something has come loose. In the '90's, executives here raved over that weird amalgam of communism and capitalism. Now it's a monster that threatens the stock markets.
"Police officers under the Chinese Ministry of Public Security specializing in economic crimes have joined agents from the nation’s securities regulator on inspections of investment funds and brokerage firms."
I think something has come loose. In the '90's, executives here raved over that weird amalgam of communism and capitalism. Now it's a monster that threatens the stock markets.
3
@Charles Clifton, NJ:
Actually, I think Occupy Wall St. would be happy if you got rid of the carried interest rule.
And maybe if we could somehow help the bottom. Right now the richest 400 Americans have as much wealth as the bottom 50%.
And maybe since we are the richest industrialized country for GDP / capita we could get above number 20 when it comes to education.
Actually, I think Occupy Wall St. would be happy if you got rid of the carried interest rule.
And maybe if we could somehow help the bottom. Right now the richest 400 Americans have as much wealth as the bottom 50%.
And maybe since we are the richest industrialized country for GDP / capita we could get above number 20 when it comes to education.
3
What good would it do to let the poorest 50% allocate/manage capital?
1
It's about time someone cracked down on so-called hedge funds that bet average people will lose money with every transaction. The bigger worry for the Good People of China is that their fearless leaders have allowed 30% of the national pension fund to be played on the stock market. The smart people got out while they still had some money and now the government takes it out of their futures to support BIG finance. It's a crime. The entire financial market is a criminal enterprise today.
http://www.theguardian.com/world/2015/aug/23/china-to-allow-pension-fund...
http://www.theguardian.com/world/2015/aug/23/china-to-allow-pension-fund...
6
Interesting to see how many people KNOW how markets work!! We have a highly regulated market here-- with zero interest rate people who hope to ake a bit of money on their savings have no choice other than to "invest" in what to me looks like a market much in need of the 2000 point correction if not more.
I admire the Chinese for assigning blame -- something the US gov seemed unable to do in the financial crisis!!
Time to discuss what work should mean in this brave new world.... ( do we need traders?? can't we just use c omputers??)
I admire the Chinese for assigning blame -- something the US gov seemed unable to do in the financial crisis!!
Time to discuss what work should mean in this brave new world.... ( do we need traders?? can't we just use c omputers??)
3
Do you admire those that admit fault?
What should the computers do?
What should the computers do?
Of course, the result of this will be that Chinese stocks will be undervalued in the future, since any purchaser of a stock has to take into account the possibility that they won't be able to get their money back if the market goes down too much. Chinese companies will have a harder time raising money as a result.
It's not too surprising that a government that is still officially Communist doesn't understand the capitalist idea of the stock market. We should have known better than to assume that the Chinese were a growing threat to our economic domination.
It's not too surprising that a government that is still officially Communist doesn't understand the capitalist idea of the stock market. We should have known better than to assume that the Chinese were a growing threat to our economic domination.
11
Given the fact that China is run by a communist dictatorship we should not be surprised that journalists or investors who voice opposition suddenly disappear. It will be interesting to see how president Obama handles the president of China as his guest. Market economy in China, I think not.
4
Massive government intervention in the market including police, arrests and the application of "the full weight of a security apparatus" represent a toxic cocktail that is unlikely to reverse the market's downward course despite occasional rallies. The intervention will scare traders, foreign investors and the general public creating the exact opposite of the intended result. This toxic cocktail is screaming: Watch out Below...............As the world economies and markets are so closely connected, the China fiasco has negative implications for all markets.
3
The Chinese government is telling these hedge funds and investment firms that only "Warren Buffett" investment style are allowed for big players. Who knows, these investment bankers may be re-educated and turn into future Chinese Warren Buffetts who like to buy only good Chinese companies and keep them forever. The hard work would be finding good Chinese companies that will be around 10 years from now.
Thus beside capital control, there will be investment style control. This bodes well for the retail Chinese investors and the S&P 500 index should do well by year end.
Thus beside capital control, there will be investment style control. This bodes well for the retail Chinese investors and the S&P 500 index should do well by year end.
1
To a degree, what China is doing to moderate and police its stock markets appears similar to what the U.S. and other countries do when they step in to either temper the fear and greed or minimize illegal/unethical activities. Of course, it would be less surprising to read about tanks and the military surrounding Chinese institutions housing illegal traders or sudden widespread arrests with little due process.
I find the comparison between the Chinese stock market and "a roach motel..." amusing and hopefully not quite as appropriate in the U.S. But a lot of capitalism boils down to what you can get away with, legal or not, U.S. or China...
I find the comparison between the Chinese stock market and "a roach motel..." amusing and hopefully not quite as appropriate in the U.S. But a lot of capitalism boils down to what you can get away with, legal or not, U.S. or China...
17
China makes their bubble even more dangerous by pretending the market can't go down.
Ask Alan Greenspan how that works out.
Ask Alan Greenspan how that works out.
12
If Chinese government interventions don't come back to bite them, then we pretty much need to rethink everything we've learned about stock markets over roughly 200 years.
6
A government which is undemocratic, authoritarian and rampantly corrupt cannot achieve sustainable economic growth. Amping up the authoritarianism ultimately only further undermines the economy.
5
Let's see what will happen in 2025 : )
There are too many Americans forget the fact that 9 out of last 10 centuries China owns the highest GDP in the world. Plz, keep telling yourself what you have posted so that we can come back even faster. Personally, I turely hope that more and more Americans can think like you.
There are too many Americans forget the fact that 9 out of last 10 centuries China owns the highest GDP in the world. Plz, keep telling yourself what you have posted so that we can come back even faster. Personally, I turely hope that more and more Americans can think like you.
f or f: I kind of like your description of our current government.
1
All I can say is that when the "China Spring" hits it's going to be a doozie!
What the can the corrupt, near-criminal Chinese government going to do when 3/4 of a Billion people come after them?
The Chinese government has no Plan B. They react violently, lurching from crisis to crisis. (A real example if the Repubs were in charge in America) The Chinese can't even copy well, heck, they can't even copy bad. The Chinese government is only capable to ape Western behavior. The Chinese government has no understanding why Western capitalism requires a measure of democracy, honesty and integrity, of which the Chinese government has absolutely none of these traits.
This collection of Chinese leaders led by President Xi have no idea of what to do to keep China Inc. together. The behavior of government manipulations into their economy is ample proof that the Chinese government is basically lost in the woods. They have no idea what to do to improve their lot. An opening of their society to greater freedoms do not enter into the Chinese frame of mind.
In other words this Chinese experiment is doomed to fail. Not tomorrow, not next week or year. But this Chinese government is hardly sustainable.
Like I said, when the "China Spring" hits it's going to be a doozie!
What the can the corrupt, near-criminal Chinese government going to do when 3/4 of a Billion people come after them?
The Chinese government has no Plan B. They react violently, lurching from crisis to crisis. (A real example if the Repubs were in charge in America) The Chinese can't even copy well, heck, they can't even copy bad. The Chinese government is only capable to ape Western behavior. The Chinese government has no understanding why Western capitalism requires a measure of democracy, honesty and integrity, of which the Chinese government has absolutely none of these traits.
This collection of Chinese leaders led by President Xi have no idea of what to do to keep China Inc. together. The behavior of government manipulations into their economy is ample proof that the Chinese government is basically lost in the woods. They have no idea what to do to improve their lot. An opening of their society to greater freedoms do not enter into the Chinese frame of mind.
In other words this Chinese experiment is doomed to fail. Not tomorrow, not next week or year. But this Chinese government is hardly sustainable.
Like I said, when the "China Spring" hits it's going to be a doozie!
6
Americans and U.S. firms who have invested and/or are doing business in China *should* be very nervous. Practically drooling over the prospect of vast profits, they have elected to play the game of free-market capitalism in a treacherous sandbox where rules are seldom what they seem, and most certainly are not the rules either by which they are used to playing, or by which the Chinese themselves play. U.S. companies seem willing to risk large amounts of capital, as well as valuable intellectual property, while standing on a rug being tugged by a government that has neither the need nor inclination to play by a fair and stable set of rules.
None of the U.S. players deserve any sympathy for the precarious positions into which they've placed themselves. By agreeing to play on an uneven playing field and by acquiescing to ever-changing Chinese government demands that arise in the face of China's own economic vagaries, U.S. players look and play the fools, often struggling from positions of uncertainty, if not frank weakness. The pity is that even small investors have now become lashed to the mast of a stock market that, while described dryly as "volatile", has all the characteristics of quicksand. Will we never learn?
None of the U.S. players deserve any sympathy for the precarious positions into which they've placed themselves. By agreeing to play on an uneven playing field and by acquiescing to ever-changing Chinese government demands that arise in the face of China's own economic vagaries, U.S. players look and play the fools, often struggling from positions of uncertainty, if not frank weakness. The pity is that even small investors have now become lashed to the mast of a stock market that, while described dryly as "volatile", has all the characteristics of quicksand. Will we never learn?
6
the real debate to me is whether these derivative financial instruments, particularly shorting, should be allowed at all, good or bad. they create bubbles in the form of more investment than available product and crashes by flooding the market in downturn. essentially it is trading "Ether", which of course is just plain gambling. i love an occasional bet on a football game or cards or something, but if i were to gamble like this, betting my house and yours, i would be put into rehab. the debate is just incoherent when the topic is so clear. we think we are so brilliant because we have papers from government schools but i wonder just how smart this world really is.
3
One borrows stocks from investors in a company, the lenders receive a fee, the borrower sells the stocks in the market(i.e. short selling).
Wow they have no idea how markets work. You can coerce reassurance
1
I think you actually mean "You cannot coerce reassurance"
If that is the case, I fully agree with you.
If that is the case, I fully agree with you.
You cannot force a market to go up. Well, I guess you could threaten enough Chinese investors for a couple of weeks or so, but not forever.
3
President Obama and President Hu Jintao will have a lot to talk about concerning market crashes when they visit soon. I will be curious how China comes down on automated trading in terms of future regulations, perhaps they will start a trend in better regulation of this form of high speed gambling, opps I mean market trading. Good luck to China.
4
I'm mean, not really, considering that Hu isn't the president.
1
Joe, Hu Jintao is not coming to Washington to meet with Obama.
President Xi is coming.
You might check the names of those you comment on before you write comments.
President Xi is coming.
You might check the names of those you comment on before you write comments.
2
I thought the market was rigged, i.e. how can it be gambling(...on something random)?
Do they know something we don't know....not that I agree with anything about what China does...The market is not real, it's a gamble, a few major players can ruin the whole world..when are we going to get on board and really regulate the "casino's" especially when so many innocent 401k holders have their retirements wrapped up in it!!
24
Regulate the casinos(i.e. governments)?
We all are the fellow Americans, but a fact that Bill Gates is worth $50 billion doesn’t mean that I am equally wealthy.
That’s the problem with the stock values worldwide. The stock values are determined by using mathematically wrong model. The wrong model delivers the wrong results, a wrong sense of personal wealth and unjustified spending levels.
The more we believe in our own lies, the more we spend, the more stocks we want to sell and the faster the DJII and NASDAQ nosedive.
If one share is sold at the certain value, it doesn’t mean that all the stocks of the same company are equally worth.
The real value of any company should be determined based on the average stock value. Those should be calculated based upon the total capital invested into a corporation and the total number of shares.
If $100 million is invested into a company and a million shares are issued it means that average value of a single share is $100.00.
Now, if a fool buys a hundred shares for $20,000.00 (on average $200.00 per share) it means that the total value of company is now only $100,010,000.00 and not $200 million.
If the fools could really make us wealthy overnight, being a fool would be the most valued skill in the entire world…
The Chinese communists have learned this lesson in a painful way.
That’s the problem with the stock values worldwide. The stock values are determined by using mathematically wrong model. The wrong model delivers the wrong results, a wrong sense of personal wealth and unjustified spending levels.
The more we believe in our own lies, the more we spend, the more stocks we want to sell and the faster the DJII and NASDAQ nosedive.
If one share is sold at the certain value, it doesn’t mean that all the stocks of the same company are equally worth.
The real value of any company should be determined based on the average stock value. Those should be calculated based upon the total capital invested into a corporation and the total number of shares.
If $100 million is invested into a company and a million shares are issued it means that average value of a single share is $100.00.
Now, if a fool buys a hundred shares for $20,000.00 (on average $200.00 per share) it means that the total value of company is now only $100,010,000.00 and not $200 million.
If the fools could really make us wealthy overnight, being a fool would be the most valued skill in the entire world…
The Chinese communists have learned this lesson in a painful way.
5
That is not how this works at all. If the company has $X in assets and their market cap is $Y, and if $X > $Y then someone could borrow the money to buy all the shares of the company becoming the owner and then sell off their assets for a risk free profit. Stocks are about ownership in companies which entitles you to some of their profits as well as the right to have your say in how the business is run at shareholder meetings. If someone bid a ridiculous sum then people would sell to them, but realistically the spread between the bid and the ask is narrow and follows a random walk process. The P/E ratio is used to help us determine if a company is undervalued or overvalued. Why would you pay a higher price for an overvalued stock when there may be undervalued stocks? What you should be considering is that China propping up companies by purchasing shares means they are increasing their ownership of the companies at lower prices and preventing foreign owners from having ownership in Chinese companies. People should be pissed that they are not allowed to invest in a hot market with discounted shares. All this xenophobia is really bad for business.
https://www.youtube.com/watch?v=TZulLSs9hpc
https://www.youtube.com/watch?v=TZulLSs9hpc
1
Doesn't it even out(not the printing of money)?
When buying a stock you're also buying the future earnings of the company and the possible appreciation of its value due to these earnings increasing. Your analysis misses most of the picture needed to understand why equities are priced the way they are.
If a country like China does not respect human rights (the rights of basic freedom, speech, religion, association and living), how could you expect this country be a member of the modern world? Stock market may be one of the more stringent test of what China is.
It seems that we have already forgotten what the former Soviet Union and its little brothers look like and how backward and even evil a totalitarian regime could be. Even the resurrected Russian from the ashes of the USSR is a pain on the neck all these years to us. China is the only surviving brother from that stem and we, the Americans, are pumping oxygen and blood in the name of economic collaboration or world peace.
The great irony is that we helped China to open its door and hoped that China could be an ally again then the former USSR. Unfortunately, the blood of the communist and totalitarian is thicker than the US dollars. Look at what we've created, a Russian-China alliance with money and technology from us, against the free world.
That will be the biggest issue that world shall face in the next hundred years.
It seems that we have already forgotten what the former Soviet Union and its little brothers look like and how backward and even evil a totalitarian regime could be. Even the resurrected Russian from the ashes of the USSR is a pain on the neck all these years to us. China is the only surviving brother from that stem and we, the Americans, are pumping oxygen and blood in the name of economic collaboration or world peace.
The great irony is that we helped China to open its door and hoped that China could be an ally again then the former USSR. Unfortunately, the blood of the communist and totalitarian is thicker than the US dollars. Look at what we've created, a Russian-China alliance with money and technology from us, against the free world.
That will be the biggest issue that world shall face in the next hundred years.
27
The Chinese government should be more open and less opaque, maybe then things would look brighter and less scary. But then Mr. Xi would look human.
1
Why have we not slapped trade sanctions on this monstrous, cheating, bribing, lying, secret stealing, corrupt, human rights absent country! It has done way worse than Iran ever did. It has built islands on other peoples territory and armed them with military equipment. It practices one sided free trade. It arrests and "disappears" those who may disagree or get in the way of the total wealth and control of the ruling party?
We complain about Russia and Iran yet remain mute on China?
We all know why. Because we have outsourced our industry to them and fear prices may increase if we stopped.
But price increase is what we need! Inflation is what we need! And instead we have destroyed our middle class and handed global power to a despotic totalitarian state.
Trade war now! Tariffs now! Trump is right!!!
We complain about Russia and Iran yet remain mute on China?
We all know why. Because we have outsourced our industry to them and fear prices may increase if we stopped.
But price increase is what we need! Inflation is what we need! And instead we have destroyed our middle class and handed global power to a despotic totalitarian state.
Trade war now! Tariffs now! Trump is right!!!
9
For those who don't like the USA as the world's dominant super power wait till China becomes dominant. You might yearn for the good old days.
3
You can't have a government controlled free market. That's an oxymoron if ever there was one. You can't tell investors when to buy and when to sell. And a censored press doesn't help things either.
That said, you can't have unsupervised, dog-eat-dog capitalism, either. There really does need to be a referee, and enforced rules preventing market manipulation, the unfettered growth of oligopolies and monopolies, insider trading, and fraud. Big investors cannot be allowed to treat small investors unfairly.
I don't know that the US has found the perfect compromise. But we are certainly ahead of China. Hopefully, given the immense size and power of the Chinese economy, they will come to get it right. The stakes are high. But they have a ways to go.
That said, you can't have unsupervised, dog-eat-dog capitalism, either. There really does need to be a referee, and enforced rules preventing market manipulation, the unfettered growth of oligopolies and monopolies, insider trading, and fraud. Big investors cannot be allowed to treat small investors unfairly.
I don't know that the US has found the perfect compromise. But we are certainly ahead of China. Hopefully, given the immense size and power of the Chinese economy, they will come to get it right. The stakes are high. But they have a ways to go.
3
Wouldn't it be better to ostracize the 'big investors'?
China should arrest people from Morgan Stanley, Merryl lynch and Goldman Sachs. Get real, do you think that a senior Chinese Bank is doing all these damages? It is orchestrated by CIA through most US giant security conpanies, simple as that. No private company can do such a damage unless is backed by a country.
5
I wouldn't necessarily use the CIA or those other US covert intelligence agencies (NSA, Homeland Security, and who knows what others) as orchestrating the plunge of the Chinese market.
But I do agree to gargantuan US & world banks, and of course the gargantuan (can never fail) stock brokerage houses.
Good news does not always translate into positive upward movement on the stock markets, and the reverse also holds true. I always wonder why!
But I do agree to gargantuan US & world banks, and of course the gargantuan (can never fail) stock brokerage houses.
Good news does not always translate into positive upward movement on the stock markets, and the reverse also holds true. I always wonder why!
They did it to themselves.
I find this news,, shall we say interesting. The free markets of the world function from the multitude of individual decisions. One person at a time decides that something is a good deal,,, or not. All things are traded, the value of a country's currency, wheat, manufactured goods, even interest rates.
But China, just a handful of politicians, a few weeks ago decided to devalue their currency,,, a blatant money and business grab. And the stock markets around the world responded,,, and in essence,, devalued themselves to match. And now China's response is to try and artificially control the market? Now they want to know why a broker sold a particular stock? Because it wasn't worth it. You can stop the price from falling,(for a time),, but not the value.
Those few politicians have brewed their tea and now are having trouble drinking it. All the while,, trying to blame someone other than the true culprit, fool, idiot, themselves.
I find this news,, shall we say interesting. The free markets of the world function from the multitude of individual decisions. One person at a time decides that something is a good deal,,, or not. All things are traded, the value of a country's currency, wheat, manufactured goods, even interest rates.
But China, just a handful of politicians, a few weeks ago decided to devalue their currency,,, a blatant money and business grab. And the stock markets around the world responded,,, and in essence,, devalued themselves to match. And now China's response is to try and artificially control the market? Now they want to know why a broker sold a particular stock? Because it wasn't worth it. You can stop the price from falling,(for a time),, but not the value.
Those few politicians have brewed their tea and now are having trouble drinking it. All the while,, trying to blame someone other than the true culprit, fool, idiot, themselves.
29
Interesting comment,however…
.
What about the Libor price fixing, the USA week-after-week of "infractions by large banks,, Big Oil, just to mention a few businesses, and my favourite - the USA voting PACS!
So much for the "multitude of individual decisions"!
.
What about the Libor price fixing, the USA week-after-week of "infractions by large banks,, Big Oil, just to mention a few businesses, and my favourite - the USA voting PACS!
So much for the "multitude of individual decisions"!
Laughing,,, I cannot fault your logic. There are many, and many attempts are steering the market,,, but I think they all ultimately fail.
A small possible,,, The Fed controls the ammount of money in circulation. Ah, but do they? Dollars,, real dollars, are made the old fashioned way,,, they are made one at a time. Every time something is manufactured, grown, or mined,, you bump into the formula 1+1=3 (Forgive this tremendously over simplified,,) 1 dollar of labour,, 1 dollar of material,, equals a selling price of 3 dollars. A dollar has just been invented! That IS the only way dollars are created. We do it. One at a time.
Now back to the Fed. They can choke the system,, or flood the system,,, but their real art must be to add just enough dollars into the money supply to equal what IS taking place. If they get too far out of whack,, mayhem ensues.
The same follows for all manipulations,,,, anyone pushes too hard, cheats too much,,, the market will respond either up or down,,, and sometimes (laughing,, more often than not I suspect) it may go the wrong way,,, seeking that perfect level.
Ultimately,, if it is to work,, you and I control the system.
If you want to test that,, we just start a grass roots Don't buy Made in China. Dominoes could not be toppled quicker.
A small possible,,, The Fed controls the ammount of money in circulation. Ah, but do they? Dollars,, real dollars, are made the old fashioned way,,, they are made one at a time. Every time something is manufactured, grown, or mined,, you bump into the formula 1+1=3 (Forgive this tremendously over simplified,,) 1 dollar of labour,, 1 dollar of material,, equals a selling price of 3 dollars. A dollar has just been invented! That IS the only way dollars are created. We do it. One at a time.
Now back to the Fed. They can choke the system,, or flood the system,,, but their real art must be to add just enough dollars into the money supply to equal what IS taking place. If they get too far out of whack,, mayhem ensues.
The same follows for all manipulations,,,, anyone pushes too hard, cheats too much,,, the market will respond either up or down,,, and sometimes (laughing,, more often than not I suspect) it may go the wrong way,,, seeking that perfect level.
Ultimately,, if it is to work,, you and I control the system.
If you want to test that,, we just start a grass roots Don't buy Made in China. Dominoes could not be toppled quicker.
Which free markets?
This is actually something the Chinese government got right. The Chinese government is not terrorising the poor local and foreign investment firms. They are investigating whether during the recent market plunge laws were broken with regard to, program trading, insider trading and illegal market manipulation (collaboration between corrupt journalists and investors who wanted to make money once the market reacted to the planted stories etc...) etc...This is something that should have been done in the US after the 2008 financial crisis but as we saw the US government is far too beholding to Wall Street to even given them a stern talking to for tanking the world economy with their reckless gambling that benefits no one but themselves let alone hurt their feelings by launching any serious investigations. In 2008 all the US government did was give them a trillion dollars of tax payer money to make up their gambling losses. Yes, the Chinese really don't know how things are supposed to be done.
93
Interesting, so you mean to say it should be legal to buy stocks but illegal to sell? Have you ever bought any kind of investment? Hope you have no plans to sell any of it...
3
So, China becomes the "Shining Beacon on a Hill"? Instead of America? Hey, what are you guys in China smoking? Can't be Pot. Must be Opium.
Your comment is based on the assumption that because some US bankers were not adequately punished for illegal behavior in 2008, all investors anywhere in the world are always guilty of illegal behavior and should be punished.
Please re-examine your assumption. For the most part, the "crimes" for which Chinese journalists and investors are being detained, arrested, and investigated are equivalent to:
-Paul Krugman writes an editorial in the Times saying he thinks the Fed will raise rates soon. The next day he is arrested and forced to confess on national TV to the crime of trying to cause a stock market crash.
-Your bank declares insolvency so you go to the ATM and withdraw your retirement savings from it. The next day police arrive at your door and arrest you under the Patriot Act (the specific charge being "deliberately using computers or machinery to destablize the economy or financial sector.")
Do you really think these punishments are appropriate?
Please re-examine your assumption. For the most part, the "crimes" for which Chinese journalists and investors are being detained, arrested, and investigated are equivalent to:
-Paul Krugman writes an editorial in the Times saying he thinks the Fed will raise rates soon. The next day he is arrested and forced to confess on national TV to the crime of trying to cause a stock market crash.
-Your bank declares insolvency so you go to the ATM and withdraw your retirement savings from it. The next day police arrive at your door and arrest you under the Patriot Act (the specific charge being "deliberately using computers or machinery to destablize the economy or financial sector.")
Do you really think these punishments are appropriate?
2
A country such as China which doesn't understand the basic machinations of a free economy, shouldn't be allowed to participate in stock markets. Stocks and bonds won't be intimidated or coerced. If people are smart, they will get shut of any close financial relationship with this agent. Like everyone else on the globe, China too will have it's economic bubble burst.
Humpty Dumpty sat on a wall
Humpty Dumpty had a great fall
All the king's horses and all the king's men
Couldn't put Humpty together again
Humpty Dumpty sat on a wall
Humpty Dumpty had a great fall
All the king's horses and all the king's men
Couldn't put Humpty together again
7
Who understand "the basic machinations of a free economy"?
7
They understand. Don't short change them one bit. They have/had the power to manipulate the markets to achieve specific goals, but the slid to excess. The rest of the world, for the most part, went right along. It worked for a long time, even with a plethora of warnings that something was rotten in Beijing.
The real question is, what direction do they take next? Is it the end of the capitalist experiment in China?
The real question is, what direction do they take next? Is it the end of the capitalist experiment in China?
1
Who 'understand the basic machinations of a free economy'?
" The authorities are combing records and questioning transactions ... "
An especially amusing conceit in a country that keeps two sets of books.
An especially amusing conceit in a country that keeps two sets of books.
35
Government rules, what don't you understand?
1
The scary thing is that you're actually overestimating the number of sets of books.
1
Are we talking about the USA here?
1
The Federal Reserve and all the Central Banks of Europe, Japan, China have turned the world economy into a giant bubble waiting to burst with their low interest rate policies. Once again the pension funds of the world will blow up in order to enrich Wall Street and Hedge Funds.
54
Mid February is a festive time in China - it's when their traditional new year is celebrated. Similar to the zodiac signs - animals are used to symbolize the characteristics of the new year. Clearly the Chinese government's stock market intervene wasn't developed to mimic the Year of the Sheep. Still it has similar characteristics.
If the new year celebration is muted by the government's unsuccessful attempts to prop up the stock markets - should it be attributed to characteristics of a sheep? No, investor's misfortune can only be attributed to the characteristics of government intervention in the stock market - it's unsustainable.
Market observers in the United States refer to a stock market trending upwards as a bull market and a downward trending stock market as a bear market. A sheep market is a made in China product that is simply that U.S. investors find undesirable.
If the new year celebration is muted by the government's unsuccessful attempts to prop up the stock markets - should it be attributed to characteristics of a sheep? No, investor's misfortune can only be attributed to the characteristics of government intervention in the stock market - it's unsustainable.
Market observers in the United States refer to a stock market trending upwards as a bull market and a downward trending stock market as a bear market. A sheep market is a made in China product that is simply that U.S. investors find undesirable.
2
So, another example of bad behavior from our No. 1 trading partner. Isn't it time America diversified its imports? We should be buying from around the world, not primarily from this plutocracy.
50
One plutocracy has to support another. My own sibling, CEO of a manufacturing corporation nominally based in a Mid-Atlantic state but for whom virtually all production originates in Guangzhou province, is making 7 digits of income this year. And laughing at me, a lowly GS-something Federal employee, as a lackey and a loser.
37
Given that we are in a defacto war with China- they steal our data, our technology,- perhaps we do the same, I see no reason why I should knowingly buy anything made in China.
31
You have limited choice for some products.
1
So shorting is capitalist and Anti-government? Well there is so much to short in China no one should be surprised by this.
6
I don't have a lot of sympathy for the foreign hedge funds and traders. They specifically invested in China knowing the Chinese stock market would be as rigged & corrupt as the rest of the Chinese economy, and believing they could take advantage of it.
85
Could what you are saying could apply to our own market and economy? Perhaps our justice department could learn from the swift action of the Chinese Government. After all we do hope for them to be more transparent like us??????
1
Tyrone, that's because in the US corrupt market and economy it's worked so well for them, right? They've certainly taken advantage of it here and are now purchasing the government.
Chinese security officials have detailed the "confidence fairy" and are questioning her in an undisclosed location.
41
A lot of hedge fund operator are resigning over this issue. How can you make money shorting when the Chinese govt is looking at your trades to check you are not shorting.
19
The U.S. Treasury Secretary, William Gibbs McAdoo in the summer of 1914 shut down trade in the U.S. stock markets starting with the NYSE for several months in order to stem an outflow of exchange in U.S. dollars through stock trades and redemptions that European nations were using in order to fund their tremendous need for munitions, weaponry, and produce. The scale of the redemption activity threatened to spiral the U.S. economy into a depression as currency still required being backed by gold at this time, and as the Federal Reserve had not yet been restored from its decapitation by President Andrew Jackson in 1835, nearly a century earlier. Using transitional emergency monetary powers allotted to him under the Aldrich Vreeland bill, McAdoo printed hundreds of millions of dollars without gold backing. He eventually succeeded in negotiating agreements whereby France and England agreed to buy debtor (Liberty) bonds and use these to purchase the weapons and goods they had such need of. Germany continued to pay cash. England and France wound up owing so much our neutrality was compromised and after we entered the war as their ally we wound up becoming the financial capital of the world over London and Berlin.