Every stock photo of a Chinese 'brokerage' seems to show a broken down old dive, with at least one or two elderly people half asleep. It kind of reminds me of some of the bookies' shops I've been in. Maybe somebody is trying to convey a message.
1
We all know China has a lot of US currency in reserve.
We have been scared for a long time that China would try to destabilize the USA economy dumping that money ion the open market using that money as leverage.
If China has to spend that money on supporting their currency will this be good for the USA as that money can not be used this way or will it be bad as the USA economy can no longer expect China to lend us money.
http://www.bloombergview.com/articles/2015-08-31/china-has-lots-of-treas...
What is happening might not ne good for the developed nations but will definitely be worse for the developing and underdeveloped countries in Africa.
If we think there has neen a problem because of people trying to immigrate to Europe just imagine how that number can increase if the econoimies in Africa falter and people start to starve.
I hope I am wrong as I have no education in international affairs and can be letting my fears get the better of me.
If I am correct we have to act now to see that this does not happen.
We have been scared for a long time that China would try to destabilize the USA economy dumping that money ion the open market using that money as leverage.
If China has to spend that money on supporting their currency will this be good for the USA as that money can not be used this way or will it be bad as the USA economy can no longer expect China to lend us money.
http://www.bloombergview.com/articles/2015-08-31/china-has-lots-of-treas...
What is happening might not ne good for the developed nations but will definitely be worse for the developing and underdeveloped countries in Africa.
If we think there has neen a problem because of people trying to immigrate to Europe just imagine how that number can increase if the econoimies in Africa falter and people start to starve.
I hope I am wrong as I have no education in international affairs and can be letting my fears get the better of me.
If I am correct we have to act now to see that this does not happen.
When Japan devalued Yen by 25% to 30% their stock
market boomed and no one panicked. Canadian currency
has seen major devaluation. I was in Canada in 2011
I got 95 Canadian Dollars for US 100 dollars. Now the
exchange rate is C$135 for US $100. No one has
squeaked. There seems to be a huge concern on 5% RMB
devaluation. Is there a sense of proportion in the financial
markets?
market boomed and no one panicked. Canadian currency
has seen major devaluation. I was in Canada in 2011
I got 95 Canadian Dollars for US 100 dollars. Now the
exchange rate is C$135 for US $100. No one has
squeaked. There seems to be a huge concern on 5% RMB
devaluation. Is there a sense of proportion in the financial
markets?
Why did everyone believe that the Chinese Communist Party could manage the Chinese economy, Stock Market, and the large number of State Owned Enterprises, using cronyism, and corruption and avoid a financial crisis? the majority of loans for chinese SOEs and real estate are bad. Now the Chinese elite are taking the money and immigrating. Watch out because that hot chinese money is invested in the US stock markets, too
Of course such an event will have some emotional influence on other markets. But not a real effect as in if the valuation of an American company is x then it is still x unless it has a lot of exposure to China. Which mostly is not the case. Also China market is a somewhat young immature market. After our own crash investors are a bit more resilient now and will not panic and sell as easily. It will smooth out as the Chinese Financial people are doing the right thing to stabilize it sanely and pragmatically. Still some volatility like a storm it water and when the winds die down the water will calm. Now is a buying opportunity with possible some more in the future based on financial analysis of the stocks and not some mumbo jumbo political this and that nonsense. Take the long view to make decisions now.
Stock market trading halt again is a small indicator of a larger problem. Fear, greed, inflated prices, corrupt system, political manipulations and social mobility issues are all factors contributing to stock market collapse and economic disasters. Fed reserve is printing more money than it should have since 1930's. Chinese are following the same Market Economy Principals, the traders not the political junta, to make more money in the shortest possible time.
Chinese people's ambitions are more real and challenged by population pressure, history, competition, greed and social mobility. Fear has no limit, greed has no end, regulations and their implementation at global level may determine different results in events of crashes. Ripple effects would reduce people's savings in US to nothing, a painful reality, unfolding gradually. Lawmakers in USA have to work on Campaign funding rules to minimize lobbyists influence in engineering disastrous decisions, policies and their outcome. Or the supreme court can take affirmative action in curtailing political corruption to make lawmakers accountable for not acting in the best interest of their people and country.
Chinese corruption, greed and power struggle in society would manifest in stick market debacles and send more shock waves to US and rest of the world. To minimize the effects, US have to put its house in order, the Congress and Senate should legislate what's needed, not what a few interest groups want.
Chinese people's ambitions are more real and challenged by population pressure, history, competition, greed and social mobility. Fear has no limit, greed has no end, regulations and their implementation at global level may determine different results in events of crashes. Ripple effects would reduce people's savings in US to nothing, a painful reality, unfolding gradually. Lawmakers in USA have to work on Campaign funding rules to minimize lobbyists influence in engineering disastrous decisions, policies and their outcome. Or the supreme court can take affirmative action in curtailing political corruption to make lawmakers accountable for not acting in the best interest of their people and country.
Chinese corruption, greed and power struggle in society would manifest in stick market debacles and send more shock waves to US and rest of the world. To minimize the effects, US have to put its house in order, the Congress and Senate should legislate what's needed, not what a few interest groups want.
CCP vs. The Invisible Hand, who will come out on top?
It is not just China, but also the troubles ahead in U.S. The Wall Street market bubble grow with U.S government pumping money into it. Now, the bubble suppose to continue to grow from employed people pumping money into it. The problem is with wage stagnation and low paying jobs people unable to pump more money for the bubble to grow. Banks are back to their old habits.The Chinese has manufacturing bubble. They kept manufacturing goods thinking there is an ever ending export market. Having realized that is a mirage, they are trying to develop domestic market. The problem is they kept wages artificially low, so people don't have money, which is complicating the development of domestic market. The bottom line is that U.S lost the middle class while China never had it.
So, an economy controlled by a central government with unfettered power and uncontrolled corruption does not in the longer term work. Surprise! Surprise!
Pardon my ignorance but I am wondering if China's downward spiral is the reason for the so-called fast-track for the Pacific trading pact? In other words the multi-national (or I should say "no-national") corporations are looking for the new slave labor in the area.
We need tariffs that bring manufacturing home here to the U.S. so that we can maintain our way of life. I don't mind if I pay $10 more for an i-phone, do you? Or perhaps, the shareholders could bear $10 less in dividends per year.
We need tariffs that bring manufacturing home here to the U.S. so that we can maintain our way of life. I don't mind if I pay $10 more for an i-phone, do you? Or perhaps, the shareholders could bear $10 less in dividends per year.
This is an out of control, corrupt, autocratic basically Communist regime rotten to its core. Their economy is teetering on the edge of a precipice due to the house of cards nature of its business ethic .
Beware.
Beware.
And do I care? NO. The Fed has screwed the everyday saver for over 8 years w the no interest rate policy to protect the banks and Wall Streets. So interesting how in the end all of the Free Market Capitalists turn out to want the government to bail them out and monopolistic sissies.
1. If you can´t take the heat, stay out of the kitchen, (market)
2. What goes up must come down. Law of Gravity.
3. Competition is good for all of us.
I am in Mexico where there is so much sugar rich Cocacola on sale I feel sick at the sight of it and the thought of the profits for the drug companies when the diabetes epidemic hits. Frankly, time for several products to be curbed in worldwide. Nearly impossible to buy a diet soda or even bottled water at venues such as Pizza shops. Drank local water. Not dead yet.
1. If you can´t take the heat, stay out of the kitchen, (market)
2. What goes up must come down. Law of Gravity.
3. Competition is good for all of us.
I am in Mexico where there is so much sugar rich Cocacola on sale I feel sick at the sight of it and the thought of the profits for the drug companies when the diabetes epidemic hits. Frankly, time for several products to be curbed in worldwide. Nearly impossible to buy a diet soda or even bottled water at venues such as Pizza shops. Drank local water. Not dead yet.
One possible benefit from all of this- though I'm not holding my breath- is a reduction in the truly awful trade in endangered animal parts for Asian 'medicine' in China.
Market transparency equates to market stability. The Chinese market was everything, but transparent.
If China collapses, it will be the end of unemployment here in the US. We'll have to manufacture our own grills, lawn furniture, bicycles, electronic devices and so forth. With commodity prices being at all-time lows and unemployment at all-time highs and banks willing to loan money to anyone who can fog a mirror, it's probably the best darn news I've heard in years.
This is the USA, folks. We thrive when the excrement hits the wind machine. If you're invested in honest labor, American know-how, and tangible assets (Warren Buffett) then the only thing you have to fear is rolling up your sleeves and getting dirty for a change.
This is the USA, folks. We thrive when the excrement hits the wind machine. If you're invested in honest labor, American know-how, and tangible assets (Warren Buffett) then the only thing you have to fear is rolling up your sleeves and getting dirty for a change.
18
@PK Exactly! And its high time more people realized that.
Actually, no. If China collapses, US manufacturers will pull back from investment and wait to see what develops. It can only be bad for us. Ultimately, jobs will come back to our shores because of education, skill levels, resource availability, etc., but in the short run Chinese wages will decline to maintain employment. Or so it works anywhere but in a centrally, and ineptly, managed economy.
If China collapses it will be even cheaper to manufacture goods in China. Manufacturing jobs in America are a thing of the past.
Regarding China, sadly, another example of free-market paranoia as the lemmings are following the the media sound-bite jockeys over the cliff. The media assault seems to be who can be more more sarcastic and skeptical about it.
Yet I’m sure Trump will handle it…after he’s done forcing Mexico to build our “wall,” he’ll order China to reimburse our market losses.
Yet I’m sure Trump will handle it…after he’s done forcing Mexico to build our “wall,” he’ll order China to reimburse our market losses.
1
When the housing market collapsed I believed the talking heads who said it wouldn’t affect the “real” economy because it was only 4 ½% of GDP. Really wrong. There were wealth effects, spillover effects to all other sectors, and global contagion because the securitized instruments financing this bubble had been sold all over the world, to little town council retirement plans that are now bankrupt. So size may not matter as much as psychological impact.
Now it's China and most of the talking heads say we and even Europe are mostly disconnected. Well, China buys a lot from Australia and Canada and the BRICs, and if they all go into freefall, it’s hard for us to do well. Then there’s Europe. The US is the EU’s main trading partner, but China is its second. As of 2014, total trade between the EU and China exceeds $550 billion/year in goods and services, and the EU is China’s largest source of imports. So far the total EU bailout of Greece seems to total about $264 billion over a period of seven years, and every billion has been like pulling teeth. Trade with China is twelve times the annualized support of the EU to Greece. How does the collapse of China’s economy not destroy Europe’s?
China is our largest trading partner, but it’s a very one-sided partnership, with 80% imported into the US. That means our economy does not have to collapse. But when one’s belief in the Wizard of Oz is destroyed by removal of the curtain, the collective shock can be very traumatic indeed.
Now it's China and most of the talking heads say we and even Europe are mostly disconnected. Well, China buys a lot from Australia and Canada and the BRICs, and if they all go into freefall, it’s hard for us to do well. Then there’s Europe. The US is the EU’s main trading partner, but China is its second. As of 2014, total trade between the EU and China exceeds $550 billion/year in goods and services, and the EU is China’s largest source of imports. So far the total EU bailout of Greece seems to total about $264 billion over a period of seven years, and every billion has been like pulling teeth. Trade with China is twelve times the annualized support of the EU to Greece. How does the collapse of China’s economy not destroy Europe’s?
China is our largest trading partner, but it’s a very one-sided partnership, with 80% imported into the US. That means our economy does not have to collapse. But when one’s belief in the Wizard of Oz is destroyed by removal of the curtain, the collective shock can be very traumatic indeed.
7
The politicians keep telling us that globalization is a good thing. As far as I'm concerned, globalization is a virus.
13
Once global trade has become a reality, the world leaders OR central bankers must collectively respond to these kind of situations. We don't see any of those things happening as they still wait for market forces which we know don't work until it is too late and destroys common families. If this continues for one more week, fear will take over and bring down a deeper global recession. Every country turns inward to set their own countries right de-tangling from global trade and free flow of currency. May be that is a blessing for USA and the need to invest in our own country.
5
China is where the "hot" money ran to looking for ridiculous yields. You knew the end was coming when China loosened the requirements to trade stocks...which is a tactic the rich asset holder class use when they want to dump equities at a high and ramp the bubble to explosion. The globalist-run financial markets are always looking for the next ponzi operation. So if China crashes, what is next? The BRICS are finished. London is in a bubble. The US in a bubble. Europe is in deflation...what's a poor monetarist to do???
4
China is a command and control economy, just like the "progressives" desire. Problem is those issuing the commands are not smart enough to control a large economy.
1
Project much? Who was in charge when America's economy tanked?
If we want America to end up like China elect a Republican.
If we want America to end up like China elect a Republican.
17
Both parties are entangled with China. Dems are sneaky about it and republicans are loud and proud drinking at the Chinese trough. The National Chamber Of Commerce, a blatant republican organization, has been the most aggressive promoter of shipping jobs to China as well as taking the caps off of immigration to keep americans left high and dry for job security. All of the republicans and too many of the democrats have pushed the trade agreements that now have americans scrambling to keep their head above water not to mention these agreements have weakened our regulations and laws to protect our families. Good " old Nafta " trade agreement has allowed the American taxpayer to be on the hook for millions if not billions by TransCanada Oil Company because they are suing us because we voted down TPP. Yeah...these trade agreements take away our sovereignty not mention our jobs and security . Bernie has been against all the agreements and voted against them ... the man is on our side ... he cares about his citizens, that I'm sure. The other politicians, not so much !
5
The Shanghai Composite Index has now fallen so far that it is essentially unchanged from 365 days ago and is still higher than at any time in the previous four years before then.
But supposing for the sake of argument that big money really were fleeing Chinese equities for a sustained period, then it's likely that -- as in Thailand in 1997 (after the stock market and real estate booms ended at the end of 1996) -- money managers would move funds into global reserve currencies, bringing about a depreciation in the Chinese currency.
The swing in China's FX rate would probably not be as big as it was in Thailand's case, as the Thai currency was much smaller and the risks therefore larger. Also, China's reserves are large -- which is partly a result of the lessons learned from seeing what happened in 1997. But there would in any case be a risk of "contagion" for other currencies in China's region.
But supposing for the sake of argument that big money really were fleeing Chinese equities for a sustained period, then it's likely that -- as in Thailand in 1997 (after the stock market and real estate booms ended at the end of 1996) -- money managers would move funds into global reserve currencies, bringing about a depreciation in the Chinese currency.
The swing in China's FX rate would probably not be as big as it was in Thailand's case, as the Thai currency was much smaller and the risks therefore larger. Also, China's reserves are large -- which is partly a result of the lessons learned from seeing what happened in 1997. But there would in any case be a risk of "contagion" for other currencies in China's region.
Now is an ideal opportunity to redefine what "growth" in capitalist systems really means. We act as if unemployment and underemployment (both temporary and permanent) are just contributing factors to the health of our economy, when they should be the central metric of the success of capitalism overall. The true value of the system cannot be measured just by how it rewards capital, and leave out the other members of the system. Corporations and their owners are delighted when "wage costs" fall.
We shouldn't be the slightest bit surprised that American society is going down the tubes when our very definition of success is geared towards measuring the gains of the investor and ignores the losses of the rest of the population.
As recently reported, the length of the average lifespan for white males in America has stalled while they continue to rise for every other demographic in all other advanced economies. Depression and suicide are on the rise. "Trumpism" is not going away even if Trump himself eventually does.
We shouldn't be the slightest bit surprised that American society is going down the tubes when our very definition of success is geared towards measuring the gains of the investor and ignores the losses of the rest of the population.
As recently reported, the length of the average lifespan for white males in America has stalled while they continue to rise for every other demographic in all other advanced economies. Depression and suicide are on the rise. "Trumpism" is not going away even if Trump himself eventually does.
6
"...the China Securities Regulatory Commission announced that it was extending for three months a ban on stock sales by large shareholders...."
I would bet money that China has a very large sub rosa options market, to mitigate he effects of those sorts of restrictions.
I would bet money that China has a very large sub rosa options market, to mitigate he effects of those sorts of restrictions.
2
Good to remember than the long term annual return of equity markets is around 8%. No reason at all to suppose that won't also be true over the next decade or so. We should all certainly hope so, because all our lovely social programs are funded by taxes, many of which derive from taxation of stock market dividends and gains.
Not everyone can afford to lose so much and "wait" for a recovery Max. Besides OUR losses are going into the pocket's of the world's wealthiest. Criminal
2
Wallstreet has been a love-sick teenager with China over a decade. This morning on CNBC they had the nerve to disparage Bernie with the phony title " socialist " ... seriously ! My life savings is better protected under Bernie policies than wallstreet's gut everything out of America and put it in China policy ! Bernie would enforce regulations protecting our savings and investments, he wants to reinstate Glass Steagall which keeps the wallstreet gamblers/bankers from using our money like their own to gamble with no repercussions. He also wants to beak up the " too big to fail banks " which considering they're even bigger now than the 2007 financial crisis ! Bernie wants to protect our investments and not let the China/wallstreet gamblers take us down again !
14
You do know that Sanders is a socialist, right? He admits as much himself, even though he tries to obfuscate what it really means for electability purposes.
1
Oh calm down everyone. I've ridden such cycles for five decades, continuing to buy through it all, but it's humorous how these events bring out all the prognosticators, who know no more about what will happen tomorrow than a
4-year-old.
4-year-old.
4
You may have forgotten "riding" through the crashing disaster in 2008, saved only by massive bailouts from the public treasury, but not all of us have. The lasting pain of the aftermath has left some of us feeling less amused than you apparently are. And the next time the markets crash through greed, foolishness, criminality or some mixture of those, the people won't be so quick to pour money out to cover your losses. Pinning markets' debacles on whole nations of people, pocketing the profits while wrecking others' lives--well, that's got to stop, and it will stop. People just won't bail you out forever.
6
jb - Of course I haven't forgotten anything; especially 2008. I guess I'm just not as optimistic as you about bailouts. I think big money will continue to run the show, bailouts will occur, and the empire will continue its precipitous decline.
All I'm saying is this market decline is not unusual or unique. Google 1997 Asian market crisis.
All I'm saying is this market decline is not unusual or unique. Google 1997 Asian market crisis.
Maybe you two can argue about 2008, but that was my children's college funds and my mom's retirement money which we couldn't get out of the market till it was pretty much gone courtesy of a will. My great aunt believed in the stock market and her stock broker.
Prices down, profits up ex energy, therefore yield up. Forward profits will be helped by lower energy and commodity costs, more consumer disposable income and infrastructure and state and local spending. Some impact from slower global growth for big international companies like Caterpillar and Apple. Bad time to own high yield (junk) bonds or funds heavy in them like Franklin Income Fund A.
If you are steadily buying through 401K or other savings, keep buying. Good time to take advantage of dollar cost averaging.
If you are steadily buying through 401K or other savings, keep buying. Good time to take advantage of dollar cost averaging.
2
Only is you're a pro, Look Ahead. Many people are too busy raising families, working three jobs and trying to stay afloat.
I came to read this comment section at lunch for comic relief. With a few exceptions, folks commenting here are very certain of exactly what is causing market decline and what will fix the problem(s). Internet truly is the Hyde Park soapbox in a Tower of Babel :)
I don't even claim to understand even a smattering of the intricacies of the Chinese economy, let along the global repercussions of a Chinese stock market slide. All I understand is that there is only a low linkage between the Chinese economy and the Chinese stock market. The yuan devaluation of course will hurt the Chinese in the short term because of substantial capital flight. But all this has to the bumpy landing of 10% growth coming down to 5%, something that was inevitable. The structural issues in China has been well known to even superficial observers like me for a decade -- bad loans by state-owned bans, real estate bubbles (deflated slightly in the last few years), unnecessary capital investments to create jobs, etc. They all had to be addressed and the landing won't be soft at all times.
Anyway, it may be a good time to a buy some VTSMX shares. I think Buffet (whose assets declined by $11B last calendar year) may agree with me :)
I don't even claim to understand even a smattering of the intricacies of the Chinese economy, let along the global repercussions of a Chinese stock market slide. All I understand is that there is only a low linkage between the Chinese economy and the Chinese stock market. The yuan devaluation of course will hurt the Chinese in the short term because of substantial capital flight. But all this has to the bumpy landing of 10% growth coming down to 5%, something that was inevitable. The structural issues in China has been well known to even superficial observers like me for a decade -- bad loans by state-owned bans, real estate bubbles (deflated slightly in the last few years), unnecessary capital investments to create jobs, etc. They all had to be addressed and the landing won't be soft at all times.
Anyway, it may be a good time to a buy some VTSMX shares. I think Buffet (whose assets declined by $11B last calendar year) may agree with me :)
According to his approved biography, "Snowball", Warren Buffett had the bulk of his money in U.S. Treasuries during the last meltdown. He DID NOT buy in the run-up because there were no profitable deals - just scams. He did buy a majority in GE and Burlington Northern Railroad after the crash. Mr. Buffett loves America.
2
A 2% drop tells the average person nothing, which is exactly what Wall Street wants us to know. The Dow has dropped around 1500 POINTS - from 17,800 to around 16,500 - in the past few days. The daily figures the general public is being fed do not tell the whole story. We are in a global economy with the top 1% global financial elite calling the shots and I guarantee you that they will not get hurt - it's the little 401K and private investors around the world who will pay for this -again. It is simply criminal. It is past time for SERIOUS FINANCIAL REGULATION AND BREAKING UP BIG BANKS, UTILITIES, COMMUNICATIONS, REAL ESTATE/MORTGAGE COMPANIES AND EVERY OTHER SEGMENT THAT THE TOP 1% GLOBAL FINANCIAL ELITE OWN. WE MUST DEMAND IT AROUND THE WORLD.
http://www.bloomberg.com/markets/world
http://www.bloomberg.com/markets/world
6
That is really terrible advice to be more concerned with the absolute number of "index points" rather than the percentage change.
Points seem pretty important when Wall Street is crowing about them, John.
Perhaps basing the economy of a country on a stock market casino will be replaced by some more rational system in the near future. Even on public life support, stock markets appear to be unstable and unreliable, suggesting the possibility they are just an ephemeral blip on the screen of history.
4
Well so much for the wisdom of our economist priests of anything goes capitalism who insisted on "integrating" our economy with organized crime lead nations like China and most our 3rd world countries. But oh, that's right this same bunch of playing Russian roulette with all our lives "risk takers" tanked the US economy in 2008, so we ought to expect the occasion civilization ending "adjustment" caused by their 5 year old behavior.
4
Maybe our "economic priests" are the "organized criminals" you speak about.
2
This demonstrates the extent to which Chinese money is inflating U.S. stock markets and asset prices generally. When wealthy Chinese get a margin call in China, they're selling U.S. securities to cover. These reactive plunges have almost nothing to do with "trade" between the two nations, but rather the effect the top 1% of each nation, and their central banking policies, have on the other.
Saudi Arabia's sovereign wealth fund is similarly invested in U.S. capital markets, but now the Saudi's need more money for their war in Yemen and more cash for sudden and new budget deficits.
These foreign market plunges and shortfalls pull money out of our capital markets. This is the flat world we've heard so much about.
Saudi Arabia's sovereign wealth fund is similarly invested in U.S. capital markets, but now the Saudi's need more money for their war in Yemen and more cash for sudden and new budget deficits.
These foreign market plunges and shortfalls pull money out of our capital markets. This is the flat world we've heard so much about.
4
Oh well, down another 50K. If this keeps up, I will have to look for a job that does not exist. On the bright side, at 75, I still have enough to last till that times comes. I know, know, it is only a paper loss, right....
4
Welcome to the global economy! Yes! Let's invest even more heavily on countries that are ultimately unstable, Let's sign that TPP before anyone gets wise!
No, we can't simply stick our heads in the sand, and isolate ourselves from the world, but we can be much more prudent, and we can stop being led over the cliff by Wall Street and the multinationals, who care nothing for our country and its people (of for any other country/peoples). Their only objective is more profit, at any cost. We need to reign them in, and quit getting in bed with them.
No, we can't simply stick our heads in the sand, and isolate ourselves from the world, but we can be much more prudent, and we can stop being led over the cliff by Wall Street and the multinationals, who care nothing for our country and its people (of for any other country/peoples). Their only objective is more profit, at any cost. We need to reign them in, and quit getting in bed with them.
4
Good luck with that. It's preordained.
2
Perhaps we need a column from Prof. Krugman explaining why the Chinese need to initiate an infrastructure-rebuilding program, to juice up their economy. Oh...wait...the Chinese have ALREADY built bridges, bullet trains and highways as far as the eye can see. Never mind...
5
Krugman is the guy who promoted unlimited debt on the part of our federal government. Obama took his advice and spent like a drunken sailor, increasing the federal debt from less than $11 trillion to more than $18.6 trillion in less than seven years. China bought a whole lot of this U.S. debt. Now their economy is collapsing and they will want to cash in the bonds and notes they bought from us. Good luck with that. We are broke. Thanks to the Nobel prize winner we are about to be in a world of hurt. But of course Krugman will take no responsibility; he never does when his wacky Keynesian ideas hit the fan.
2
No Paul, the guy who "spent like a drunken sailor" was GWB, who launched two wars on a credit card and sent the bill to Obama and the future.
And if our "job creators" were actually creating jobs as was promised by the "Trickle Down Fairy", the majority of Americans would be prosperous and our tax revenues would be sufficient to pay down the debt. But when you rig the system to give all the wealth to the top and Corporate American, they're going to avoid paying taxes like the plague, thus driving the debt up. It's not "librul economics" that's the proble, it's neo-conservative economics.
And if our "job creators" were actually creating jobs as was promised by the "Trickle Down Fairy", the majority of Americans would be prosperous and our tax revenues would be sufficient to pay down the debt. But when you rig the system to give all the wealth to the top and Corporate American, they're going to avoid paying taxes like the plague, thus driving the debt up. It's not "librul economics" that's the proble, it's neo-conservative economics.
19
Still beating that Dead Horse? It has already been explained that it is George Bush's fault. That's what we get when an administration cuts taxes, takes this country into a war based on lies UNFUNDED (it was supposed to cost $100 million) and plays with banking and finance rules as if it were a casino. All of which nearly brought to fall over the brink.
US debt is plunging faster now than it has in the last 50 years. President Obama and his administration will take credit for that performance.
US debt is plunging faster now than it has in the last 50 years. President Obama and his administration will take credit for that performance.
9
It seems like the global media was ready to announce the "bubble bursting" moments of China that has been waited for years yet haven't come.
The focus yet again was on, faked GDP figure, ghost city, unhealthy debt, manipulated currency.
Yet one has to understand how China's stock market works and what is the reasoning behind this halting.
Just some simply facts to start. Shanghai index was around 2500 just 1.5 years ago, which is a number has been stalled for years after 2008, compare to same period s&p and nikkei both doubled to pre-crisis level.
Almost no attention was paid by investors up until 2015. Money started to pool in as security firms promoted the undervalued state blue chips. Retailers, who have been accumulated saving over years quickly reacted, followed by even more retailers who risked borrowing, to the point where 80% the new inflow in all from retailers. These are the grandmas who have no knowledge of the company accept they overheard its ticker and someone made money out of it. Such irrationality determines the magnitude of the volatility. Then here comes the regulators who have no experience: Assemble "national team", halt market resulting losing liquidity, in the illusion of they are able to keeps the market up. It is more approbated to say that retailers are reacted out of a man-made fear. China's stock market is a showcase of irrationality, less the economy.
FYI, such ridiculous halting policy just been cancelled after two day in "full effective."
The focus yet again was on, faked GDP figure, ghost city, unhealthy debt, manipulated currency.
Yet one has to understand how China's stock market works and what is the reasoning behind this halting.
Just some simply facts to start. Shanghai index was around 2500 just 1.5 years ago, which is a number has been stalled for years after 2008, compare to same period s&p and nikkei both doubled to pre-crisis level.
Almost no attention was paid by investors up until 2015. Money started to pool in as security firms promoted the undervalued state blue chips. Retailers, who have been accumulated saving over years quickly reacted, followed by even more retailers who risked borrowing, to the point where 80% the new inflow in all from retailers. These are the grandmas who have no knowledge of the company accept they overheard its ticker and someone made money out of it. Such irrationality determines the magnitude of the volatility. Then here comes the regulators who have no experience: Assemble "national team", halt market resulting losing liquidity, in the illusion of they are able to keeps the market up. It is more approbated to say that retailers are reacted out of a man-made fear. China's stock market is a showcase of irrationality, less the economy.
FYI, such ridiculous halting policy just been cancelled after two day in "full effective."
4
All hail the Global Economy. Thank you, Washington and Wall Street - especially Bill Clinton.
4
Well, not just Bill, but all the RepCons who pushed for "trickle down" policies, of which lowering the rates on capital gains greased the wheels on off-shoring. Why? The lower a companies costs - wages, taxes, etc. - the larger the profits. The larger the profits, the larger the capital gains. This is why CEO's and executives started taking their compensation in stocks and stock options instead of salary - lower taxes. So how do you lower costs? Offshoring! Hence pushing NAFTA and subsequent trade deals, and lowering import and excise taxes. Until we reverse these policies, we're going to continue to see prosperity bypass American workers, and continue to be vulnerable to instability in foreign countries where we're invested.
Not as short an answer as yours, but more accurate.
Not as short an answer as yours, but more accurate.
10
My accountant, a tax attorney and CPA, is a solo practitioner with no Wall Street connections. He told me last January (1) that the market would be relatively flat in 2015, and (2) that the Chinese economy was a bubble that would soon collapse.
So he knew, but Wall Street did not? Don't believe it. The big investment banks have the high cards in this game, as per usual, and will do just fine -- while the rest of us suffer.
Or you can vote for someone who is willing to fight to change the system. But no, my southern relatives are supporting Rubio and Trump. Little information, prejudice, cultural traditions, peer pressure: all add up to another Republican Congress -- or worse, a Republican presidency -- and more power to the oligarchs who are rigging the game.
And BTW, the employment statistics are a farce. Virtually all my peers -- well-educated, experienced professionals -- are unemployed and not looking further, or self-employed. I would guess that the actual percentage of Americans who want to work, but have no jobs; are self-employed; or are working part-time, is more like 25%. And that was before the Chinese bubble burst.
So he knew, but Wall Street did not? Don't believe it. The big investment banks have the high cards in this game, as per usual, and will do just fine -- while the rest of us suffer.
Or you can vote for someone who is willing to fight to change the system. But no, my southern relatives are supporting Rubio and Trump. Little information, prejudice, cultural traditions, peer pressure: all add up to another Republican Congress -- or worse, a Republican presidency -- and more power to the oligarchs who are rigging the game.
And BTW, the employment statistics are a farce. Virtually all my peers -- well-educated, experienced professionals -- are unemployed and not looking further, or self-employed. I would guess that the actual percentage of Americans who want to work, but have no jobs; are self-employed; or are working part-time, is more like 25%. And that was before the Chinese bubble burst.
7
My accountant, a tax attorney and CPA, is a solo practitioner with no Wall Street connections. He told me last January (1) that the market would be relatively flat in 2016, and (2) that the Chinese economy was a bubble that would soon collapse.
So he knew, but Wall Street did not? Don't believe it. The big investment banks have the high cards in this game, as per usual, and will do just fine -- while the rest of us suffer.
Or you can vote for someone who is willing to fight to change the system. But no, my southern relatives are supporting Rubio and Trump. Little information, prejudice, cultural traditions, peer pressure: all add up to another Republican Congress -- or worse, a Republican presidency -- and more power to the oligarchs who are rigging the game.
And BTW, the employment statistics are a farce. Virtually all my peers -- well-educated, experienced professionals -- are unemployed and not looking further or self-employed. I would guess that the actual percentage of Americans who want to work, but have no jobs, are self-employed or are working part-time, is more like 25%.
And that was before the Chinese bubble burst.
So he knew, but Wall Street did not? Don't believe it. The big investment banks have the high cards in this game, as per usual, and will do just fine -- while the rest of us suffer.
Or you can vote for someone who is willing to fight to change the system. But no, my southern relatives are supporting Rubio and Trump. Little information, prejudice, cultural traditions, peer pressure: all add up to another Republican Congress -- or worse, a Republican presidency -- and more power to the oligarchs who are rigging the game.
And BTW, the employment statistics are a farce. Virtually all my peers -- well-educated, experienced professionals -- are unemployed and not looking further or self-employed. I would guess that the actual percentage of Americans who want to work, but have no jobs, are self-employed or are working part-time, is more like 25%.
And that was before the Chinese bubble burst.
I can't stop thinking that this is what Donald Trump said would happen. Is it possible that I'm starting to think he's not crazy?
We have been saying this for decades. Maybe you haven't been listening. And I take no credit for knowing this, it does not take a rocket scientist to know the system isn't broken, it's fixed.
2
China is just kicking the can down the road each time this close the market and inject funds into it. They did this last year and all it did was buy time...but for what? There are some serious flaws in their model and they need to liberalize but to do so puts them at risk of corrections. The fact the investors seems to embrace news of closure, fund injections and currency devaluation is concerning to me as it shows people are just as blinded as they were in 2008.
2
There are a lot of fundamental misreads out here. Among the most basic involves the way in which a global market lays off and distributes risk.
Typical of this if the following type of statement highlighted by the Times: ''Putting things into perspective, US exports to China account for only 7% of total exports, and 1% or so of GDP. So China's economic health is effectively decoupled from ours. However, events like Chinese stock crash are just fodder for sophisticated investors in US to make more money. They understand US equities prices are strangley inflated, & are looking for excuses to adopt short positions.'' -WRONG!
One of China's biggest exports this past year has been capital investment. Its Bank of China has sunk Trillions of dollars of Yuans into U.S. real estate assets and various mergers and acquisitions, internationally. By successive devaluations of its currency, China has in essence, on contract, devalued many of its purchases.
If George Soros is correct and we are heading into another global liquidity crunch, this can be highly destructive of value by as much as 30%. I don't call that, ''decoupled.'' Obviously a lot of investors are looking for liquidity and safe haven before a contraction. So their cash is sitting on the sidelines or in more negotiable forms, and this is also causing an acceleration in instability. China driving with on foot on the gas and the other on its brake obviously isn't helping matters.
Typical of this if the following type of statement highlighted by the Times: ''Putting things into perspective, US exports to China account for only 7% of total exports, and 1% or so of GDP. So China's economic health is effectively decoupled from ours. However, events like Chinese stock crash are just fodder for sophisticated investors in US to make more money. They understand US equities prices are strangley inflated, & are looking for excuses to adopt short positions.'' -WRONG!
One of China's biggest exports this past year has been capital investment. Its Bank of China has sunk Trillions of dollars of Yuans into U.S. real estate assets and various mergers and acquisitions, internationally. By successive devaluations of its currency, China has in essence, on contract, devalued many of its purchases.
If George Soros is correct and we are heading into another global liquidity crunch, this can be highly destructive of value by as much as 30%. I don't call that, ''decoupled.'' Obviously a lot of investors are looking for liquidity and safe haven before a contraction. So their cash is sitting on the sidelines or in more negotiable forms, and this is also causing an acceleration in instability. China driving with on foot on the gas and the other on its brake obviously isn't helping matters.
2
By making the 'markets" the be all and end all of our economic goals we have made the richest richer, the middle class and below poorer. We protected outlaw bankers in 2008 and celebrate off-shoring and "efficiencies." For real (not corporate) citizens, this is a stupid and destructive policy. It seems, however, that the electorate and their masters simply don't care.
1
But the Chinese were so advanced and progressive, their command economy sprinkled with free market concepts was the wave of the future! Wrong. Had the USSR tried this it would have blinked out of existence way long ago.
I bet the MSS and PLA are bolstering forces awaiting for the eventual collapse of government and the requisite bloody crackdowns when the CHINESE PEOPLE finally wake up!
I bet the MSS and PLA are bolstering forces awaiting for the eventual collapse of government and the requisite bloody crackdowns when the CHINESE PEOPLE finally wake up!
1
Even Smith and Wesson is down, this must be serious.
4
I would like to see how our President, Mr. Clinton, and the GOP candidates who strongly support the TPP are going to say. Mr. Sanders is against the TPP,, for many reasons, but what is happening in China is a major reason not to weaken our trading borders.
China's wealth has been artificial, mostly created by a currency which, until recently, was set well above its true worth. China built their economy, cities, infrastructure, the Olympics and the like on currency they also knew was over valued.
Since early last year, the China dream has shown its ugly face. Capitalism, really does not work in a controlled economy. Since then the Chinese economy has been shrinking; rapidly. Their over priced markets with it. and, not that their currency found its true value, its value has also shrunk.
Right now, the United States is the bulwark preventing a world wide depression. Europe is in shambles, most of Asia is too. A Chines economy collapse will be too much for the US to overcome.
It is like 2008 or 1929 all over again; take your pick. As the markets "adjust", but "too big to fail" will be on line for bailouts that are not even possible.
So, globalization, open borders, open trade, off shoring, outsourcing, etc., has created massive amount of wealth. But, not this is finally coming back and it is going to be a high price to pay. The chickens are coming home to roost. The end result won't be pretty.
Capitalism with a Communist face has failed.
China's wealth has been artificial, mostly created by a currency which, until recently, was set well above its true worth. China built their economy, cities, infrastructure, the Olympics and the like on currency they also knew was over valued.
Since early last year, the China dream has shown its ugly face. Capitalism, really does not work in a controlled economy. Since then the Chinese economy has been shrinking; rapidly. Their over priced markets with it. and, not that their currency found its true value, its value has also shrunk.
Right now, the United States is the bulwark preventing a world wide depression. Europe is in shambles, most of Asia is too. A Chines economy collapse will be too much for the US to overcome.
It is like 2008 or 1929 all over again; take your pick. As the markets "adjust", but "too big to fail" will be on line for bailouts that are not even possible.
So, globalization, open borders, open trade, off shoring, outsourcing, etc., has created massive amount of wealth. But, not this is finally coming back and it is going to be a high price to pay. The chickens are coming home to roost. The end result won't be pretty.
Capitalism with a Communist face has failed.
7
Would that the world had any resemblance to you analysis, Nick. But, that time has long past. China has been aggressively investing along with Europe in American hi-end M&A and luxury real estate assets as a hedge. That, leaves us considerably more exposed to their devaluation strategy than some, like you, might think. This does not even begin to consider the leverage out their in the form of re-re insurance and liquidity bonds. This also means that a good deal of our domestic growth in assets have been fueled by the same Chinese currency you abjure. Similarly, our consumer economy has been supporting their exports. The U.S. bulwark you paint is one heavily subsidized by Chinese investment as well.
The crisis in China is one created by their government's attempt to work around imposing an income tax, that they believe their people will ignore, avoid, and doom to failure. Their 'bright' idea for this, was to create a leveraged ''mostly domestic'' third stock exchange. That crashed in April, and burned in May, and has been a zombie with brakes on life support since.
The crisis in China is one created by their government's attempt to work around imposing an income tax, that they believe their people will ignore, avoid, and doom to failure. Their 'bright' idea for this, was to create a leveraged ''mostly domestic'' third stock exchange. That crashed in April, and burned in May, and has been a zombie with brakes on life support since.
1
I don't care about this market noise. I tune it out. Why?
I am completely diversified in very low cost bond and stock index mutual funds.
I do not panic buy or panic sell.
I don't watch Cramer or CNBC.
I am not greedy - I don't max out gains in the good times - but I don't get crushed if the market tanks. I am somewhere in the middle.
These articles are basically worthless noise.
I am completely diversified in very low cost bond and stock index mutual funds.
I do not panic buy or panic sell.
I don't watch Cramer or CNBC.
I am not greedy - I don't max out gains in the good times - but I don't get crushed if the market tanks. I am somewhere in the middle.
These articles are basically worthless noise.
6
I want to hear how GOP presidential candidates will make US economy immune to Chinese stock market.../
4
For those old enough to remember, this is eerily looking like what happened with Japan in 1989:
Japan was growing at 7 - 9% / year for most of the 70's and 80's , and its stock market climbed to over 39,000. But their downfall was tied to an appreciating yen, and banks that failed to write off increasing bad loans. Only recently has their economy begun to grow between 1.5 -2.5% / year and they are finally paying off their debt.
But China presents more of a problem. Their banks are under tremendous pressure - they have increasing non performing loans from unprofitable SOE's , the PBOC has been using their currency reserves to prop up both the RMB and stock market, and what was once a $4 trillion reserve is now around $3 Trillion. That's a 25% decrease in just a little over a year for reserves that took decades to build. They also have increased their debt from $7 Trillion in 2007 to over $28 Trillion now - a 4 fold increase in just 8 years and their economy is slowing dramatically - how can this end well?
Japan was growing at 7 - 9% / year for most of the 70's and 80's , and its stock market climbed to over 39,000. But their downfall was tied to an appreciating yen, and banks that failed to write off increasing bad loans. Only recently has their economy begun to grow between 1.5 -2.5% / year and they are finally paying off their debt.
But China presents more of a problem. Their banks are under tremendous pressure - they have increasing non performing loans from unprofitable SOE's , the PBOC has been using their currency reserves to prop up both the RMB and stock market, and what was once a $4 trillion reserve is now around $3 Trillion. That's a 25% decrease in just a little over a year for reserves that took decades to build. They also have increased their debt from $7 Trillion in 2007 to over $28 Trillion now - a 4 fold increase in just 8 years and their economy is slowing dramatically - how can this end well?
5
Since 2008, the U.S. macro-economy has basically been on life support. Investment in the real economy remains at levels too low to generate an expansion cycle, with most investment diverted to the paper economy (most economists don't distinguish sufficiently between these two forms of investment). The stock market is being propped up only because there is. for most people, no viable alternative form of investment. CDs and money market accounts pay virtually nothing, bond interest remains at historic lows, gold is down, and despite some recovery, the real estate market remains far below pre-2007 levels, due to the enormous financial hit so many Americans have taken.
The 0.25% percent interest rate hike declared by the Fed may have appeared minimal to Fed analysts, but together with China's stock market collapse, it likely has destroyed the stock market's very fragile equilibrium. Fed Vice-Chair Stanley Fischer's statement yesterday that three more interest rate hikes were coming this year has further spooked investors taught for decades that they should not "fight the Fed."
All in all, a very precarious outlook. I pulled my entire deferred compensation account out of stocks yesterday.
The 0.25% percent interest rate hike declared by the Fed may have appeared minimal to Fed analysts, but together with China's stock market collapse, it likely has destroyed the stock market's very fragile equilibrium. Fed Vice-Chair Stanley Fischer's statement yesterday that three more interest rate hikes were coming this year has further spooked investors taught for decades that they should not "fight the Fed."
All in all, a very precarious outlook. I pulled my entire deferred compensation account out of stocks yesterday.
Remind me, globalization is great because....
Bigger herds create more damage when they stampede.
Bigger herds create more damage when they stampede.
4
It will be interesting to watch the effect this has on the US if the Chinese government starts cashing out their Treasuries to pay down some of their debt. It's times like these that I'm glad to be invested in real assets, e.g. real estate, fine art, and precious metals, so I can sit back and watch the show like I did in Sept . -Oct. 2008. Pass the popcorn please.
China has been cashing out their Treasuries for over a year to prop up their Yuan.
Yet the US GDP growth rate has been growing while China's has been slowing, dramatically.
Yet the US GDP growth rate has been growing while China's has been slowing, dramatically.
Wow. All those Republicans who said China would eat our lunch and the American economy was collapisng under President Obama, what are they saying now again? Oh yeah, they are endlessly shouting we should "make America great again." Because the economy under President Obama has totally tanked, and China is taking over the world, that's it. Right?
11
The S&P 500 has gapped down 1.5% or more three times this week. It did that only three times in all of last year. The market is telling you that if China's central planners can lose control of their market, it can also happen here. It's not the first time the Fed has lost control; they've already lost credibility.
1
I've been down, I've been up. Up is better.
2
We need two stock markets. One highly regulated to protect people interested in the long-term
growth and security of their savings. The other, patterned on casino and gambling practices,
should be designed to accommodate in-and-out traders wanting to make a fast buck. The
former should be headquartered in New York; the latter should be based in Nevada.
growth and security of their savings. The other, patterned on casino and gambling practices,
should be designed to accommodate in-and-out traders wanting to make a fast buck. The
former should be headquartered in New York; the latter should be based in Nevada.
8
Apparently it is too difficult for Wall Street's 'Masters of the Universe" to understand that ALL the data generated by China and Chinese financial, govt and industrial sectors is BOGUS. While even Western economic statistics and financial 'reports' are well-known flights of corporate fancy at least they are based in occasionally verifiable facts, and only the "analysis" is torqued to suit the Street's wishful thinking or schemes. In China, however, the stats and data are 'designed' from the bottom up by often fearful toadies loathe to be accused of not making their production quotas or making some party apparatchik look bad. Unlike in the U.S where Wall Street and corporate fraudsters are immune from prosecution, in China the perceived (selected?) miscreants are shot dead, and their families pay for the bullet. Now we could learn a thing or two from that approach to market discipline, but anyone who thinks the Chinese numbers are real should also be subject to it.
1
The original Chinese Junk was and still is a much admired superlative design. Unfortunately, today's Chinese junk doesn't hold up as well.
3
I keep remembering that silly old saying
"what goes up MUST come down" Why is anyone surprised. Most of the market is just "economic hot air". Buy this, buy that, buy high, sell low, everyone is trying to make zillions and it signifies NOTHING. The stocks on the US market are those that seem like they will go up and up and up like Facebook, etc. They do not reflect the true production of the US. Facebook MAKES NOTHING of value .
The "old" market used to have IBM, Caterpilar, GE -the maker of appliances--not lending money-- and other producers. soon enough all these "social cites" will be worthless like the piles of 19th c RR stock certificates in my locker.
"what goes up MUST come down" Why is anyone surprised. Most of the market is just "economic hot air". Buy this, buy that, buy high, sell low, everyone is trying to make zillions and it signifies NOTHING. The stocks on the US market are those that seem like they will go up and up and up like Facebook, etc. They do not reflect the true production of the US. Facebook MAKES NOTHING of value .
The "old" market used to have IBM, Caterpilar, GE -the maker of appliances--not lending money-- and other producers. soon enough all these "social cites" will be worthless like the piles of 19th c RR stock certificates in my locker.
1
This week should be a good time to buy non-China stocks. These ridiculous drops are always followed by huge gains.
3
I've been finding that some consumer electronics made in America are actually better and cheaper than similar products made in China. Even if it costs a little more, I find buying American when possible helps our own economy, not some totalitarian government controlled industries.
17
Chinese officials should question whether their country's economic system - state capitalism - still works. The leadership embraces economic growth, which makes it a capitalist, but it wants to rule the market, shaking the confidence of investors. They prefer a free market, without government meddling. The leadership says it has to intervene to protect investors and calm markets. In fact it is preventing the share of state-owned companies from falling. This triggers only the opposite effect, because the investors are not informed of what the government does.
3
Everyone who's followed the news knows what a ridiculous sham China's economy is, with its severe investment restrictions that basically allow those of its citizens with some money to invest only to buy into crony-capitalist 'state enterprises'. It's just communism disguised as capitalism with the riches going to a small elite and economic bubbles and job insecurity for the rest. What I found astounding is the reaction I got from financial advisers in THIS country when I told them this and raised that 'house of cards' analogy that's, by now, become a cliche. They'd say "Yes, but ..." - and STILL push Chinese stocks as investment material.
It's things like this that make me wonder if, as the late (and sorely missed) Groucho Marxist activist Abbie Hoffman liked to joke, someone really did put bad acid in the water supply.
It's things like this that make me wonder if, as the late (and sorely missed) Groucho Marxist activist Abbie Hoffman liked to joke, someone really did put bad acid in the water supply.
1
Relax. First, the Shanghai is effectively the exchange for the Chinese themselves, which, unfortunately, they regard much like we might regard a casino. Stocks owned by foreigners are via the Hong Kong, which is not nearly as volatile.
Second, there will very soon be as many people in the Chinese middle class as there are people in the USA. There is no chance that the Chinese effort to develop domestically, rather than relying on exports, will fail in the long term.
Second, there will very soon be as many people in the Chinese middle class as there are people in the USA. There is no chance that the Chinese effort to develop domestically, rather than relying on exports, will fail in the long term.
This may dampen all economies, at least temporarily, but China was getting awfully aggressive, both economically and militarily. With the other problems they have of an aging population, and enormous pollution, they had to slow down at some point. I'm not sure this is a bad thing, in the long run.
2
Why the surprise? the deep state is alive and well and has usurped our citizenship. All large economies are run by oligarchies. There are no representative democracies any more, only totalitarianism of different strengths. Remember Hitler was elected.
Citizens standing in unity for transparency and accountability directed by conscience guided by God's grace and justice revealed in Christ is the only hope.
Citizens standing in unity for transparency and accountability directed by conscience guided by God's grace and justice revealed in Christ is the only hope.
1
It's nice to know that stocks go on sale every once in a while.
#notscaredyet
#notscaredyet
I love how the lefties NYT loved to cry the sky is falling because of corporations and "globalization" . Guess what, you think you were in control before then?! You think more government or GSE's (which caused the last recession) are better?
The REASON China dropped so hard were fears they would close the market and everyone sold sold sold as soon as they could !! China announced it would NOT freeze the market and the USA futures stopped at 400 and went back to a 200 point loss instead.
Look its simple, ALLOW free market, admit that nothing is perfect and FEAR and skepticism is healthy to a point, and DIVERSIFY.
All Globalization does is allow people to trade with a larger market and yes because its now very connected, it reacts very quickly. Nothing is guaranteed, you are not ENTITLED perfection, and know that markets go in cycles (nothing stays up forever!! )
The REASON China dropped so hard were fears they would close the market and everyone sold sold sold as soon as they could !! China announced it would NOT freeze the market and the USA futures stopped at 400 and went back to a 200 point loss instead.
Look its simple, ALLOW free market, admit that nothing is perfect and FEAR and skepticism is healthy to a point, and DIVERSIFY.
All Globalization does is allow people to trade with a larger market and yes because its now very connected, it reacts very quickly. Nothing is guaranteed, you are not ENTITLED perfection, and know that markets go in cycles (nothing stays up forever!! )
1
The middle-class consumers, that missing 70% of the US economy, have survived Christmas spending and are now stressing out to payoff their credit cards. The seasonal spending splurge has filled the needs/wants for new cell phones, TVs, appliances, clothing, etc, in short products manufactured in China.
With consumer spending suspended, retail orders dead in the water, Chinese manufacturing is taking an extended holiday. Chinese manufacturing has sneezed and the global economy has pneumonia!
Congress is against raising the minimum wage, investing in infrastructure, and desperate to enact tax cuts for the wealthy. Meanwhile the middle-class and working poor struggle to make ends meet and pay off credit card debt. The IMF can be considered foolish for having declared the Chinese Yuan/Renminbi to be one of the world's "elite" currencies, what a joke!
Best of all, the Chinese Yuan/Renminbi's exchange rate changes by the hour.
With consumer spending suspended, retail orders dead in the water, Chinese manufacturing is taking an extended holiday. Chinese manufacturing has sneezed and the global economy has pneumonia!
Congress is against raising the minimum wage, investing in infrastructure, and desperate to enact tax cuts for the wealthy. Meanwhile the middle-class and working poor struggle to make ends meet and pay off credit card debt. The IMF can be considered foolish for having declared the Chinese Yuan/Renminbi to be one of the world's "elite" currencies, what a joke!
Best of all, the Chinese Yuan/Renminbi's exchange rate changes by the hour.
4
Just as the threat of gun controls cause a spike in gun sales here, the threat of capital controls from the interventionist Chinese government undermine the confidence for owning Chinese stocks and currency.
4
Before everyone here bashes wall street, who here wouldn't profit from these market crashes if they can? Are you telling me that if you saw the crash coming you wouldn't short the market to make yourself some nice juicy profit? You'd just sit there and go down with everyone else?
Well, can you foresee what the market is going to crash or when a stock is about to tank? And let's say you can, and you short it massively with that knowledge only you are privy to - that's fraud in the eyes of the SEC. So I am not entirely sure what your point it.
Equity was once sold to amplify the ability of entrepreneurs to invest in production. While there is, no doubt, still societal benefit from certain investing, stock markets have become little more than gambling dens, divorced from the value of the underlying assets.
In fact, demands from such markets for short-term gains have had a negative impact on underlying assets.
No where is this more true than in China.
It's time that we stopped letting this unproductive tail wave the world economic dog.
In fact, demands from such markets for short-term gains have had a negative impact on underlying assets.
No where is this more true than in China.
It's time that we stopped letting this unproductive tail wave the world economic dog.
23
Some people have been saying that for more than 30 years, but no one at the trough cares to hear that, the naysayers are easily dismissed as pointy headed academics, and the rest of us can't buy our own legislator.
Analysts try to tie movements in the market to all kinds of economic and political factors. Lately, in addition to China, we hear about the price of oil, interest rates and unrest in the Mideast. But the price of stock is tied, first and foremost, to the profitability of the underlying businesses. The housing crisis threatened the banking system which threatened the profitability of virtually every business out there. But if China goes to hell in a hand basket, if the price of oil goes down to $1, or if Saudi Arabia goes to war against Iran, the overall effect on profitability of the broad array of US businesses is questionable at best. Interest rates and inflation are much more important to profitability. There's good reason why the market reacts so strongly to what the Fed does. And it's very complicated, which is why the market went up when interest rates went up and reversed itself the next day.
Anyone who hasn't seen this coming is living in a soap bubble. Wealth, or rather the semblance of wealth, created by rumors of growth, or the semblance of growth, created by one country's central authority as the basis for a world wide financial system is so unbelievably stupid, it beggars belief.
We have borrowed from a future that no longer exists in the form we imagine it can still return to. No wonder everyone who has a dog in this race is panicking. It's the only logical thing to do if that's what you've staked your hopes on. There is plenty of good news here, but not in this realm.
Many others on this planet live outside that realm and to us, and while we understand that we too will be touched when this all comes tumbling down, we are already living the way of the future - smaller, much smaller than you might think possible. Within that smallness is everything a human could possibly need and want, but anyone still racing that dog won't see it as a viable option anytime soon.
But I've been pounding this bully pulpit ever since I started reading the New York Times in the crash of 2008. No one but types like me ever thought much of my comments then, and I suspect no one will now. No matter. I'll keep hammering away nonetheless.
We have borrowed from a future that no longer exists in the form we imagine it can still return to. No wonder everyone who has a dog in this race is panicking. It's the only logical thing to do if that's what you've staked your hopes on. There is plenty of good news here, but not in this realm.
Many others on this planet live outside that realm and to us, and while we understand that we too will be touched when this all comes tumbling down, we are already living the way of the future - smaller, much smaller than you might think possible. Within that smallness is everything a human could possibly need and want, but anyone still racing that dog won't see it as a viable option anytime soon.
But I've been pounding this bully pulpit ever since I started reading the New York Times in the crash of 2008. No one but types like me ever thought much of my comments then, and I suspect no one will now. No matter. I'll keep hammering away nonetheless.
7
Hammer away. We read your excellent points.
4
Many other commenters spoke eloquently and correctly on China's bubbles (I lived in one such ghost city for 2 years - huge apartment buildings with maybe a dozen units occupied). I will just add that China wants to play the global market game, but with its own protectionist rules. It doesn't really work that way. The Chinese have nowhere to invest their money but domestic real estate bubbles or their own contracting economy (by and large, they are forbidden from investing in foreign markets). What, exactly, did they think was going happen?
5
Forbidden from investing in foreign real estate? Who, exactly did you think was creating those 3, 4, 5 million dollar apartment ghost cities in Manhattan?
I just (about 11 am EST) learned that the official Chinese stock market entity had announced that it will not use the circuit-breaker mechanism to halt trading in tomorrow's (Friday) market.
China's market is tumbling like the pile of garbage that crushed those apartment buildings.
4
Bull! Several years ago I pulled my IRA out of Vanguards S&P 500 Fund and have been getting a "decent 2%" from one of their Retirement Funds. Meanwhile the S&P soared to 2200. My wife's IRA CDs at Ally are locked in for five years at 1.40%: my savings account at Ally returns .85%.
So, if this adjustment in the Global market frightens you, you should have pulled your IRA/Savings out of the stock market a few years ago...but you stayed in for more...out of greed. I will not cry for you, greedy investor. You may not do better in one of our Nevada casinos...at least you will have fun knowing you are gambling in a house stacked against you.
So, if this adjustment in the Global market frightens you, you should have pulled your IRA/Savings out of the stock market a few years ago...but you stayed in for more...out of greed. I will not cry for you, greedy investor. You may not do better in one of our Nevada casinos...at least you will have fun knowing you are gambling in a house stacked against you.
3
Good mom and pop type investors, David, keep consistent asset allocations in good times and bad. It's impossible for anyone to properly time a market, including you. It's not a symbol of greed, nor should they be feeling frightened now.
3
I don't understand why we seem to have pegged our economic fortunes on the fate of a Communist dictatorship with transparency issues. If capitalism is the source of prosperity, why are we in bed with a country that just wants to be friends with benefits? Call me isolationist, but 50 years ago China could go to hell and it wouldn't affect the domestic markets in Western nations. This fiasco appears to have revealed a lack of self-reliance in the First World.
10
I understood the climate of China economy partly by watching its several big national gala shows for important holidays. When the gala show is less about entertainment and more about propaganda, the economy prospect and the finance and social environment may be very tired.
1
The Chinese symbol for the word "crisis" contains two characters: one means danger, the other opportunity.
Now is also a good time to remember Warren Buffet's famous maxim: be fearful when others are greedy and greedy when others are fearful.
Most people see doomsday right now. I see stocks for sale
Now is also a good time to remember Warren Buffet's famous maxim: be fearful when others are greedy and greedy when others are fearful.
Most people see doomsday right now. I see stocks for sale
32
Then you enjoy the sport of "Catching A Falling Knife." Good luck and watch those fingers.
4
The mayor of Chicago has that tattooed on his chest. and, he never wastes one if he can help it.
I would like to see an analysis that discusses how much of this is due to the US Fed raising interest rates, which was predicted to slow the US (and global?) economy. Let's get some decent analysis into these articles rather than simple description!
25 basis points? You must be kidding! And no, the analysts have already said that not much is happening. If there's anything happening it's only in the mind.
2
China should let their markets and currency fall; it is a bitter pill, but smaller and less bitter than tomorrow's or next year's. When investment values have fallen to their (much lower, risk-appropriate) market prices, Chinese investors and eventually foreign investors will resume investing in China's growth.
Based on our American experience of the last decade, It's very easy to suspect that the purpose of the so-called safety measures in the Chinese stock markets is to provide the wealthy with some time to abandon the ship with their jewelry stashed safely away, and their NYC real estate portfolios intact.
Based on our American experience of the last decade, It's very easy to suspect that the purpose of the so-called safety measures in the Chinese stock markets is to provide the wealthy with some time to abandon the ship with their jewelry stashed safely away, and their NYC real estate portfolios intact.
7
I would think the circuit breaker just makes it worse as everyone is trying to sell their stock before it trips, which puts a ton of downward pressure on prices no doubt if the markets where left open prices probably would have increased unless Chinese stocks really are that overpriced and then its just a matter of time until they get to whatever bottom they are going to hit anyway.
As a side note there does need to be reforms in markets to try to prevent the bubble burst cycle that is occurring all to often, but this is not the way to do it. Maybe something like increasing the threshold for long term capital gains and/or creating another category like intermediate-term capital gains. or just making the tax rate a continuous function like an exponential or something. Also could maybe charge funds that profit from short term trades a tax to make up for the conversion of these gains into long term gains for the fund owners (if this is applicable not 100% sure how this works).
As a side note there does need to be reforms in markets to try to prevent the bubble burst cycle that is occurring all to often, but this is not the way to do it. Maybe something like increasing the threshold for long term capital gains and/or creating another category like intermediate-term capital gains. or just making the tax rate a continuous function like an exponential or something. Also could maybe charge funds that profit from short term trades a tax to make up for the conversion of these gains into long term gains for the fund owners (if this is applicable not 100% sure how this works).
1
So, now in the US people will lose their life savings twice within 8 years. Way to go, traders. I thought these brilliant captains of industry were paid to see these things coming. A little unrest, not only in the stock market, but within the population. You can't continue to have the uber rich use the stock market as their personal investment toy, and not have other people become very restless.
10
Why would someone have all of their "life savings" in the stock market? And to lose it, they would either have to sell very low, rather than riding out the ups and downs, or be using leverage. And if that's the case, why would they blame others for their own investing decisions?
3
Instead of getting hysterical, these traders around the world need to sit down and calmly ponder why they ever had confidence in the totally artificial Chinese market...economy...anything Chinese.
It is a dictatorship pretending to a free market. It's never been what these ignorant traders apparently thought it was.
And, the same goes for GM, Apple, Microsoft, any other American or European company that manufactures anything there and have just handed over every bit of their intellectual property by doing so.
Greed makes people stupid. Stupid.
It is a dictatorship pretending to a free market. It's never been what these ignorant traders apparently thought it was.
And, the same goes for GM, Apple, Microsoft, any other American or European company that manufactures anything there and have just handed over every bit of their intellectual property by doing so.
Greed makes people stupid. Stupid.
13
Could you please stop trying to pull the wool off your eyes already! Sheesh!!
1
Regarding your point about relinquishing intellectual property through manufacturing, the valuable information occurs during the design stage. The later manufacturing process -- unless innovative and using unique technology -- is relatively benign. Anyone any where can buy a product, take it apart, analyze it, and then reproduce it. And, they do.
Look no further than the new crop of mile high skyscrapers in Manhattan to see proof of the ailing Chinese economy. Its citizens do not want their money there and its no surprise. This seems to be the start of a long road of correction for China and its dependents like Brazil.
6
Back in the 60's China exported almost nothing to the US. We had a great economy in the 60's. The only thing that came out of China was threats to America from Mao suit wearing communist party leaders. Ah the good old days.
8
99% of us are the proverbial blind man on a galloping horse. The stock market is just the casino for guys in three piece suits. So shudder away.
6
DJIA is down 4.6% this week, Apple is down 7.5%, currently trading at around $100.00. The big question is why Apple is being allowed to ripple it's huge China exposure over to the DJIA. Both are running out of battery. Apple should be cut loose, and so should Cook.
1
Amazing once again how the hubris and certainty of NYTimes comments makes me wonder why we, instead of all these high priced Econ PhDs, are not running the world's economies! To my mind: modern economies seem to be based on consumer consumption. China needs to promote consumption domestically by growing their middle class. And the US needs to keep consumption going: Hence a "consumption tax" proposed by some politicians, as a replacement for an income tax, would probably be a very very bad idea. Just saying.
2
I sincerely hope the Chinese market decline indicates American investors are repatriating wealth.
5
Amen
The Chinese economy is over leveraged and over valued. It was long overdue for a correction. China has been an interesting testcase, can a market economy can be centrally managed? The US and Europe principally depend on markets to allocate resources and capitol, while China does it through the CCP. Hence, their overinflated currency and stock market. It will be interesting to see how they survive their correction. Note the NYT data showing that China at $500 billion is a fraction of our $20 Trillion economy. Put out the fire in your hair, the US will not perish over China's correction. Stop buying gold and wait another day for armageddon.
5
Bottom line, the whole country is new to investing and they made mistakes. This is their 1929.
8
The sellers are not buying gold; they're buying stocks at cheaper prices. China is just an excuse for another round of profit taking and a reset for those who can whip in and out of the market.
1
First pair of really incisive comments I've read yet. I guess it's easier to say "when in danger or in doubt, run in circles, scream and shout".
1
China didn't learn from Bush that market manipulation will artificially raise the cost of living and stall or collapse the economy.
2
Funny. When NYT recapped challenges for the USA in 2016, China was never mentioned.
4
The Wall Street money grabbers salivated to have a global economy, where they could quest after cheap labor, avoid taxes, avoid environmental laws and regulation in general, and hawk shoddy products and deals to unsuspecting turkeys in far off lands.
Of course, our casino financial industry couldn't really responsibly deal with our own boom and bust economy, but in keeping with the Peter Principle, they kept rising to higher levels of complexity and incompetence, and have reached it. So now when China falters and sneezes, the U.S. stock market goes into a tailspin and catches pneumonia for several weeks or, who knows, maybe years.
Not to worry, Wall Street has those sizable pension funds and retirement investments to collect its fees from. Thank goodness for the little people!
So much for our globalized economy: Be care what you wish for.
Of course, our casino financial industry couldn't really responsibly deal with our own boom and bust economy, but in keeping with the Peter Principle, they kept rising to higher levels of complexity and incompetence, and have reached it. So now when China falters and sneezes, the U.S. stock market goes into a tailspin and catches pneumonia for several weeks or, who knows, maybe years.
Not to worry, Wall Street has those sizable pension funds and retirement investments to collect its fees from. Thank goodness for the little people!
So much for our globalized economy: Be care what you wish for.
13
The unpatriotic practice of exporting business and wealth will haunt us.
With "Globalization", if China falls, so do we.
With "Globalization", if China falls, so do we.
10
Lau Tzu had it right: "There is no calamity greater than lavish desires. There is no greater guilt than discontent. And there is no greater disaster than greed."
13
For those who invest, buy and hold is the tried and true strategy. For the gamblers in the crowd, though, there are easy ways to profit off a declining market. In particular, there are ETF's that go up as the market goes down. A reverse investment in the S&P, for example, will gain 5% if the S&P loses 5%. Of course, the reverse is also true. Never buy and hold one of these ETF's! They are short term investments to profit off of a market decline.
The Chinese economic house of cards is crumbling. But just remember, China owns trillions of U.S. federal debt. If they start cashing in those obligations the American house of economic cards will fall even harder. This is what the Obama administration has wrought by increasing our federal debt from less than $11 trillion to more than $18.5 trillion in less than seven years.
2
Typical right-wing Voodoo economic hogwash! China buys US Treasury bonds because they are the World Standard for those who want to park their excess cash. We all know that the Chinese have much excess cash. The US Treasury bonds are the stabile investment because of the strength and depth of the American economy. Americans hold a majority of US Treasury bonds.
This development has happened under the Obama administration. Not under a GOPer administration, disaster follows when the GOPers get in office.
The Chinese hold about 7% of US Treasuries, Japan has about the same amount. The Chinese and the PBOC would be insane to cash out their US holding as these are the most stabile portions of their portfolio!
If the US wants to follow the Chinese model all we have to do is to elect a GOPer into office.
By the way, you left out the part how this rise in national debt was almost all because of Bush' follies into the Middle East and the casino bank regulations he championed.
This development has happened under the Obama administration. Not under a GOPer administration, disaster follows when the GOPers get in office.
The Chinese hold about 7% of US Treasuries, Japan has about the same amount. The Chinese and the PBOC would be insane to cash out their US holding as these are the most stabile portions of their portfolio!
If the US wants to follow the Chinese model all we have to do is to elect a GOPer into office.
By the way, you left out the part how this rise in national debt was almost all because of Bush' follies into the Middle East and the casino bank regulations he championed.
18
Not too long ago the worry was 100$ a barrel oil and the Chinese moving in on the US as the world's #1 economy. That has proven to be a by gone circumstance. Now China seems to be leading the world into an economic swamp in which no one knows the outcome. And the talk is 20$ a barrel oil. Certainly that would solve the puzzle of the Assad regime's demise. But the problem is deepening chaos.
8
1) Just let the yuan float to whatever rate the market thinks is correct. Exports will pick up, then imports, and the economy will rebound.
2) Stop with the "circuit breakers." It makes it difficult for the true price of equities to be discovered. By the time someone wants to swoop in and start buying, the market is closed.
Obviously these former communists have a bit to learn about how markets work. It is not confidence inspiring. One wonders what else they are getting wrong that we do not know about yet.
2) Stop with the "circuit breakers." It makes it difficult for the true price of equities to be discovered. By the time someone wants to swoop in and start buying, the market is closed.
Obviously these former communists have a bit to learn about how markets work. It is not confidence inspiring. One wonders what else they are getting wrong that we do not know about yet.
1
I know I'm way behind the curve, but I still can't believe that China has a stock market.
3
The Chinese are very new to the capitalist game. The government in its role as big brother has tried to intervene by buying shares and devaluing the currency. Being new to the game the Chinese don't really understand due diligence on the part of investors nor do they comprehend the importance of independent auditors to a company's statements. Most of these enterprises (if not all) are financed by government banks in a country where corruption is taken as a matter of course. This is all a recipe for disaster and now the country realizes it has been suckered and the rest of the world is catching on fast.
5
Deregulating our market economy had been done back in the early 1900's, which created the Great Depression of 1929. It spread crippling housing and farms. A deflationary cycle followed. Sound familiar? Our current situation looks no different. Our too big to fail banks have become craters, but we cannot prove it. They do not have to account for their assets or show their balance sheets. They are playing liar's poker against the rest of us and our federal tax dollars backing their play. As the Chinese continue to tank our banks will begin to bleed money and every investor holding ETF's, stocks or bonds will be trying to sell. Then, comes the bubble to beat all bubbles: high-end real estate. With China heading into a depression - how many of these properties will find buyers, when the current owners needs them the most?
2
Wall Streeters showed the Chinese how to set up "markets". The money is not disappearing - it's going straight into the pockets of international hedge fund managers and other BIG players that Bernie Sanders talks about - that is how the wealthiest are stealing OUR daily bread and futures.
16
Not to worry....the Donald will negotiate us out of this problem.He'll double the hight of the Great Wall and build a couple of golf courses to show the Chinese how smart he is.
9
So much for the Chinese "century."
As much as my portfolio is smarting from the global rout, I take no small amount of satisfaction seeing the Chinese, who have acted so arrogantly, get their comeuppance. Their economy and financial markets are entirely transparent. Poseurs eventually get outed. Fact is that their "Communism-lite" approach is not a viable model for the rest of the world. Cheer up, USA. Our best times are still ahead of us.
As much as my portfolio is smarting from the global rout, I take no small amount of satisfaction seeing the Chinese, who have acted so arrogantly, get their comeuppance. Their economy and financial markets are entirely transparent. Poseurs eventually get outed. Fact is that their "Communism-lite" approach is not a viable model for the rest of the world. Cheer up, USA. Our best times are still ahead of us.
7
How is halting trading even allowed? Unless due to some serious technical glitch or other unforseen calamity, this is simply a very public and overt example of just how rigged and corrupt the system has become.
3
Even our markets have an off switch; we used it in a flash crash situation in 2010....
Circuit breakers lifting going into tomorrow morning in China!
Look out below!!
Look out below!!
3
What percentage of Chinese manufacturing and in turn their economy is based on publicly traded companies? Is not a good percentage of China's manufacturing under government or military ownership? It has been general knowledge for quite some time that the Chinese economy has been a house of cards. Those that overinvested in supplying raw materials to China like coal and metals mining firms are already showing the pain of that through bankruptcy. There must be a fundamental shift in our economic systems away from reliance on perpetual growth to a more sustainable basis. The resources are not available and are in some respects diminishing to continue never ending growth. The globe we live on has a finite level of resources with infinite growth in the human population. If the end result of that is not apparent to some; just keep dropping another fish in the goldfish bowl and see what happens.
6
If China is eating our lunch, to quote (or at least paraphrase) Trump, this doesn't say much for China. Or Trump.
3
Don't think for a moment that China has not been diligently working towards this kind of world power for decades. And we have played right into their hands, just as they planned, by locating our companies there, killing our own jobs, and buying their products. Now we are paying the price for that greed, dismissing any thoughts of the future. "What's the worst thing that could happen if we do this?"
5
The yuan clearly wants to go lower. It's the government's efforts to prop it up that are causing the stock market turmoil. As long as people can read the writing on the wall about the yuan's direction, they'll continue trying to pull money from China and send it abroad. In a freely floating exchange rate system, the currency would adjust instantaneously, so the disruption to equity markets would be much less.
1
The currency and stock markets are kind of thermometers only, but they have become the tail wagging the dog.
It is comical that the currency and stock markets of "communist" China have such a huge impact on the markets in the west.
But we let them in, let's clean up the mess now - if we can.
It is comical that the currency and stock markets of "communist" China have such a huge impact on the markets in the west.
But we let them in, let's clean up the mess now - if we can.
4
Did anybody really believe that the average Chinese worker would be satisfied, in the long-term, being paid pennies per hour? When there's free flow of information across borders via business travelers and the internet, those same workers quickly realize that they're grossly underpaid and undervalued. Eventually, even under communist rule, their subtle actions will cause employers to act to keep them satisfied.
Hence, costs rise, and prices rise to maintain margins. The free market at work, even in China. As China loses its competitive advantage of low-cost labor, it should come as no surprise that its core manufacturing economy is weakening. Its stock market is merely reflecting an even more dismal future as total costs, a majority of which are labor and energy components, equalize against other developed countries.
Hence, costs rise, and prices rise to maintain margins. The free market at work, even in China. As China loses its competitive advantage of low-cost labor, it should come as no surprise that its core manufacturing economy is weakening. Its stock market is merely reflecting an even more dismal future as total costs, a majority of which are labor and energy components, equalize against other developed countries.
2
Chinese want all the benefits of a free market without freedom.
3
China now sees what capitalism is and i bet the top party leaders doesn't like this experiment. Too unstable and risky for the lemming masses.
Fortunately they have enough in dollar reserves to take their 25 year old stock market private again.
Fortunately they have enough in dollar reserves to take their 25 year old stock market private again.
2
Reserves mean nothing if the Chinese have no stability or if confidence wanes around the world. Want to see trillions evaporate in a blink of the eye? Keep an eye on China.
1
I guess those Communists aren't beating Capitalists at their own game after all.
On the contrary......consider all the business and wealth that was exported to China and now our economy is at risk if China fails.
1
You are saying that we do not have anything at stake here.
plus
2008 , communists were winning,
2016 capitalists are winning.
This is like whenever you see sun just saying the already known, it is sunny. There should be some days sunny in a year Am I right.
Communists are beating capitalists is just lousy argument , nothing else.
plus
2008 , communists were winning,
2016 capitalists are winning.
This is like whenever you see sun just saying the already known, it is sunny. There should be some days sunny in a year Am I right.
Communists are beating capitalists is just lousy argument , nothing else.
Forgive my schadenfreude, but...
We all told you so.
China was never going to lift the global markets; you don't bet on a house of cards.
We all told you so.
China was never going to lift the global markets; you don't bet on a house of cards.
8
Analysts tell us that capital outflows from China is at very high levels. The word is that approximately 15 million Chinese have one half of the trillions in the PBOC. These bureaucrats that serve the elites have the power to bend rules that allow them to empty China's coffers.
Rats Jumping Off a Sinking Chinese Junk!!
Rats Jumping Off a Sinking Chinese Junk!!
4
This is all part of the Great Contraction as termed by James Kunstler in 2008.
We cannot have infinite material growth on a finite planet. The whole world needs to make a Green Transition away from endless Wars, Auto Addiction and increasing purchases of throwaway junk to investment in Green public transit, schools, health,parks, libraries, arts and music. China's big mistake was getting suckered into the Auto Addiction sprawl of the US model - the planet cannot afford 1 Billion Chinese with cars - it is already groaning under the burden of 300 million cars in the US. Thus you have the epic traffic jam in China for weeks not hours. The Chinese should never have traded in their bicycles for cars and sprawl....
The next subprime meltdown in the US will be the subprime trucks and SUVs which were allowed as a loophole to jack up the ailing US auto industry.
Unlike houses though, now with modern technology, banks can remotely turn off a truck or SUV so it cannot even be driven!
Meanwhile December in the Northeast USA was the hottest in history - in New Jersey 11 degrees above average for the month!
Climate change is of course fueled by all the greenhouse emissions from the endless Wars, Auto Addiction and the mad pursuit of ever more junk while shared public resources like transit, schools and libraries get cut more and more...
We cannot have infinite material growth on a finite planet. The whole world needs to make a Green Transition away from endless Wars, Auto Addiction and increasing purchases of throwaway junk to investment in Green public transit, schools, health,parks, libraries, arts and music. China's big mistake was getting suckered into the Auto Addiction sprawl of the US model - the planet cannot afford 1 Billion Chinese with cars - it is already groaning under the burden of 300 million cars in the US. Thus you have the epic traffic jam in China for weeks not hours. The Chinese should never have traded in their bicycles for cars and sprawl....
The next subprime meltdown in the US will be the subprime trucks and SUVs which were allowed as a loophole to jack up the ailing US auto industry.
Unlike houses though, now with modern technology, banks can remotely turn off a truck or SUV so it cannot even be driven!
Meanwhile December in the Northeast USA was the hottest in history - in New Jersey 11 degrees above average for the month!
Climate change is of course fueled by all the greenhouse emissions from the endless Wars, Auto Addiction and the mad pursuit of ever more junk while shared public resources like transit, schools and libraries get cut more and more...
17
Interesting point on subprime autoloans and repos.
2
Mr Bradsher, Ms Tsang, and Readers: As global aggregate demand contracts, less oil and its substitutes is demanded by manufacturers and the utilities that fuel them. If a producer has a 5% profit margin, and revenue declines by 10% due to lagging demand, then it is this profit that is corroded first. To maintain a positive cash flow, the producer will cut payrolls and any other nonessential costs to maintain a "going-concern" confidence in the firm by market participants. These local payroll and other cost cutting measures will in turn reduce aggregate demand further; eventually reducing the producer's revenue again. Thus, the dilemmas presented by a contracting economy. Japan had a contracting economy for decades that was not too disruptive because the accompanying very low inflation protected its growing proportion of retirees as its population aged. China is moving away from its export-driven economy to encourage more domestic driven-growth. But, China does not have the financial safety net for retirees that Japan does. Japan too has a very large debt overhang from its many past failures to "prime the pump" of its economy. Some time ago, the Times published a discussion of the clothing industry which cited a trader stating that this sector, the rag trade, follows cheap wages around the globe. Perhaps, other producers now do too, at the peril of China and other major national manufacturing nations. [1/07/2016 9:22 AM Th]
2
What do you expect from a society so corrupt and violent it kidnaps book sellers?
6
The markets are a sea of red and the Dow is down nearly 1000 points from the 17,800+ high of a few days ago. The Chinese government is using the "people's bank" savings accounts of it's citizens to try to shore up their market and putting people's futures in jeopardy. Tell me one more time why Americans would vote for people who want to destroy social security and have us put our money on the biggest craps tables in the world. Let's just hope the vast majority of us are smart enough vote to put a stop to this wholesale theft of average people's lives to give even more wealth to the financial elite who engineer the markets. The first thing we need to DEMAND is that hedge funds be outlawed around the world. That would take half the gambling quotient out of the markets.
http://www.bloomberg.com/markets/world
http://www.bloomberg.com/markets/world
7
While you object to people deciding their own ways for preparing retirement, how about at least acknowledging that for decades our political elite have raided the supposed locked box? Sound oddly familiar?
3
I don't object to people making their own decisions but I will continue to warn innocents against having their retirement money stolen in the rigged markets of today. WE must DEMAND SERIOUS FINANCIAL REGULATION to protect average people.
8
yeah, well, thats capitalism for you
6
I'm assuming this is satire.
In short, the real economies are mitigating all the hand waving of the fake economies. But we're told and believe that "our fortunes" lie with the fake economies. So when it becomes apparent that all the hand waving is just that, we predictably believe "the economy" is in trouble, which in-turn becomes self-fulfilling, and the cycle starts all over again. We play this game refusing to accept that it's rigged, and in the end we always lose and the house always wins because that IS the game.
3
Even if there were not manufacturing downturn numbers coming out of China, routine profit taking cleans value out of the market and shovels it to the people who are ready to buy stocks back at discounted prices. How can anyone think about tying retirements to this casino? 401Ks are the worst wool pulled over anyone's eyes and now they want to do this with social security?
4
To those American manufacturers that scraped their machinery, because it was less expensive to buy from China than produce their products, your now getting what you deserve. Those manufacturers that didn't sell out to China, will become the leaders in their industry.Unfortunately, this will not have a positive effect on the workers who lost their jobs to Chinese imports, as robotics have replaced the union workers.Robotics may be one of the underlying causes for the drop in Chinese manufacturing as there is less a demand for Chinese products.
3
Wasn't it just 5 weeks ago that the renminbi was accepted by the IMF as equal in status to the euro, dollar and pound, given that there was recognition of significant reforms, opening up of the Chinese economy and use of market driven principles. The IMF said that the currency was safe, reliable and freely usable.
Unfortunately for the Chinese, money was moved out of China. Their market is plummeting, and the Communist government is using very un-market driven principles to control trading and money leaving the country.
When markets fall, my first thought is that they are correcting themselves, that is, representing the true value of that which they represent. The US recovery is based on a market running too hot and overvalued--again.
US unemployment is 12 to 15 percent. Thousands of qualified individuals have not found work since 2008. Retirees mortgage their homes to buy medical services. Only the rich can afford to invest. The US recovery is a PR scam.
Markets are emotion-driven and greed-driven, not fact-driven sales places. Valuation of bonds, currencies and other financial instruments ignores the real, underlying value of the instruments.
If all markets were reset to represent reality--and stayed that way--they would provide long-term stability. Nothing wrong with accuracy in numbers.
China's problem is a welcome reminder of the real value of their economy, and a reason for the rest of the world's markets to value accurately and avoid future crises.
Unfortunately for the Chinese, money was moved out of China. Their market is plummeting, and the Communist government is using very un-market driven principles to control trading and money leaving the country.
When markets fall, my first thought is that they are correcting themselves, that is, representing the true value of that which they represent. The US recovery is based on a market running too hot and overvalued--again.
US unemployment is 12 to 15 percent. Thousands of qualified individuals have not found work since 2008. Retirees mortgage their homes to buy medical services. Only the rich can afford to invest. The US recovery is a PR scam.
Markets are emotion-driven and greed-driven, not fact-driven sales places. Valuation of bonds, currencies and other financial instruments ignores the real, underlying value of the instruments.
If all markets were reset to represent reality--and stayed that way--they would provide long-term stability. Nothing wrong with accuracy in numbers.
China's problem is a welcome reminder of the real value of their economy, and a reason for the rest of the world's markets to value accurately and avoid future crises.
63
Chinese, like their counterparts elsewhere, are also
speculators. At first sign of trouble( fear) they want
their money out of the country. They are putting
downward pressure on Yuan by selling it and buying
dollars, Euro, Pounds.
speculators. At first sign of trouble( fear) they want
their money out of the country. They are putting
downward pressure on Yuan by selling it and buying
dollars, Euro, Pounds.
2
"Nothing wrong with accuracy in numbers." Sure, but what is accurate? If the people setting the valuations have a vested interest in the effect of that valuation, then the "accuracy" is no better then wishfull thinking.
When keeping your job depends on optimism, there are very few pessimists to be found.
When keeping your job depends on optimism, there are very few pessimists to be found.
How did people not see this coming.
I thought it would but not so soon.
I thought it would but not so soon.
1
I say watch oil prices, there is biggie is coming. If oil prices cannot increase, a big economical crisis is inevitable.
1
One would think that cheaper energy costs would stimulate consumer demand and low the cost of production, including lower transportation costs. What fraction of our economy is the fossil fuel production industry?
We and the Saudis are keeping oil prices low. It's hurting our frackers, it's hurting the Saudi welfare state, but most of all it's hurting Russian petro exports, and the Russian economy. Bad game of chicken going on.
Ok Everybody knew that Saudi's are leveraging prices or so everybody is assuming that was the major factor. So eventually Saudi's will stop or deleverage and Oil prices are going up , no body pay from the pocket somebody else gas money.
That is what we assume, But China's economy freezing, so If oil prices doesn't go up , that says a very grim outlook. because it means no manufacturing, no growth, many things. Oil price is not a sensitive indicator for condition but it is the most important one.
You can use cheap oil, but the question is for what ? If business go down, who cares the gas prices. enjoy your leisure driving , yeah that will be amazingly cheap.
That is what we assume, But China's economy freezing, so If oil prices doesn't go up , that says a very grim outlook. because it means no manufacturing, no growth, many things. Oil price is not a sensitive indicator for condition but it is the most important one.
You can use cheap oil, but the question is for what ? If business go down, who cares the gas prices. enjoy your leisure driving , yeah that will be amazingly cheap.
Here we go again...hold on to your hats (and wallets)
1
Wasn't this inevitable? All free-market economies rise and fall based on significant and insignificant factors. Chinese leaders can no more stop the inevitable fluctuations in the Chinese investment markets than they can stop Beijing pollution by half-way measures. This too shall pass and China will continue to grow its economy by hard work and innovation, but not by Communist party interventions.
Hard work and innovation are in short supply among the Chinese.
Currency manipulation has been a poor substitute for the imposition of international duties, and the result has been that the USA and other western countries have given up protecting a wage/price relationship that assured us of a working middle class that had savings and a control of its finances.
At this point, the USA's middle class has overspent on Chinese imports that keep breaking and must be bought again and again, sending money on a one-way trip to china. Our savings is gone. Corporate America has muscled our middle class out of manufacturing, leaving us dependent on an enemy state to manufacture most of our consumer products. Don't our politicians see how dangerous this is on many levels? After underinvesting in our country and running up huge debts, we now need to invest in ourselves again. That will involve a sacrifice by the 1% in America who control most of the country's wealth. Taxes must and should be imposed on the wealthy because there is no other source of money available.
At this point, the USA's middle class has overspent on Chinese imports that keep breaking and must be bought again and again, sending money on a one-way trip to china. Our savings is gone. Corporate America has muscled our middle class out of manufacturing, leaving us dependent on an enemy state to manufacture most of our consumer products. Don't our politicians see how dangerous this is on many levels? After underinvesting in our country and running up huge debts, we now need to invest in ourselves again. That will involve a sacrifice by the 1% in America who control most of the country's wealth. Taxes must and should be imposed on the wealthy because there is no other source of money available.
4
This scares me because we have very few correctional tools left at our disposal should China drive the global economy off a cliff.
Even after the mild increase, interest rates are still record low. Debt is maxed, wages are flat, people have no savings...as a casual investor and hard-working middle class American I am deeply troubled by these ongoing events and see no immediate alleviation ahead.
Even after the mild increase, interest rates are still record low. Debt is maxed, wages are flat, people have no savings...as a casual investor and hard-working middle class American I am deeply troubled by these ongoing events and see no immediate alleviation ahead.
2
Someone in he article says, "China is good at defensive measures." Every one of those measures are short term fixes and every one of them only kick the can down the road. China has never had control of it's people or it's economy. The Communist Party is hostage to it's own terror of losing power, because it has no power. The corruption is too deep for that. As someone who predicted the end of the gold rush in 2008 - and sold all property in 2007, I've also been predicting the turmoil in China for years. I'm reminded of Greenspan and all the other experts who said of the 2008 debacle,"No one could have seen this coming"
2
I think these stories and comments overlook another highly important factor about China, one that has implication for the rest of us and how we run our own economies. China's economy is environmentally unsustainable, which means it is very likely to manifest itself as economically unsustainable sooner rather than later.
4
Hard to work, live or raise kids if you can't breathe. Wonder what their birth defect rate is?
1
The combination of greed and denial on the part of our "leaders" and "job creators" is breathtaking in its stupidity and arrogance.
What in the world did they imagine would happen as they continued to transfer enormous amounts of money into the hands of a very few, obliterating the middle class buying power, while continuing to increase production capacity?
Who did they imagine would buy their (increasingly retrograde) stuff? It seems we're now so historically illiterate that no one remembers Henry Ford's reality based model: the survival of capitalism is predicated on a decently compensated middle class.
And that's pretty much gone the way of the Dodo.
What in the world did they imagine would happen as they continued to transfer enormous amounts of money into the hands of a very few, obliterating the middle class buying power, while continuing to increase production capacity?
Who did they imagine would buy their (increasingly retrograde) stuff? It seems we're now so historically illiterate that no one remembers Henry Ford's reality based model: the survival of capitalism is predicated on a decently compensated middle class.
And that's pretty much gone the way of the Dodo.
9
If you had invested in one of the China bear ETFs starting last year, and had the stomach or brains for the fluctuations, you could have made a fortune. I think that will hold true for some time. The Chinese government has an aversion to transparency. As long as that country is not truly democratic, i.e. as long as it remains a one party system whose party members take financial advantage of their privileges and positions, the pretence that it can run an open transparent market is one big lie, and you can confidently bet against it. That's my opinion and I'm sticking with it.
1
We have been reading about ghost cities, mass layoffs, environmental problems and the related social unrest for a few years now. The communist party has been at pains to keep this house of cards upright and hang on to power.
We will soon reach a tipping point where there will be a revolution in China; let's hope it's not a really bloody one.
I am in manufacturing and can tell you that the industrial equipment being produced in China is beyond garbage. The "good enough" attitude of the society and it's lack of attention to quality and detail are frightening. Would you fly in a Chinese made aircraft?
It's time for a reset in China and an opportunity to do things differently and with a solid foundation based on standards and systems. This should be a golden opportunity for the American and European manufacturers, but we as a society choose short term savings over durability, quality, and reliability. Shame on us.
We will soon reach a tipping point where there will be a revolution in China; let's hope it's not a really bloody one.
I am in manufacturing and can tell you that the industrial equipment being produced in China is beyond garbage. The "good enough" attitude of the society and it's lack of attention to quality and detail are frightening. Would you fly in a Chinese made aircraft?
It's time for a reset in China and an opportunity to do things differently and with a solid foundation based on standards and systems. This should be a golden opportunity for the American and European manufacturers, but we as a society choose short term savings over durability, quality, and reliability. Shame on us.
9
I believe the I-phone is made in China and it's very well made and is fairly successful. Would I fly in a Chinese made aircraft? Yes, if it were made to the standards of the I-phone.
I feel that there is something economists and the media are not telling us about China. Or, rather, the media is not doing an in depth study on what is happening to China's economy (maybe for fear of Chinese retaliation?). China is a huge consumer of raw materials, including oil - all commodity prices have fallen sharply. Oil prices can be down because of a glut, but what about other commodities? Countries that were once economically buoyed by Chinese demand are falling back down to Earth, from Brazil to Canada. China continues to run a huge current account surplus, yet its foreign exchange reserves keep falling. And international trade is sharply down, for almost all major countries. Something is happening... It doesn't feel right, and I don't feel that we're being properly informed.
2
Construction equip mfrs (US, Europe, Japan) are hard hit from China's contraction.
What happens tomorrow morning when it's down another 7% right off the bat and they shut it down again?
Isn't "Communist Chinese Party" and "free market economy" a euphemism?
Any artificial government propping up will be met with the same response as when the industrialists, and consortium of wealthy tried to buy the market in a show of confidence after the crash in 1929, only to be roiled by the waves of selling.
The Chinese should have learned from old US reruns of the "Honeymooners":
"Be kind to the people you meet on the way up,
because you're going to meet them on the way down."
Ralph Kramden, circa 1952
Isn't "Communist Chinese Party" and "free market economy" a euphemism?
Any artificial government propping up will be met with the same response as when the industrialists, and consortium of wealthy tried to buy the market in a show of confidence after the crash in 1929, only to be roiled by the waves of selling.
The Chinese should have learned from old US reruns of the "Honeymooners":
"Be kind to the people you meet on the way up,
because you're going to meet them on the way down."
Ralph Kramden, circa 1952
2
The liberal political TV pundits(Chuck Todd and others) told us just last Sunday that the economy was in "great" shape.Will Obama tell us all these 2016 declines were Bush's fault?
2
This is what happens when one puts their "faith" shadow economies. We and Western Europe have rules, regulations, and oversight. Outside that ???
What is most bothersome is that our markets should be riled by their turmoil. If this is the end-game of "globalization" then perhaps we should take our ball and go home. Not isolation, but not so dependent.
What is most bothersome is that our markets should be riled by their turmoil. If this is the end-game of "globalization" then perhaps we should take our ball and go home. Not isolation, but not so dependent.
1
China is finding out the hard way that it can't control its domestic markets while participating in global free markets. Fill one hole and another opens up.
When the Chinese economy was small, their government could manipulate conditions and get away with it. Now it has grown to the point that it is heavily intertwined with global economic forces. It's economy has to respond to the pulls and pushes of the rest of the world. This is especially true of the capital markets.
Whether it wants to or not, China will have to deregulate its financial markets and let them track with the rest of the world's markets. Let's see them promote their policies against the likes of Goldman Sachs. Who do you thing will come out on top?
When the Chinese economy was small, their government could manipulate conditions and get away with it. Now it has grown to the point that it is heavily intertwined with global economic forces. It's economy has to respond to the pulls and pushes of the rest of the world. This is especially true of the capital markets.
Whether it wants to or not, China will have to deregulate its financial markets and let them track with the rest of the world's markets. Let's see them promote their policies against the likes of Goldman Sachs. Who do you thing will come out on top?
4
I may not understand the intricacies of the marketplace but what I do know is that China makes and the US takes. We still continue to borrow money from China and buy goods from them. As long as this dynamic remains same, I don't really see what the problem is. I understand that when a wheel slows, all parts of the wheel slow down but here the wheel is still turning in the same direction. In the overall scheme of things, if the purchasing power of the Chinese is reduced, it shouldn't be a problem for other countries as the Chinese mostly make what they consume.
"The trick is preventing a gradual decline from turning into a rout."
Well gee -- since the Chinese "powers that be" can literally imply stop all trades at the flick of a switch, they can actually do that. But of course that only fuels the sell off when the switch is turned on again the nest day. China has a problem on its hands and fiddling with its currency is not helping.
2
"When stocks sold off last summer, China organized large-scale purchases by government-linked brokerages and investment funds."
The market stops are not the main issue. Last time they had market stops they beat on their companies to prop the markets. How long can they twist companies' arms like that?
The market stops are not the main issue. Last time they had market stops they beat on their companies to prop the markets. How long can they twist companies' arms like that?
We were told that the Chinese were hurting the American economy because they were not allowing their currency to fall.
Now we are told that they are hurting our economy because they ARE allowing it to fall, in a controlled way.
I'm sure we'd be told that an UNCONTROLLED fall would be awful, if it happened.
Anything that happens to the Chinese currency seems to get blamed. That makes it hard to believe this iteration.
As for their stock market, remember that it is relatively small, it affects a limited % of their people, and the important companies are co-owned by the state. Their stock market can't do the damage ours does here. And they don't have a banking crisis to go with this.
They may have a problem, but I don't believe the explanations common in the US, including this. It just doesn't add up.
Now we are told that they are hurting our economy because they ARE allowing it to fall, in a controlled way.
I'm sure we'd be told that an UNCONTROLLED fall would be awful, if it happened.
Anything that happens to the Chinese currency seems to get blamed. That makes it hard to believe this iteration.
As for their stock market, remember that it is relatively small, it affects a limited % of their people, and the important companies are co-owned by the state. Their stock market can't do the damage ours does here. And they don't have a banking crisis to go with this.
They may have a problem, but I don't believe the explanations common in the US, including this. It just doesn't add up.
14
Just an excuse for a profit taking reset.
Wall street lives always its hype, the hype was Chinese market will show good growth always ( 7-10% per year).
Is this sound familiar, sure it is, housing market will always improve and it is rock solid? in 2008 we wake up to apocalypse.
Chinese economy grew 2000-2010 almost average 7% every year, this is a 1,2 billion country. What was the hype, China will create its middle class and that middle class, it did , in 10 year 100 of millions become middle class, but how solid was that, how it was created, it is a very short period of time to create 100 of millions people to launch from low income to middle class. 10 year , 1 single decade.
Now is the reckoning day, Chinese government engage one of the incredible transformation , our human civilization rarely seen in its history.
Hopefully, it will not end up Mesopotamian civilization like, hopefully these are only corrections.
In all data , only one things is extremely disturbing. OIL PRICES. We were thinking that this is a mere Saudi Arabia's politic maneuver as well as , market share manipulation, but in fact the real reason at least main reason seems to be slowing growth in China.
So be ready to sharp fall again, hopefully it shouldn't evolve full blown crisis, like in 1998. but again Oil prices is saying a very grim future.
Is this sound familiar, sure it is, housing market will always improve and it is rock solid? in 2008 we wake up to apocalypse.
Chinese economy grew 2000-2010 almost average 7% every year, this is a 1,2 billion country. What was the hype, China will create its middle class and that middle class, it did , in 10 year 100 of millions become middle class, but how solid was that, how it was created, it is a very short period of time to create 100 of millions people to launch from low income to middle class. 10 year , 1 single decade.
Now is the reckoning day, Chinese government engage one of the incredible transformation , our human civilization rarely seen in its history.
Hopefully, it will not end up Mesopotamian civilization like, hopefully these are only corrections.
In all data , only one things is extremely disturbing. OIL PRICES. We were thinking that this is a mere Saudi Arabia's politic maneuver as well as , market share manipulation, but in fact the real reason at least main reason seems to be slowing growth in China.
So be ready to sharp fall again, hopefully it shouldn't evolve full blown crisis, like in 1998. but again Oil prices is saying a very grim future.
2
things will always get better
consume, and be happy
consume, and be happy
Things always get better or at least return normal level with one glitch.
We overcome 2008 economic crisis, ( whomever says otherwise) But we left behind 6 million home foreclosed, almost 7 million job lost.
Of course it is not a meteorite hitting earth and causing Dinosaur extinction.
If you are comfy with your life , nothing bothers you, things will get better, meanwhile millions buried 6 feet under.
No body would like to remember.
We overcome 2008 economic crisis, ( whomever says otherwise) But we left behind 6 million home foreclosed, almost 7 million job lost.
Of course it is not a meteorite hitting earth and causing Dinosaur extinction.
If you are comfy with your life , nothing bothers you, things will get better, meanwhile millions buried 6 feet under.
No body would like to remember.
Go to China to get the real picture. (Hint: the Chinese are people, nothing more, nothing less.) I am no Sino expert, but I have graduate degrees in econ and accounting, and I spent over a month in China last summer meeting informally with Chinese persons in academia, the state bureaucracy and business. I concluded during this visit that the only thing holding China back now is the CCP. I think the laobaixing (the Chinese people) agree, but for obvious reasons, they remain mute, at least when they are in China. (Meet them in small informal settings - with an introduction- in North America to see another view expressed.) I agree with author Evan Osnos, "Living in Beijing...I found confidence...in China's future seems to vary inversely with the time one spends on the ground... The longer I lived in China, the more I sensed that the Chinese people have outpaced the political system that nurtured their rise." One notable point: the Chinese appetite for real information is something that - to this American - is admirable and undeniable. It is as if they are starving.
93
Unfortunately, the opportunity to turn China toward a more democratic system was lost in 1989. The CCP shows no signs of liberalizing, which may eventually produce a political explosion, with consequences no one can foresee.
1
They are starving for information, but they have been trained never to tell the truth. I wouldn't trust anything from China as far as I can spit.
1
Jim: The Chinese people (laobaixing) know what is right and wrong. But they are prone to a subconscious acquiescence we don't see in America, until they can't bear it anymore. This is why China often swings from one extreme to another. I've been traveling to China since 1982 and talking to our "laobaixing" in person and in private when they are most frank and clear-headed. But in a crowd, people go mum.
Please investigate the possibility that dark money of big investors is being deployed to influence the elections of 2016.
2
2016? You are a decade off.
1
It is. Now what?
As long as China is given free hand to play with her currency, the economic situation of the Western countries will continue to be on shaking grounds. The sad part is that knowing the economic situation of today,s China, some government officials, like the new Canadian government, still think that they must visit China in order to improve their home economic well-being . No much economic thinking regarding China, isn't it?
1
China's ghost cities are a perfect microcosm and reflection of its economy; merely an illusion.
3
I see us in a world wide recession, leading to a probable depression by the end of the first quarter of the year. The yuan will continue to fall against the dollar as the full impact in food purchase decline because of higher prices by the U.S. and the EU markets further impact the Chinese market.
The glut in oil and in the mercantile markets in general point to this happening. They will offset the increase in food prices, but not enough to avoid the yuan against the dollar will fall to a 10 to 1 radio by months end.
The U.S. or the EU, or both, may even foment a regional war to stop the fall. Grim news. Fatal fall? we'll see. The grim financial future of the non BRIC countries will be a shock to the world.
The glut in oil and in the mercantile markets in general point to this happening. They will offset the increase in food prices, but not enough to avoid the yuan against the dollar will fall to a 10 to 1 radio by months end.
The U.S. or the EU, or both, may even foment a regional war to stop the fall. Grim news. Fatal fall? we'll see. The grim financial future of the non BRIC countries will be a shock to the world.
Corn really doesn't grow to the sky. After a few decades of outstanding growth, China meets Capitalism’s Minsky Moment phenomenon.
We’re all geniuses in a Bull Market, as the financial Masters of the Universe convince the chumps that all risk can be diversified away, so leverage up, and we’ll all get rich.
Then something unexpected happens. Something nobody could possibly have foreseen (yeah right) and the House that Debt build collapses.
The article says Europe (somebody else, not us) is more at risk. “Mr. Halpenny said the Chinese fallout was being felt more heavily in Europe than in the United States because the European economy is more dependent on trade with China.”
But I wonder when China might need some liquidity and start selling the more than $2 trillion in US Treasury debt they’re holding?
What happens to US interest rates when that happens? What happens to others holding US debt, thinking the US Treasury Debt is the “Gold Standard” in safe investments?
We’re all geniuses in a Bull Market, as the financial Masters of the Universe convince the chumps that all risk can be diversified away, so leverage up, and we’ll all get rich.
Then something unexpected happens. Something nobody could possibly have foreseen (yeah right) and the House that Debt build collapses.
The article says Europe (somebody else, not us) is more at risk. “Mr. Halpenny said the Chinese fallout was being felt more heavily in Europe than in the United States because the European economy is more dependent on trade with China.”
But I wonder when China might need some liquidity and start selling the more than $2 trillion in US Treasury debt they’re holding?
What happens to US interest rates when that happens? What happens to others holding US debt, thinking the US Treasury Debt is the “Gold Standard” in safe investments?
1
When the whole rest of the world's debt looks still worse, US treasury debt still looks good; nice and 'safe'. China has been selling off US treasury debt for 6 months now, and other countries are buying it.
1
When it comes to the central management of the Chinese economy, the emperor is indeed not wearing any clothes.
27
The Western world, China, Japan, Brazil have lived beyond their means by amassing extraordinary debt. The citizenry has refused to elect anyone who would cut back this overspending profligacy.
Leftists like Krugman have consistently said debt and more debt is good and justified by their theories.
Obama has nullified the Pax Americana, and now the world is falling into greater disorder and even chaos. More to follow.
All this nonsense and mismanagement is finally hitting reality, the markets, which are falling. We will soon have a bear market, recession, further chaos, and quite likely another financial crisis.
Leftists like Krugman have consistently said debt and more debt is good and justified by their theories.
Obama has nullified the Pax Americana, and now the world is falling into greater disorder and even chaos. More to follow.
All this nonsense and mismanagement is finally hitting reality, the markets, which are falling. We will soon have a bear market, recession, further chaos, and quite likely another financial crisis.
3
No body can live beyond their means, because money never come from nowhere.
World wide , investors put their money in Chinese market, for making kill.
They did as usual for a while , but again this irrational belief come to crumbling end. Let's do not forget, China catapulted world #2 economy.
That didn't happen because Chinese wanted to live beyond their means.
The word usually used for downturn after a shining economical boom , which is living beyond means a very poor choice of red baron Capitalists
World wide , investors put their money in Chinese market, for making kill.
They did as usual for a while , but again this irrational belief come to crumbling end. Let's do not forget, China catapulted world #2 economy.
That didn't happen because Chinese wanted to live beyond their means.
The word usually used for downturn after a shining economical boom , which is living beyond means a very poor choice of red baron Capitalists
It seems to me that social trends in the United States may offer some understanding of China's economic stall. When the U.S. economy was in difficulty, people satisfied their material joys with small things, things that did not require credit to buy, but appeased the need for material joys. Now that the economy has improved, so has the pool of good credit risks. As a result, big ticket items like cars and trucks are boosting the U.S. economy - the auto industry enjoyed a banner year - but those purchases come at the expense of smaller items that are not only plentiful but are somewhat passé. Everybody has those.
The other issue is the preference of experiences over the collection of material things. I see that as another reason why so much of manufactured luxuries is flagging.
The other issue is the preference of experiences over the collection of material things. I see that as another reason why so much of manufactured luxuries is flagging.
3
We have certain parameter for halting trading. China has never fully accepted a free economic system and moves a whim it seems. Until there is total openness with their financial dealings, we'll have the same ups and downs. The manipulation of the Chinese economy is finally coming home to roost and we're all paying for it.
2
In China there´s another problem that might explode and could be worst than this and it´s the real estate bubble.
4
Why do people talk and react about a 1-5% Drop/change like it's a 50% Drop/change? In so many ways and in so many situations. Put on your Big-Boy Pants and Quit crying about: Obama, The Chinese, North Korea, Yellen and the Fed, Europe. that includes Russia and Finally OPEC. I don't see any CEO's worried about their jobs or Pay and I don't see any of the brokerage firms knocking on our door trying to tell us not to invest! Hey various Stock analysis/rating sources ( S&P, Reuters, the Street Trefis..etc.) Still give the highest rating to various Stock, ignoring the so-called "economic environment. So.... Why the big disconnect! The Day-to Day (Times, WSJ,M*, Bloomberg) News reports the bad Stuff and everywhere else....you get the picture!
1
Oil drops to $32. Why aren't gasoline prices under $1 per gallon? Because big oil owns the politicians who can do something about this extortion. The jails should be full of the crooks and swindlers that own the United States. It'll never happen and the stealing will only get worse if Republicans control congress and the White House.
12
The "devolution" has begun, as emperor Xi tries to silence the markets and the will of the people... RUN!
The simple truth to all of this is simply that stock markets and other investments wax and wain over and over again. It is a continuous cycle that has gone on for hundreds of years. Markets go up and they go down-BUT in time they have ALWAYS gone back up-from the Great Depression to the Great Recession.
The only decision one has to make is to decide whether to stay on or off this roller coaster or in fact get on the coaster. Keep in mind that all of those who got off the coaster after 2008 lost a lot and those that stayed or got on made a handsome profit. There is money to be made in all markets-so don't be afraid to stay on or get on.
The only decision one has to make is to decide whether to stay on or off this roller coaster or in fact get on the coaster. Keep in mind that all of those who got off the coaster after 2008 lost a lot and those that stayed or got on made a handsome profit. There is money to be made in all markets-so don't be afraid to stay on or get on.
3
If we are lucky the house of cards that is the world's economy- built upon funny money since the Bush Depression of 2007-9, will finally correct. Ben Bernanke & the Banksters conspired to bail out themselves to the tune of $16 Trillion conjured out of thin air.
To quote Senator Bernie Sanders Wall Street Speech widely ignored the media earlier this week:
"As a result of an amendment that I offered to audit the emergency lending activities of the Federal Reserve during the financial crisis, we learned that the Fed provided more than $16 trillion in short-term, low-interest loans to every major financial institution in the country including Citigroup, JP Morgan Chase, Bank of America, Wells Fargo, not to mention large corporations, foreign banks, and foreign central banks throughout the world."
China's economy is deeply intertwined with ours- especially large US companies like General Electric, General Motors, Wal-Mart and every large investment firm. China's economic system is corrupt - even more so than our own and is also built upon graft, theft, lies and willful ignorance.
Everywhere one looks there is corruption or complicity in financial markets. There is no connection to reality in real estate prices in much of the US, higher education has inflated until a generation of young Americans are drowning in massive student debt, personal indebtedness is massive & Main Street is a ghost town in much of the heartland.
Stop worrying about ISIL. This is a bigger threat.
To quote Senator Bernie Sanders Wall Street Speech widely ignored the media earlier this week:
"As a result of an amendment that I offered to audit the emergency lending activities of the Federal Reserve during the financial crisis, we learned that the Fed provided more than $16 trillion in short-term, low-interest loans to every major financial institution in the country including Citigroup, JP Morgan Chase, Bank of America, Wells Fargo, not to mention large corporations, foreign banks, and foreign central banks throughout the world."
China's economy is deeply intertwined with ours- especially large US companies like General Electric, General Motors, Wal-Mart and every large investment firm. China's economic system is corrupt - even more so than our own and is also built upon graft, theft, lies and willful ignorance.
Everywhere one looks there is corruption or complicity in financial markets. There is no connection to reality in real estate prices in much of the US, higher education has inflated until a generation of young Americans are drowning in massive student debt, personal indebtedness is massive & Main Street is a ghost town in much of the heartland.
Stop worrying about ISIL. This is a bigger threat.
14
All you have to know is this: When markets crash, the oligarchy benefits. After every financial markets crash during the last several decades, in the aftermath you are left with a situation where the general population suffers big losses (over 20% of wealth and assets in the aftermath of the 2008 crash, for example), while the rich (the oligarchy) becomes much more wealthier and powerful.
The "funny money" created by the Fed is used to enslave people, communities, municipalities, countries, through debt, and strip them of real assets in what is essentially a neo-feudalism situation.
In this latest, ongoing version of fraud by the Wall Street criminal racketeering cartel, your pension funds, or what is known euphemistically as "dumb money" within the financial industry, have been compromised by what are essentially fraudulent funds.
It amazes me that after the massive fraud that led to the 2008 crash, there are some who still think we're dealing with a legitimate financial industry. It is a scam through and through.
The "funny money" created by the Fed is used to enslave people, communities, municipalities, countries, through debt, and strip them of real assets in what is essentially a neo-feudalism situation.
In this latest, ongoing version of fraud by the Wall Street criminal racketeering cartel, your pension funds, or what is known euphemistically as "dumb money" within the financial industry, have been compromised by what are essentially fraudulent funds.
It amazes me that after the massive fraud that led to the 2008 crash, there are some who still think we're dealing with a legitimate financial industry. It is a scam through and through.
14
And the only two 'leaders' objecting to the status quo are Donald Trump because fear and hate push the right's buttons, and Bernie Sanders, because he's a decent man.
1
The oligarchs use their inside info to buy low and sell high leaving the middle class worker bees, who have been trained to dollar cost average, holding the bag.
We did not worry about the Chinese stock market until after Bill Clinton got involved, helping China achieve most favored trading nation status. Clinton also help repeal Glass-Steagall and gave us NAFTA. One can only imagine what Hillary Clinton would do after she enters office, if she wins the election.
And George W. gave us thousand of dead and injured American service men and women and trillions in war debt. So what's your point?
14
I think you have a good point. Bill Clinton rode the wave of the dot com bubble until it completely collapsed under is shaky speculative underpinnings. Really, what did he do for the middle class? Bankers and big corporations got deregulation and Nafta I lost a bundle in the market, AND George W. comes into the White House a few months later giving tax cuts to the rich.
Me, and the rest of the old middle class, are way, way down on the feeding trough. We can still make money but everything else is more expensive so there is nothing left over, we are all, in a sense, just making ends meet.
Me, and the rest of the old middle class, are way, way down on the feeding trough. We can still make money but everything else is more expensive so there is nothing left over, we are all, in a sense, just making ends meet.
2
New Yorkers: you know that one bedroom in manhattan you've been eyeing for $1.4 million? You may want to hold off a year or two. Watch out below.
6
There's nothing like panic to create a great buying opportunity and supreme confidence to create a great selling opportunity.
4
It appears that the Chinese stock market is reflecting poor economic decisions. Can China continue to build it's military and work with another countries or will costs not be covered? Is this a short time problem or will,it take time? It appears that China has some basic economic problems to resolve.
2
I wouldn't worry about it. Not like high yield spreads have blown out and disconnected from the SPX or that China growth has collapsed or that Europe's economy stinks (and their in the middle of a refugee crisis) or that the Middle East is doing totally cool or that Latin America won't pick up the slack because commodities are ripping or that we don't have the most fractured political environment we've ever had in the US! But hey, N. Korea is acting normal at least.
Don't worry...nothing to see here. Lets get back to freaking out about "Safe places" and "bad rhetoric" that hurts peoples feelings...that should be the focus of our venerable leaders!
Don't worry...nothing to see here. Lets get back to freaking out about "Safe places" and "bad rhetoric" that hurts peoples feelings...that should be the focus of our venerable leaders!
3
This is what happens when you have a bunch of communists trying to manage a capitalist (or rather, pseudo-capitalist) economy. Repeated market closings in response to precipitous declines in stock prices simply puts off the inevitable flushing out of speculative excess. The Chinese economic picture is quite murky, although no one likes to acknowledge this, since investment bets are made on the basis of government-cooked statistics.
The question today, unlike the late 1990s, is whether the Chinese economy is now big enough and important enough to drag down the world. The response of world markets to the implosion of Chinese stocks is perhaps an indication that as China goes, so goes the world. We'll find out as this year unfolds.
It's clear that the world economy is distorted and dysfunctional. In a zero-interest rate environment we have slow growth and falling prices. This indicates that only central bank legerdemain has kept us from re-experiencing the 1930s. If the current slow growth environment turns into a worldwide recession, what will governments and central banks do? Public debt is already at an all-time high; interest rates are between zero and one percent. What tools remain to avert a prolonged depression, should the world economy go off the cliff?
The question today, unlike the late 1990s, is whether the Chinese economy is now big enough and important enough to drag down the world. The response of world markets to the implosion of Chinese stocks is perhaps an indication that as China goes, so goes the world. We'll find out as this year unfolds.
It's clear that the world economy is distorted and dysfunctional. In a zero-interest rate environment we have slow growth and falling prices. This indicates that only central bank legerdemain has kept us from re-experiencing the 1930s. If the current slow growth environment turns into a worldwide recession, what will governments and central banks do? Public debt is already at an all-time high; interest rates are between zero and one percent. What tools remain to avert a prolonged depression, should the world economy go off the cliff?
54
"It's clear that the world economy is distorted and dysfunctional."
No sorry but you dont get it -- The global economy is completely 100% function for various forms of oligarchies and multinational corporations.
Carry water, chop wood.
Here are new tool: debt forgiveness of student loans, credit card debt, and an increase in wages.
One of the main problems with a lot of the articles about the Chinese economic system is the mistaken impression that the Chinese are different from Western capitalists. That they are still in their infancy; haven't quite figured out how it all works or are still stuck in a communist mindset about wealth and power. The truth is that the Chinese are the same as Wall street bankers. There is greed, lust for power, manipulation for would-be oligarchs to join the super rich.
Sad to say in this case, but people are really basically the same, and a system of global regulation is needed to bring all countries under one umbrella of rules. The alternative will be an endless shell game where companies exploit one country against another for profit. Our economies are now completely entwined and dependent on one another. Without global regulations in place, it'll be what it seems to be now- power brokers making phone calls to other power brokers running their own game at the investor's expense.
Sad to say in this case, but people are really basically the same, and a system of global regulation is needed to bring all countries under one umbrella of rules. The alternative will be an endless shell game where companies exploit one country against another for profit. Our economies are now completely entwined and dependent on one another. Without global regulations in place, it'll be what it seems to be now- power brokers making phone calls to other power brokers running their own game at the investor's expense.
78
"Imagine all the people...living life as one...you can say I'm a dreamer..."
John Lennon
John Lennon
At its core, the equity markets exist (or should exist) as a method of capital transference-- from interested investor to publicly traded company. It's a form of liquidity, albeit volatile and nuanced with voting rights, etc.
The thing is, China's market doesn't line up with this image. With its universally bizarre volumes and valuations, selective government bans on institutional selling, and now these volatility breakers, China's market seems to exist solely for bragging rights, like a glossy product ad with a tiny footnote that says "For display purposes only, does not reflect actual results"
The thing is, China's market doesn't line up with this image. With its universally bizarre volumes and valuations, selective government bans on institutional selling, and now these volatility breakers, China's market seems to exist solely for bragging rights, like a glossy product ad with a tiny footnote that says "For display purposes only, does not reflect actual results"
74
Communism and capitalism don't mix . . .
From what I can tell, the Chinese government has promoted investing in stocks by average Chinese people without the slightest understanding of how markets work. Unsurprisingly, as in the U.S., individuals with limited money and understanding of investing were followers, investing money only after the Chinese exchange had experienced exorbitant gains, making them very susceptible when the inevitable profit taking occurred. That accounts for a lot of the intervention -- terror at being held accountable for encouraging people to take what turned out to be very imprudent risks.
The beta that never comes out of beta.
Why is everything happening so fast and all of a sudden? Didn't anyone on Wall Street notice that the Chinese economy and growth have been slowing for over a year or more? What? Everyone just woke up on January 2, 2016 and decided it was time to collapse World markets? Who are these people who trade stocks? Why do the act so suddenly and panic every time they see something that we, the non-traders and pundits have been talking about and being warned about for the past year? These traders should be behind bars. Their precipitous actions destroy over financial markets time and again and we allow them to continue to do it without personal punishment. I am retired and primarily live off of a defined benefit pension, social security and IRA investments. My IRA is professionally invested but that doesn't really protect me from these devastating downward spirals. So now I get to lose 50% of my IRA and other than IRA investments over a 6 month or less period, yet again. Thank you Wall Street traders. If you guys were doing your jobs and paying attention this would not happen so suddenly and would give regular honest people time to react.
244
I feel the same way. You invest 100% of your IRAs in Vanguard Total Stock Market Index and Total Bond Market Index which should keep the money relatively "safe" in US companies. Yet when China's market tanks, all my money spirals down the drain too.
1
I believe the real concern is what Wall Street is doing with it's own money, my guess would be dumping their speculative trades into institutional investors -- transferring their losses to the small investors.
Most people don't have to take a 30% hit in their IRA. If you have the option, you might move some of your IRA to cash for the next few months to get the lay of the land. I have. It is not too late, now...
Putting things into perspective, US exports to China account for only 7% of total exports, and 1% or so of GDP. So China's economic health is effectively decoupled from ours. However, events like Chinese stock crash are just fodder for sophisticated investors in US to make more money. They understand US equities prices are strangley inflated, & are looking for excuses to adopt short positions.
105
Spot on Mike. My thoughts exactly.
Yes and no.... many of the countries we rely upon for trade - including the Eurozone - have a deeper connection. So China turmoil will ripple across many markets and affect us.
3
Amen!
Chinese history clearly shows that China has *always* been controlled from the center. Sadly, for the Chinese, this had led over centuries to missing opportunities to optimize the fantastic human and intellectual resources that China has to offer.
Instead,we have seen the various Emperors, and most recently the Chinese Communists, try to finagle their way to success - mostly on the backs of Chinese people who have always been the ones who get burned as whomever is in "central control" screws things up.
It's happening again. That said, this time China's screw up is tied to the rest of the world. Capital no longer resides within national borders; capital is "on the wire"; it follows the cheapest labor and commodity prices (including the labor to extract those commodities). America has contributed mightily to China's rise, and weakened itself in the offing (except for America's outsourcing CEOs and arms manufacturers, who have enriched themselves; and china's military-industrial complex, too).
Keep watching for how these abusers of humanity try to salvage their assets and make anyone but themselves pay. Our networked world is making this Plutocratic run world more and more transparent. Americans and Chinese are beginning to understand how they've been sold out. We live in interesting times.
Instead,we have seen the various Emperors, and most recently the Chinese Communists, try to finagle their way to success - mostly on the backs of Chinese people who have always been the ones who get burned as whomever is in "central control" screws things up.
It's happening again. That said, this time China's screw up is tied to the rest of the world. Capital no longer resides within national borders; capital is "on the wire"; it follows the cheapest labor and commodity prices (including the labor to extract those commodities). America has contributed mightily to China's rise, and weakened itself in the offing (except for America's outsourcing CEOs and arms manufacturers, who have enriched themselves; and china's military-industrial complex, too).
Keep watching for how these abusers of humanity try to salvage their assets and make anyone but themselves pay. Our networked world is making this Plutocratic run world more and more transparent. Americans and Chinese are beginning to understand how they've been sold out. We live in interesting times.
2
I have to look at the way this usually effects me and wish the Chinese well.
I wish these dips in gas/oil prices would be reflected in my rent and food prices. I get the same story for years,,."what the market will bare" from every rental agency and property place I live. My grocer says the same thing. Someone's getting rich as the wealth is being gobbled up by the wealthy and the squeeze on hard working middle class has never been tighter.
I wish these dips in gas/oil prices would be reflected in my rent and food prices. I get the same story for years,,."what the market will bare" from every rental agency and property place I live. My grocer says the same thing. Someone's getting rich as the wealth is being gobbled up by the wealthy and the squeeze on hard working middle class has never been tighter.
2
Of course the Chinese stock market is collapsing; it's been propped by the Chinese government as a means to keep the country's economic bubble from imploding - and from the natives getting restless. While this is, and has been a problem, primarily for the companies which sell commodities to China it eventually will reach a consensus that it matters little to the US.
Our economy is hardly dependent on selling goods to China as our trade imbalance with China has accumulated into the trillions over the past decade. We don't need China; folks - we really don't. China needs us, desperately, big time. But why is it that only Donald Trump makes this an issue? Even Bernie, the other populist candidate, continues to don quixote like swing wildly at the "banks" - as if anyone cares. Except for a few Socialists - nobody cares! The TBTF banks' problem occurred so long ago that the voters Bernie seeks weren't even eligible to vote when that banking crisis gripped the nation and have no idea what Bernie is mumbling about.
What people - voters - care about most of all is our economy - not China's. Partly thanks to China wiping out this US manufacturing industry our economic growth is close to zero and paltry. Only the much vilified Trump has any semblance of a plan to further free the US from the dragon. Let's hear it for the collapse of China's economy - a very good thing for the US.
Our economy is hardly dependent on selling goods to China as our trade imbalance with China has accumulated into the trillions over the past decade. We don't need China; folks - we really don't. China needs us, desperately, big time. But why is it that only Donald Trump makes this an issue? Even Bernie, the other populist candidate, continues to don quixote like swing wildly at the "banks" - as if anyone cares. Except for a few Socialists - nobody cares! The TBTF banks' problem occurred so long ago that the voters Bernie seeks weren't even eligible to vote when that banking crisis gripped the nation and have no idea what Bernie is mumbling about.
What people - voters - care about most of all is our economy - not China's. Partly thanks to China wiping out this US manufacturing industry our economic growth is close to zero and paltry. Only the much vilified Trump has any semblance of a plan to further free the US from the dragon. Let's hear it for the collapse of China's economy - a very good thing for the US.
4
The global crash is here, and it's going to be worse, much worse, than the Great Depression of 1929.
China is not going to magically quadruple the amount of poisonous, toxic air pollution it's already choking under for the sake of propping up the plutocrats' last bubbles. On the contrary, the nation needs to look inward, restore its vision of itself as a nation of the people, for the people, and commit to better living conditions -- which does not mean the ridiculous excess consumerism model in the West -- all around. A purge of corruption in the country has already begun; would that such a purge were going on in the West, as well, in the IMF, the WTO, all the kleptocrat governments strangling us and destroying our global future. Exactly what material, economic conditions are actually valuable for life on this planet needs thorough analysis and reconsideration. A full-scale, conceptual revolution, which is already underway.
That transformation in China will, in turn, help end the horror that has been present for the vast majority of the planet since the Crash of 2008; the seemingly helpless, powerless witnessing of an endless spiral of rapid capital accumulation in the hands of the .0001%, while the rest of us starve, sicken and die.
We are finally at the moment of implosion of that whole, corrupt structure, and China will help us into the future by putting an end to the gambling games taking place in its economy.
Bernie Sanders will do the same in the US.
China is not going to magically quadruple the amount of poisonous, toxic air pollution it's already choking under for the sake of propping up the plutocrats' last bubbles. On the contrary, the nation needs to look inward, restore its vision of itself as a nation of the people, for the people, and commit to better living conditions -- which does not mean the ridiculous excess consumerism model in the West -- all around. A purge of corruption in the country has already begun; would that such a purge were going on in the West, as well, in the IMF, the WTO, all the kleptocrat governments strangling us and destroying our global future. Exactly what material, economic conditions are actually valuable for life on this planet needs thorough analysis and reconsideration. A full-scale, conceptual revolution, which is already underway.
That transformation in China will, in turn, help end the horror that has been present for the vast majority of the planet since the Crash of 2008; the seemingly helpless, powerless witnessing of an endless spiral of rapid capital accumulation in the hands of the .0001%, while the rest of us starve, sicken and die.
We are finally at the moment of implosion of that whole, corrupt structure, and China will help us into the future by putting an end to the gambling games taking place in its economy.
Bernie Sanders will do the same in the US.
The claim in the article that 45% of Germany's exports go to China is wildly inaccurate.
Out of Germany's total exports of 1,123 trillion euros in 2014, exports to China were 74 billion euros, or less than 7%.
Germany's largest export market was France (100 billion euros), then the USA (95 billion), then the UK (79 billion), China followed with 74 billion, but the Netherlands was not far behind accounting for 72.7 billion euros of Germany's exports.
So even if German exports to China slumped, the impact on the German economy would not be dramatic.
Out of Germany's total exports of 1,123 trillion euros in 2014, exports to China were 74 billion euros, or less than 7%.
Germany's largest export market was France (100 billion euros), then the USA (95 billion), then the UK (79 billion), China followed with 74 billion, but the Netherlands was not far behind accounting for 72.7 billion euros of Germany's exports.
So even if German exports to China slumped, the impact on the German economy would not be dramatic.
3
Perhaps they should let it run its course rather than halting trading every couple days. Or, perhaps they should just close it altogether. It's a mess.
The market movement described here may have no economic significance at all. From 2008 to 2014, stock values grew steadily at unprecedented rates. The growth in stock value far outstripped the rate of economic growth. When this happens a market correction is in order. Nothing about what is happening is inconsistent with dozens of past corrections. Those writing of China's fundamental problems, the Fed and the evils of Wall Street have been spouting that stuff for years and are using this correction as proof that they were right all along. The real lesson here is that markets go up an markets go down because that's what markets do.
Welcome to Voodoo Economics presented to you by The Acolytes of Milton Friedman and the Chicago School of Economics, are you having fun yet? Don't worry we are building really cool luxury condos for you to escape too when the pitchforks come out in earnest and do we ever need the buyers, you see when the jobs left for China and our kings of finance started doing that shorting and bundling stuff leaving the little guy holding the bag and not much else, our former middle class couldn't afford a pup tent even with no money down and forty year interest free loans so the Realtors are really giddy with the idea of a few million of you free market types fleeing Chinese justice arriving, you will find many kindred spirits here, welcome to the winner take all club.
2
I'm readying a lot of histrionic, doom and gloom, finger pointing comments. Over emotion seems to be a common phenomenon around here. Let's breath normally and relax for "this too shall pass".
3
china is a market event, the economy continues to grow. as munger said "one has to be prepared for a 50% drop top tick to bottom tick & face it with equanimity.
investing in the stock market must be with a 10 year horizon. + bone shaking gyrations
investing in the stock market must be with a 10 year horizon. + bone shaking gyrations
1
We have a problem:
Their massive surplu
Our massive deficit
Both out of whack.
Plus extra toxic is their government which hoards wealth for the well connected friends of the party (as in Russia) which causes massive disparity between gangster rich and poor, but also for us all, means that they will not redistribute it to the middle class.
The result will be a middle class which is bigger than ours, to be sure, but one that is tiny compared to the poor and poor compared to the kleptocratic policestate.
I predict that they will go into a period of near zero growth. Just like us.
Their true growth has only been around 3 percent for years and their corruption means massive capital misallocation.
More worrying is if they do as Germany did after they plateaued after rapid industialization and that is start a world war to keep the masses minds off bread and onto circuses.
Their massive surplu
Our massive deficit
Both out of whack.
Plus extra toxic is their government which hoards wealth for the well connected friends of the party (as in Russia) which causes massive disparity between gangster rich and poor, but also for us all, means that they will not redistribute it to the middle class.
The result will be a middle class which is bigger than ours, to be sure, but one that is tiny compared to the poor and poor compared to the kleptocratic policestate.
I predict that they will go into a period of near zero growth. Just like us.
Their true growth has only been around 3 percent for years and their corruption means massive capital misallocation.
More worrying is if they do as Germany did after they plateaued after rapid industialization and that is start a world war to keep the masses minds off bread and onto circuses.
The US needs $1=2T (trillion) in investment to fix the infrastructure in this country after decades of neglect by Congress. The recent passage of the transportation bill was a sham that papered over most of those needs, barely covering maintenance and a few fixes. With interest rates near zero, this is the time for us to fix the infrastructure and make these investments. These investments can provide good paying jobs and would be a better investment for the government than bailing out the banks and investment houses that have put us in this position. We can fund this in a number of unique ways including raising the gasoline tax (the economy has adjusted to higher gasoline costs so .$25-.50 tax increase so the impact would be minimal). We can also offer the transnational corporations to bring back their profits here at a reduced tax rate, with those funds going into the transportation fund.
1
Any setback is good. The last thing the planet needs is mass Chinese funded "development".
2
Think to the future: automation easily replacing many manufacturing jobs (this is old news of course), what's going to happen to all those jobs and people that drove the largest rural to urban migration in history?
Also, who would ever invest in Chinese companies?
Yes, Warren Buffett has invested in a couple companies, but when the government controls all the information, how would we ever know what's true about the state of a Chinese company when the government squashes all negative information?
Also, who would ever invest in Chinese companies?
Yes, Warren Buffett has invested in a couple companies, but when the government controls all the information, how would we ever know what's true about the state of a Chinese company when the government squashes all negative information?
1
I've read many times on this blog that Obama made the stock market go up, so who's making it go down? I don't understand.
We need to have a different understanding about the global economy and how interrelated it is and what that means. Globalization has been good in many respects, but, in pursuing globalization, we have too often overlooked a fundamental issue, namely, if everything is connected to an increasing degree, we are no longer completely in control of our own destiny, because factors beyond our control will and do have an impact at home, sometimes a very serious impact as the events in China are showing us on Wall Street's performance.
The experiment with the Euro should tell us something, but its message has yet to sink in. Even in an environment that is highly homogenous by world standards, it is very difficult given the state of our international politics to achieve true and effective economic integration. If it is difficult to do this in Europe, imagine how much more difficult it is and will be trying to do that at the global level.
We cannot retreat from globalization, but we will continue to go through enormous growing pains unless and until we recognize its impact on all of us and work together to approach the world economy the way we currently try to approach domestic economies. Unfortunately, we are not politically mature enough at the global level to do that at the moment. So, we are just going to have to muddle through until we are.
The experiment with the Euro should tell us something, but its message has yet to sink in. Even in an environment that is highly homogenous by world standards, it is very difficult given the state of our international politics to achieve true and effective economic integration. If it is difficult to do this in Europe, imagine how much more difficult it is and will be trying to do that at the global level.
We cannot retreat from globalization, but we will continue to go through enormous growing pains unless and until we recognize its impact on all of us and work together to approach the world economy the way we currently try to approach domestic economies. Unfortunately, we are not politically mature enough at the global level to do that at the moment. So, we are just going to have to muddle through until we are.
46
please puts down the cool aid. Globalism is a monumental failure. So is deregulation. Those are the dreams of monopolists and a nightmare for the rest of us.
1
You are very articulate and spot on viewing this whole market as a global one where there is no global regulation, let alone US market regulation, Dodd-Frank not even half way codified let alone enforced. . The financial systems are truly allowed to do anything, anyway, anytime they wish. I wish you could effectively see how many switched to the short side in December. The majority of Americans don't even know what short selling is,or high frequency trading and it's ramifications.
2
Great post. As responsible global citizens were are still at the toddler stage. What will be left by the time we are responsible adults?
Cook the books! Securitize China! Run as fast as you can! Buy a credit default swap ---- and write a movie.
It's always amusing to see the breathless, heated, hair on fire coverage potentially major corrections in the Chinese economy like these stock market fluctuations always get in the NYT. Even if China ends up going through something like the US went through in 2008 -- and by all means after 30 years of growth China is due -- the country is not going anywhere and like the US after a few rough years it will continue its growth and reemergence. China has US $ 4 trillion in reserves to cushion any bumps and just this year according to a Credit Suisse report China was found to have the largest middle class (defined as holding net assets of US$50,000-500,000) in the world at 109 million compared to 92 million. Since 2000 twice as many Chinese as Americans have joined the "middle class" thus defined better enabling the economy's desired switch to an emphasis on domestic consumption as opposed to exports. Regardless, all countries interests on this planet are intertwined that's why it's called a global economy. Wishing ill on the Chinese is like drilling holes in the other side of your lifeboat because you don't like the look of the guy sitting over there. Unfortunately, human history is replete with examples of mankind's insecurity, jingoism and ethnocentrism resulting in an inability to think these things through.
9
I remember back in the 80's, I think it was, that a conglomerate--I can't remember which--that owned a lot of newspapers was closing some of them not because they were losing money but because the rate of increase of the profits did not hit a certain goal. Let me make that clear: it wasn't even that the profits were flat; the RATE at which profits were INCREASING wasn't fast enough. (I own a small business and any year that's better than the previous one is a triumph, as far as I'm concerned.) I thought back then, there's something deeply wrong not only with a system that punishes success but with the people who run the system. The global concern now over China is not that China is losing money but that its rate of growth is not fast enough. That's deeply wrong and all the people who perpetuate this thinking are deeply disturbed.
2
The Chinese government and the Chinese Communist Party are scared of their own shadow. Thanks to the - still incomplete - liberalization of the economy, China became a wealthy country. But once the liberal spirit longs for free speech, free exercize of religion, judicial defense of private ownership, in one word, the exercise of basis human rights, the apparently sleeping tiger awakens and bites, ready to kill everyone who comes on its path and whom he considers as a danger to his monopolistic rule. I bet the Chinese growth model is short lived but I still have not a clue if the road down to hell will be smooth or neck braking.
We are hopelessly tied to China because our greedy industrialists want factories with no regulation, and workers with no laws. Not only did the industrialists get suckered into technology transfer, but we no longer control the global economy... the communist party in China does.
1
We use to say "don´t blame the pig but who feeds him".
Or is it partially because outside investors are waking up -- finally realizing that any money invested in China eventually will end up being nationalized and trapped there?
Wouldn't it be great if this bubble burst spread to Manhattan real estate? I'd love to pick up an East Village 1BR at a cheap price. Folks - I've been patiently waiting - good for China - the end is really near. 2nd Ave. - I'm coming!
2
C'mon Fed, time for another rate increase. Everything looks healthy
2
When your government controls money, your government controls you.
If money isn't free, then neither are you.
End the Fed. End fiat money in this country. And stop politicians spending more than we earn.
If money isn't free, then neither are you.
End the Fed. End fiat money in this country. And stop politicians spending more than we earn.
1
Shares anywhere in the world are based on a company's possible or probable earnings.
The optimists push the prices up but in many cases the reality of the situation is that future profits may not always be guaranteed so the prices go up in thin air...and come down like gravity when sellers leave the markets.
A nice word for this is 'correction'.
Another word for stock market behaviour is 'crash' so all the investors in China or around the world have learned the hard way.
China is new to stocks and will have to learn fast..!!
STAN CHUN
Wellington
New Zealand
7th January, 2016.
The optimists push the prices up but in many cases the reality of the situation is that future profits may not always be guaranteed so the prices go up in thin air...and come down like gravity when sellers leave the markets.
A nice word for this is 'correction'.
Another word for stock market behaviour is 'crash' so all the investors in China or around the world have learned the hard way.
China is new to stocks and will have to learn fast..!!
STAN CHUN
Wellington
New Zealand
7th January, 2016.
China has been in a bubble economy for years. Now the bubble is starting to burst--big surprise. As its economy matures it's becoming subject to the same boom and bust cycle as the mature Western economies, it's just that the Chinese government (and investors) aren't used to that yet so they panic. But the world isn't coming to an end and we'll all get used to this (and adjust) in time.
3
Capital markets have long lost any justification as vehicles for financing innovation and growth. They have become casinos and conduits for capital concentration. China's attempts to police national capital activity are admirable but likely ultimately futile. Sovereign wealth will allow Beijing to act as the 'man behind the curtain' for a decade or two.
Totalitarian communist government, say hello to the Free Market.
2
There is no Free Market. Not since the industrial revolution just as Adam Smith finished his Wealth of Nations, too late to see the effects of huge companies and monopolization.
But, but, but wait a minute. Hasn't Donald Trump been telling us that China is way ahead of us???? That terrible Barack Obama could not compete?
Now to hear his next commentary on this. Surely it is because they have not done business quite like The Donald himself he'll say. He'll twist and interject to make himself come out on top of this one to those who believe. And surely he "could have told them so" those Chinese. Just wait for his words......
Now to hear his next commentary on this. Surely it is because they have not done business quite like The Donald himself he'll say. He'll twist and interject to make himself come out on top of this one to those who believe. And surely he "could have told them so" those Chinese. Just wait for his words......
3
I hope the Chinese government is able to arrest the algorithm responsible for shutting down the market.
1
This is why we need to be less dependent on foreign countries and bring back the jobs to America.. even if we pay more for the goods..
2
Why anyone would trust anything from a totalitarian state like China, where the government manipulates and controls everything, is beyond me.
In my opinion, this is just a pretend game they're playing to them, with money as bait, to furthur their empire and eventually control the world.
In my opinion, this is just a pretend game they're playing to them, with money as bait, to furthur their empire and eventually control the world.
Showing of the worlds decline?
Remember how long the US financial crisis took to implode? A few years. And add a few more years, the world followed. This isn't over, nor close to being over.
1
The U. S. Stock Market will lose a great deal on Thursday. Get ready to buy "bargains" on Friday or Monday.
2
Bernie Madoff was smarter than these guys, and less crooked. Let's hope the Chinese people make it through this year in some semblance of good shape and have the wake up call they need to send the CCP packing.
They needed Lee Kuan Yew, they got Mao. Fate is unkind.
They needed Lee Kuan Yew, they got Mao. Fate is unkind.
1
Unbreathable air, putrid water, an exploited labor class, thanks to Western capitalism and now wobbly markets.
Mao must be roiling in his tomb.
Mao must be roiling in his tomb.
1
I work online with a company based in China. This article is spot on. Unfortunately.
2
And now Krugman!
The biggest ever economic swamp has been build and what now? The Bowling Crash! Not a question of if but when. The real question: Will it be a strike this time?
The biggest ever economic swamp has been build and what now? The Bowling Crash! Not a question of if but when. The real question: Will it be a strike this time?
We've all heard of "too big to fail." I'm afraid that China is proving to be "too big to succeed." It's a Herculean task. They should be given credit for holding things together this long. As Bette Davis said, "Fasten your seatbelts, it's going to be a bumpy night", for the markets worldwide.
4
The Chinese bubble is bursting. The question now is, when will ours?
1
“China has a major adjustment problem,” Soros said. “I would say it amounts to a crisis. When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008.
Yikes!
who would want to hold on to stocks if that is true
bigger Yikes
Yikes!
who would want to hold on to stocks if that is true
bigger Yikes
1
“At the end of the day the question is, do they have control? Everyone is asking that question.”
Control of a stock market? Control of exchange rates? Control of greed and fear?
It is clear, they'd like to think they do, along with control having children and happiness.
Let's start with control of efficient allocation of assets. Hmmmm.
I am not willing to place my money on that bet!
Control of a stock market? Control of exchange rates? Control of greed and fear?
It is clear, they'd like to think they do, along with control having children and happiness.
Let's start with control of efficient allocation of assets. Hmmmm.
I am not willing to place my money on that bet!
3
Two things to consider, putting the lesser of the two first. The Chinese stock market has a very loose relationship to established world stock exchanges. It is a new form of gambling in a nation obsessed with gambling. As they have opened, the stock markets took off at what must be considered irrational rates, without reliable information on assets and liabilities, with everyone who could using their high saving rate and borrowing from friend and bank to play the game, for a while every day was a win – that element is still in play and thus the government induces safeguards coming in to pay. Do not try to read too much into its swings.
Second, the comparison of the Chinese economy recovery after the 2008 crises with the slow and inadequate recovery in western economies points to a knowable group of decision makers at its economic policy making center. Slowing growth as an economy matures is no new pattern pattern and can be found in US economic history and elsewhere – a point seldom mentioned in financial coverage. China may be doing alright in the setting of slack world demand and moving the exchange rate makes sense for export recovery. Yes there are problems and outstanding debt on unreasonable investments, especially in real estate is one of them. No perfect systems have come along yet anywhere – big surprise?
Second, the comparison of the Chinese economy recovery after the 2008 crises with the slow and inadequate recovery in western economies points to a knowable group of decision makers at its economic policy making center. Slowing growth as an economy matures is no new pattern pattern and can be found in US economic history and elsewhere – a point seldom mentioned in financial coverage. China may be doing alright in the setting of slack world demand and moving the exchange rate makes sense for export recovery. Yes there are problems and outstanding debt on unreasonable investments, especially in real estate is one of them. No perfect systems have come along yet anywhere – big surprise?
10
As China continues to slow down - and I believe by far more than the official numbers that we are getting - since it represents 17% of the world’s economic growth and because so many countries depend on it for their growth, this continued slowdown is going to put more countries into recession over the coming months. The global economic slowdown will eventually find its way around the globe to our shores. We are already seeing the signs of this as our manufacturing sector and our export sectors are both in recession due to this global slowdown.
Basically I think this article fails to put the China troubles into a world context that ultimately cause the US market to become a full fledged Bear.
Two of the most reliable indicators of bear markets, the yield spread between corporate bonds and treasuries, and the volatility index, are signaling a bear market at levels that we have not seen since late 2007.
The S&P 500 index, the Dow, and the NASDAQ have all seen their versions of the “death cross.”
And I haven't even brought up oil prices yet.
Basically I think this article fails to put the China troubles into a world context that ultimately cause the US market to become a full fledged Bear.
Two of the most reliable indicators of bear markets, the yield spread between corporate bonds and treasuries, and the volatility index, are signaling a bear market at levels that we have not seen since late 2007.
The S&P 500 index, the Dow, and the NASDAQ have all seen their versions of the “death cross.”
And I haven't even brought up oil prices yet.
2
Having enjoyed for decades the State promoted export led boom which is coming to decline now, China is learning hard to prepare itself for transition to a market dictated economy. The falling stock prices and frequent currency devaluations do just reflect this reality of the Chinese economy, of course with ripple effects on the world stock and currency markets.
3
This is a very scary scenario. The potential of harm to the general public is great. Some of the biggest players may escape damage, but again the public is the target of the scheme. Our assets and their values are on the line. When the value of the assets plummet, the few vultures that survive swoop down and collect the highly depressed assets for their own. It is how the wealth of the most if absconded with. My father after the Great Depression, called them the rake off artists. Pretty accurate description is what that seems to me.
28
Modern capital growth relies on inflating asset bubbles. We are now seeing the opposite process of that inflation. The growth after the 2008 crash has come to an end. When is the next recession going to manifest here? The idea of national economies in the age of global circulation of capital is another fantasy as the Chinese are learning. How many bailouts of the kings of finance can society withstand?
80
Iceland seems to have figured it out re bailouts. Pity we won't follow their lead!
Between the "profits" of Wall Street, and the "growth" in China, we are seeing the chickens of the global capitalist system coming home to roost. Now, how best to cook numbers so that the "wealth" of the world continues to increase, never mind that it is all on paper, sorry - in the cloud.
147
No, we're seeing a classic boom bust. Except these guys have no experience with it and planned like it would be go-go for the next 20 years. Oops. But they like everything big. Wait for six months. It's just starting. Two years from now, they will be teaching O V E R C A P A C I T Y in their business schools.
Some capitalists have memory longer than 15 years and also read history books.
Some capitalists have memory longer than 15 years and also read history books.
2
Anyone who has seen the videos of, literally, empty cities with skyscrapers built for no one knows that regardless of how much polish China tries to apply, their numbers have been less than genuine for some time. China's oligarchs are finally finding out you can't have Command Capitalism. Risk is part of the cost of allowing your economy to be free. Also, there is no reason why market fluctuations on their own should affect our own Fed's rather meek actions. If you can't handle market corrections, you shouldn't be in the stock market.
158
What's the difference between Command Capitalism and socialism?
Most of us don't have a choice. The retirement investment options for workers in America these days are limited. Very few companies offer pensions anymore. Social Security is shaky and already being threatened by conservatives. The stock market is largely rigged by the inside traders and speculators. Banks are paying negligible interest rates on savings. Bonds are too conservative to get you to reach your goals. We buy and hold 401(k) investors have no choice but to swallow hard and pray that we are not wiped out. Worse yet are the people nearing retirement. God forbid that you are getting ready to retire and another bursting speculative bubble decimates your hard earned contributions.
5
The ghost cities have spread, don't you know. There are the vast numbers of empty condos in New York, in Chicago, SF and elsewhere, existing only as real estate investments for Chinese and Russian and oil-rich moguls. (Just look for the spanking new ugly buildings planted in formerly attractive sectors. See any lights on at night? Mmmhmmm). The Chinese model of ghosting tells us once again that cloud money is not an operative model for a national economy.
3
"To shore up the economy, China could further reduce interest rates so as to help the real estate market."
You mean sort of like the bubble that happened in the US in 2008? I think that is already happening with all the ghost cities in China (google ghost cities in China and check it out).
You mean sort of like the bubble that happened in the US in 2008? I think that is already happening with all the ghost cities in China (google ghost cities in China and check it out).
54
The Chinese Communist Party is learning why its called a "free market." Because the government may somewhat impact the market, but cannot completely control it.
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I could click "Recommend" many times over.
1
Xi's recent show of military might and saber rattling is to offset his dismal performance in economics. Communist regime, same playbook.
24
China has great leaders, they are eating our lunch.
- Trump
- Trump
We have tied our fate to the Chinese economy, oil price drops and China's failure, which could be predicted, indicate that global economic policy (such as it is) is not working. Maybe the US should be gearing up for a manufacturing renaissance. Our economy is relatively stable, why is this fake stock market taking us down. We make cheap goods in China, that are regularly recalled for quality issues. We can be Wal-mart or we can be America. You want something for nothing, you get junkl and that's what we get from Chinese. Africa is discovering this, they complained about English colonization, but at least the colonists built roads and schools. The Chinese build things that fall down and the Africans build stuff, if it fills the pockets of a few. You can't get nothing for nothing. This is what happens.
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Don't panic. The sky is not falling for the U.S.
Correct. They should have slapped tariffs on Chinese imports long ago. Sure things would have cost more, but we would then have Inflation not stagflation which we truly have minus the Fed printing money.
But free trade idiotology rules. Sure Free trade increases all wealth but disportionately that of the country with the lower GDP. So Free trade has benefited China way more than us and as a result they are not numero uno complete with kleptocrats, no courts, no free press, no rule of law and island building and militarizing.
And we have "free trade" to thank for it.
Trump has a point. A very correct point.
But free trade idiotology rules. Sure Free trade increases all wealth but disportionately that of the country with the lower GDP. So Free trade has benefited China way more than us and as a result they are not numero uno complete with kleptocrats, no courts, no free press, no rule of law and island building and militarizing.
And we have "free trade" to thank for it.
Trump has a point. A very correct point.
1
Remember what happened to Japan when their land values sky rocketed. I still remember Australia selling the property their embassy was located on and using the proceeds to retire their national debt. The Japanese asset bubble popped in 1991 and has not recovered to this day. Their desperate attempts to revive their economy including building a lot of unneeded infrastructure including a large bridge that few still use.
I am very familiar how wal mart used their leverage in China to essentially move production of US companies to China. West Bend WI's namesake company West Bend, used to have a large production facility just outside West Bend, WI. Had a friend who worked there and had to drive through West Bend to see a customer in the area. Outside of town was the former West Bend factory, closed with the typical rusty chain locking the main entrance gate.
IMHO what we are seeing is the beginning of the Chinese bubble bursting. What do political leaders do when their economy runs into trouble. Look at what Putin has done and is doing.
We are living in interesting and dangerous times - hopefully our next president can see this and understand what to do. My real horror would be to have the donald in the White House.
Think about it.
I am very familiar how wal mart used their leverage in China to essentially move production of US companies to China. West Bend WI's namesake company West Bend, used to have a large production facility just outside West Bend, WI. Had a friend who worked there and had to drive through West Bend to see a customer in the area. Outside of town was the former West Bend factory, closed with the typical rusty chain locking the main entrance gate.
IMHO what we are seeing is the beginning of the Chinese bubble bursting. What do political leaders do when their economy runs into trouble. Look at what Putin has done and is doing.
We are living in interesting and dangerous times - hopefully our next president can see this and understand what to do. My real horror would be to have the donald in the White House.
Think about it.
3
Anybody who follows the markets but is not a huckster selling the market knows there are multiple bubbles in the world's markets.
China's economy is a house of cards complete with ghost cities, massive corruption, capital flight & over-capacity. Our markets are vastly inflated by funny money created out of thin air by the Federal without the consent of any American & used to prop up the zombie banks that robbed consumers blind.
The American Fracking market is essentially a Ponzi Scheme where the costs of production are higher than the market price for the oil. The housing market is totally separated from economic reality in most of the United States as many workers cannot afford the ridiculously overpriced homes- including New York and Los Angeles. Houses affordable in days past by workers of modest means are now Million Dollar loans.
Paper investment of metals far exceed the quantity of real gold, silver and platinum as shares have no backing of the real thing.
Like Bernie Sanders said earlier this Week on Wall Street,
"Greed, fraud, dishonesty and arrogance, these are some of the words that best describe the reality of Wall Street today...We live in a country today that has an economy that is rigged, a campaign finance system which is corrupt and a criminal justice system which, too often, does not dispense justice."
Of course, US media ignored his speech, but you can watch it here:
https://youtu.be/R6e47vJ89p0
Wall Street, remember: Ms Clinton said cut it out.
China's economy is a house of cards complete with ghost cities, massive corruption, capital flight & over-capacity. Our markets are vastly inflated by funny money created out of thin air by the Federal without the consent of any American & used to prop up the zombie banks that robbed consumers blind.
The American Fracking market is essentially a Ponzi Scheme where the costs of production are higher than the market price for the oil. The housing market is totally separated from economic reality in most of the United States as many workers cannot afford the ridiculously overpriced homes- including New York and Los Angeles. Houses affordable in days past by workers of modest means are now Million Dollar loans.
Paper investment of metals far exceed the quantity of real gold, silver and platinum as shares have no backing of the real thing.
Like Bernie Sanders said earlier this Week on Wall Street,
"Greed, fraud, dishonesty and arrogance, these are some of the words that best describe the reality of Wall Street today...We live in a country today that has an economy that is rigged, a campaign finance system which is corrupt and a criminal justice system which, too often, does not dispense justice."
Of course, US media ignored his speech, but you can watch it here:
https://youtu.be/R6e47vJ89p0
Wall Street, remember: Ms Clinton said cut it out.
630
At least Bernie Sanders has the balls to speak the truth. Hillary will go ro bed with Wall St, just like her husband did before her.
10
Hillary Clinton is an extension of Wall Street. You don't seriously think she is going to do anything to harm her "Friends" or to increase her taxes. What happens when China call in their loans to us?
7
David:
Good to see a good noggin in the south. Hopefully living in interesting times will serve to address some of the issues you raised.
Yes just think of what those billions of dollars used to prop up our low interest rates could have built. Even President Obama tried to justify this waste of financial resources by saying it took too long to get results from infrastructure projects. Anyone who has to fly out of Butch O'Hares name sake airport in winter knows how that airport is a horror show. HMMM - Atlanta's Hartsfield Jackson airport seems to work very well.
Closing down gucci gulch would be a good thing also.
Don't hold your breath.
Good to see a good noggin in the south. Hopefully living in interesting times will serve to address some of the issues you raised.
Yes just think of what those billions of dollars used to prop up our low interest rates could have built. Even President Obama tried to justify this waste of financial resources by saying it took too long to get results from infrastructure projects. Anyone who has to fly out of Butch O'Hares name sake airport in winter knows how that airport is a horror show. HMMM - Atlanta's Hartsfield Jackson airport seems to work very well.
Closing down gucci gulch would be a good thing also.
Don't hold your breath.
You don't need to be an economist to figure China's economic bubble is gonna burst, it's not a matter of if but when. America and the World has tired of inferior quality Chinese made products, folk are starting to buy home grown again and that is both wise and necessary.
Why should the West support the east anyway ?
Why should the West support the east anyway ?
114
Wake up!! If we leave the east alone. Then China one day will NUKE the states and try to take over the world! This is their China Dream!!!
"Why should the West support the East anyway ?"
Maybe because all the money going out from Chinese investors has been invested in the West, and might be repatriated (forcefully) or not, causing big losses here. Also because a big slowdown in China means a big slowdown in the West's exports, quite a big loss of global confidence, and this will hurt
Maybe because all the money going out from Chinese investors has been invested in the West, and might be repatriated (forcefully) or not, causing big losses here. Also because a big slowdown in China means a big slowdown in the West's exports, quite a big loss of global confidence, and this will hurt
1
Give blame where blame is due: Chinese producers bid to make western-branded product at insanely-low price points set by western executives who care about next-quarter stock prices (and their bonuses) than quality or value delivered. The Chinese did what they had to, to deliver at the price point, and the westerners did not care. Where the western corporation cares about quality, and monitors, in most cases quality is delivered.
My wife recently bought a Chinese-made, Chinese-designed automated paper cutter (it's a computer peripheral) that was made for the Chinese market, and that thing is a tank.
Point being: the world should not tire of Chinese products as much as avaricious global corporations which shirk on value wherever they can to increase profit.
My wife recently bought a Chinese-made, Chinese-designed automated paper cutter (it's a computer peripheral) that was made for the Chinese market, and that thing is a tank.
Point being: the world should not tire of Chinese products as much as avaricious global corporations which shirk on value wherever they can to increase profit.
1
We must not be hostage in this country to what the Chinese Communists do. Our Fed should be actively aiding our U.S. equity markets as needed and not sitting idly by.
20
Trying to manage the equity markets is not government's business. That's exactly what the Chinese government tried to do, but they are finding that they can't possibly prop up the markets when the fundamentals are so abysmal.
Those investing in equities should be responsible for their own results, and the Fed should limit itself to keeping the economy itself on an even keel.
Those investing in equities should be responsible for their own results, and the Fed should limit itself to keeping the economy itself on an even keel.
Our Fed? You must not know that our Fed is not our really Fed and we are just a bunch of rube and dupes to them. The Federal Reserve is a collection of private banks, funding and rigging a system of finance and banking whose ramifications impact the entire world. In one giant Ponzi scam, the Federal Reserve and Wall Street are closely aligned as co-conspirators in a duplicitous scheme to defraud savers and investors as well as the US government that continues rapacious assault on investors and taxpayers, bolstered through nefarious strategies and campaign finance. The banking and finance industry along with the nabob politicians represent the most entrenched form of corruption in this country. Meanwhile, the Federal Reserve operates under the illusion that its probity and strength are as unassailable as the United States itself. In reality, the Federal Reserve is nothing but a collection of too big to fail banks that have strong-armed the United States and its tax paying citizens into a predatory lending scheme.
3
The people who work for the Fed do not have the resources or inside information that the Gordon Geckos of the world do. They can't protect us.
So how many times are they going to pack it in when they can not sustain their shell game?
10
Authoritarian politics and capitalism maybe don't mix so well?
13
The Chinese economy is a slow-moving train wreck. The cities are immersed in debt which they cannot repay without astronomical growth. As that growth is clearly flagging, we can expect to see bank failures and the whole predictable sequence of recession/depression events. If the Chinese government were able to prevent this, they would have done so already.
However, this may not be a complete tragedy for the rest of the world. Chinese goods will become cheaper, which is good for foreign consumers. Of course, those industries which sell to China will suffer, as will the Chinese consumers. The great mass of Chinese people will become desperate and ultimately this may lead to the kind of drastic political change we remember from events like the Great Cultural Revolution.
However, this may not be a complete tragedy for the rest of the world. Chinese goods will become cheaper, which is good for foreign consumers. Of course, those industries which sell to China will suffer, as will the Chinese consumers. The great mass of Chinese people will become desperate and ultimately this may lead to the kind of drastic political change we remember from events like the Great Cultural Revolution.
52
While I agree with nearly all of your points, I disagree with the last sentence of your post. The Cultural Revolution was not really a people's revolution, nor was it primarily a revolution against "culture". In the late 1950s, there was a short period of relative freedom (known by the slogan of "Let a Hundred Flower Bloom") and economic experimentation, which led an increase in influence of Mao Zedong's rivals. It was a pretext for Mao to purge his political rivals by rallying the masses against old customs and culture, which he maintained that his rivals represent. The destruction of old culture was a means to an end.
2
Drastic political change in China would mean the emergence of a true democracy.
It will keep dropping until the Party admit that they have been massively inflating the numbers for decades.
Also: wiping out village and farms to build shoddy, dull skyscrapers may raise GDP but it cannot be called progress.
Also: wiping out village and farms to build shoddy, dull skyscrapers may raise GDP but it cannot be called progress.
118
Chinese urbanization is meant to increase efficiency as well as GDP, so there are intended to be long term benefits as well as the immediate ones.
One number to keep in mind. US exports to China account for 0.5% of US GDP. Doing some a very simple back of the envelope calculation based on that number... if China fell 50% you would expect the value of the US stock market to drop by about 0.25%. Maybe that is being a it simplistic...but you have to tell a VERY complicated story to explain why the US stock market could possibly be as sensitive to movements in the Chinese economy as we have seen this week. The same applied in August when the US stock market fell by over 10% in response to a 20% decline in China. Note that by the end of August US investors figured this out and the market valuation returned. Seems like a reasonable bet to expect the same thing to happen here again.
48
You're ignoring the rest of the world economy and can't make a simple calculation like that in isolation. China accounts for maybe 17% of the world economy now. Their economy is likely slowing more that China admits. Other countries depend on that Chinese demand for their economic health and there are a number of countries teetering on on the brink of recession. Its like the weather... a change in China causes a ripple that makes its way around the world now... and its resultant impact here (eventually) could be big. The market here is aware of this risk. And thus you see this market drop. Remember... the world is riding on an ocean of red ink. It won't take that much to start a growing wave of defaults.
37
Yeah. Global selloffs like the one now and in August are always a good buying opportunity.
A lot of funds hold Chinese stocks and Puerto Rican bonds, not to mention energy sector investments. As for the Feds printing money and holding interest rates to near zero, it has caused lots of people who are trying to keep up with inflation (I know we haven't any, except for housing, food and medical care, but not everybody sees it that way), anyhow these people have plowed that funny money into the stock market, real estate investment trusts, and those funds with Chinese stocks and Puerto Rican bonds. So we won't get out of this without some pain.
1
The Fed raised interest rates into global weakness, which was the wrong move. The US economic data, particularly PMI and manufacturing, is abysmal. Consumer spending will likely follow suit, esp when so many families are a paycheck away from being on the street. It almost looks like we're at the end of the tightening cycle which started with "tapering".
Time to go back to 0% rates and launch QE4, especially during an election year.
Time to go back to 0% rates and launch QE4, especially during an election year.
26
Can't do it because if you go back to 0 percent the FED will lose all credibility.
2
The Fed raised the rate simply to end the 'will they, won't they' uncertainty. It was done mainly to pacify all the hawks in the FOMC and elsewhere in the media and wall street.
This time can QE go directly to spenders? Build infrastructure, pay off college loan debt, anything but giving it to banks to park offshore.
2
I don't think the renminbi is also known as the yuan. I believe the renminbi is the currency and it is denominated in yuan.
Like the US Dollar is our currency and it is denominated in dollars and cents.
Regardless, the Fed needs to consider the potential implications of any further rate increases. The global economy has been relying China's growth for a while now. Putting greater pressure on what appears to be a fragile situation seems ill advised. China needs to figure out how to manage what appears to be a very large looming correction. No need to be eager to plunge the world into another rescission led down by China's 1929.
Like the US Dollar is our currency and it is denominated in dollars and cents.
Regardless, the Fed needs to consider the potential implications of any further rate increases. The global economy has been relying China's growth for a while now. Putting greater pressure on what appears to be a fragile situation seems ill advised. China needs to figure out how to manage what appears to be a very large looming correction. No need to be eager to plunge the world into another rescission led down by China's 1929.
4
Sorry to inform you that the renminbi is also know as the yuan. (I've lived in China for the past 12 years).
You are correct that the global economy has been relying on China's growth for well over a decade and while this has made for a very nice party. it's going to be ending poorly. No one is eager for a recession, but for the Fed to keep printing money, and maintain an interest rate of zero so that we can allow China to grow (another way of saying not addressing systemic problems) is completely crazy!
You are correct that the global economy has been relying on China's growth for well over a decade and while this has made for a very nice party. it's going to be ending poorly. No one is eager for a recession, but for the Fed to keep printing money, and maintain an interest rate of zero so that we can allow China to grow (another way of saying not addressing systemic problems) is completely crazy!
26
You may be living in China for 12 years but renminbi (RMB) is really NOT the same as yuan. RMB is the transliteration of the name of China's currency system, meaning people's money. Renmin is the transliteration of "people", like their government is called Renmin Zhengfu (people's government. And bi is money. Yuan is the basic unit of the currency, like a dollar.
By the way the KMT government before they ran to Taiwan named their paper money as fabi, transliteration of "legal money". Bi is nothing but a transliteration of the word (paper) money, if you will.
So technically (and that is what we are doing here) RMB really is not the same as yuan. You see a bill with the number 10 on it, you will call it 10 yuan but never 10 RMB.
By the way the KMT government before they ran to Taiwan named their paper money as fabi, transliteration of "legal money". Bi is nothing but a transliteration of the word (paper) money, if you will.
So technically (and that is what we are doing here) RMB really is not the same as yuan. You see a bill with the number 10 on it, you will call it 10 yuan but never 10 RMB.
2
Why yes, let's all take our remaining savings and give it to a "certified" financial planner to use their wisdom to create income from the stock market! Let's give it all up so that banks can continue to borrow from the Fed at 0% and make us pay 15% or more to borrow what we can't afford! That's a plan!
3
The dollar, as it continues to become too strong relative to foreign markets, should be devalued through opening the fed window, this time for the people. Options include 1. Rebuilding our infrastructure 2. Paying outstanding balances on the millennial student debt crisis, thereby stimulating spending 3. Investing in our decaying social sector, specifically mental health and education 4. Job training programs aimed at individuals being released from prison. Too bad this is a sham democracy. Hope our oligarchs are feeling benevolent.
350
Patrick k -- we can wish for it, but the US you paint is too good to be true. Whatever the future holds in store for the sputtering Chinese economy, China will no doubt forge ahead shelling out mega-renminbi for its military (if we did it, so can they). With so much squandered treasure, and the world awash in blood, weapons, and that essential ingredient Trumposterone, maybe North Korea is modeling the future. Perish the thought that bad hair might win the day.
19
You propose to solve all our problems by going on a spending spree. You've got widespread approval for that. I'm no economist. Don't know if you're right or wrong. But if they put you in charge, can you get me a bigger house, a new car, and a bottle or two of really expensive bourbon?
I fear benevolence is not in their repertoire. They have a pressing need for more, you see. It gives them little rest, and they keep their minions scurrying to find ways to satisfy it. Après moi, le deluge is their motto. Even should that deluge come, their heirs will have plenty for generations to come, although the specter of an estate tax of any kind is worrisome to them. They're working on that now, however, and have every prospect of success, if the recent past of our nation is any guide in the matter.
4
No doubt the Chinese will either blame this on the U.S. or announce that the suspension of trading resulted from a technical gaffe.
26
Unrest in China has been growing for years, and the CCP has been harder pressed to contain it. If this first week of 2016 is any indication, the economy getting a lot worse in China could present the CCP with grave challenges in terms of keeping domestic order.