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China stock market crisis — 17 Comments

  1. Protecting a stock merely means that the stock’s value is attached to the protection of the government, and hence everyone that knows when to unload the stock will get a tip from the inside trading government. Everyone else, the poor stucks that have their wealth redistributed to the elites, don’t get that tip. By the time the market has “adjusted”, the wealth has de facto transfered from the non politically connected, to the politically connected. Of course this kind of system is ginned up by a few masterminds like Chriss Dodd in Congress or current day MPAA. But everyone else tends to tag along like a moral hazard or band wagon train of thieves. This creates a Lemming or Browning cascade effect, sort of like how a mob crushes people underfoot because even if the guy stepping on you wants to move off you, the 50 people pushing him won’t let him. Chain locks on all the exits in a crowded club when the fire alert has been sounded, is similar.

    American stocks are the same way, except there’s more exterior adjustment mechanisms so they become harder to crash. On 9/11, people crashed the stock market because they were getting rid of stock liabilities and transfering their assets into liquid, portable, or more stable formats that weren’t vulnerable to terrorist attacks. The market adjusts after some time, but the damage inflicted isn’t equal to the damage to the markets, as the markets are fungible or rather wealth is fungible, it can be used at any access point, with the stock market being only one of the more obvious points.

    When there’s too much top down totalitarian pressure, the market doesn’t adjust because everyone with the big bucks are waiting for the “inside tips” to tell them when to hold em or to fold em. THey are like puppets. Only a few masterminds are the ones pulling the strings, starting the cascade.

  2. “One-party autocracy,” Thomas Friedman assures me, “when it is led by a reasonably enlightened group of people, as China is today,” is the best of all possible governments. Other than Greece and the EU, that is.

    We need more ‘Elites’

  3. Folks are getting nervous.

    NEW YORK, July 7 (Reuters) – The U.S. Mint said on Tuesday it temporarily sold out of its popular 2015 American Eagle silver bullion coins due to a “significant” increase in demand, the latest sign plunging prices have spurred a resurgence of retail buying.

    In a statement sent to its biggest U.S. wholesalers, the Mint said its facility in West Point, New York, continues to produce coins and expects to resume sales in about two weeks.

  4. If China merely wanted to do wealth redistribution in the stock market, they didn’t need to go to such extents. The fact that they are getting dumped so strongly all at once, reminds me of Enron or Madoff. They were running a pyramid scheme and thus needed the active propping up of certain stock portfolios, for whatever reasons they had. Then when things bottomed out, the guys at the top took the money and ran, causing the market to panic.

  5. Folks are getting nervous.

    If they were really nervous, they would transfer their precious metals to Zurich, in sealed vaults or other fancy bank security systems they got over there.

    Having money in the US means the US government has you as their money bag they will squeeze until blood comes from the rocks.

    It’s not like the US feds don’t know how this works, they did it before under FDR.

  6. They say it’s not a cyber attack, but, I wonder. I wonder.”

    Remember, it isn’t paranoia if they have given you a reason to not believe them.

    Too many times this administration and others “in charge” have consistently lied. And the MSM has gone along with them despite the obvious truth. So, can we believe them?

  7. G6loq,

    Good one re Friedman… lest we forget that the “reasonably enlightened group of people” are a deadly epidemic for which there is not yet an inoculation and so, for which, the remedy would seem to be wholesale incineration.

  8. Corrections of stock markets are to be expected when the market has been rising as rapidly as the Chinese Markets. The Shanghai Composite Index now stands at 3507.19. At the beginning of the year, January 5, 2015 it was at 3,350,52 so it is still up about 4% this year. This chart should put things into perspective.

    http://fortune.com/2015/06/29/china-stock-market-volatility/

  9. Since the late 80s easy credit has created one bubble after another. The popping of these bubbles grows more severe as each bursts in turn. Globally we are on the cusp of a bubble that will be even larger than 1929. Its everywhere in every market around the world. Government – bankster manufactured bubbles present a suicidal dilemma of creating hyperinflation or acquiescing to the equally painful alternative of steep deflation.

    Let the hunger games begin and may the odds be in your favor.

  10. See the chart of the Shanghai Composite Market Index 2006-2015 to see what Beijing is trying to control. An incredible run-up followed by an incredible run-down. Not the first time, either.
    I don’t know what geopolitical implications this has, but they are certain to be 1) Bad, and 2) Extensively felt. We are not at all safe from this literal financial tsunami.

  11. We’ve never been able to definitively explain the hows, whys, and wherefores of the business cycle as it applies to our own market-based western economies, let alone China’s, such as it is. Solution-wise Adam Smith would argue for a governmental hands off “laissez faire” approach, but that’s never going to happen, not here, and not in China.

  12. Read yesterday (do not have link) that the Chinese government had their (apparently centrally controlled) pension system throw a huge pile of cash at the market to shore it up.

    That money evaporated immediately to the detriment of pensioners.

    Greek banks (according to Rush) are rummaging through safe deposit boxes in search of cash, leaving IOU’s (Rush noted the double key thing; how would the boxes be opened? Still, I would not be surprised).

    Zurich is too far away. But there must be a safe place to hide my growing hoard of canned chili.

  13. In so corrupt country as China all money deals are utterly murky, nobody really knows who owns what. Market participants are in panic mode, politicians and regulators are too. The end results in such situation are completely unpredictable like decisions of panic-stricken people dealing in abscence of veritable information on the basis of hearsay.

  14. The Chinese like to blame their problems on the Japanese, due to WWII and Mao’s insurgency methods which promoted Japanese colonialism so that Mao’s civil war foes would bleed themselves dry fighting for Chinese nationalism, then Mao took over after the civil war factions were worn out since Mao preserved his forces by refusing to fight the Japanese.

    The Chinese also like to blame Americans, but America is still pretty strong, so they don’t tend to do that as much unless we speak of the leadership.

    It’s similar to how Southern Democrats were brainwashed into blaming Lincoln and Sherman for the war.

  15. Who was it that said, “If all the economists in the world were laid end to end, they wouldn’t reach a conclusion.?

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