Chinese Stock Market in Trouble

http://money.cnn.com/2015/07/07/investing/china-stock-market-companies-stop-trading/index.html

It was once said that when the US sneezes, the world gets a cold.

1/4 of the Chinese stocks stopped trading. Can you imagine if that happened here in the States?

I wonder what the effect of a Chinese economic crisis will have on the world's economy, as China has been slurping up raw materials for years, not to mention buying bonds from the USA.

 

gambling culture. it was up 150%, not it's dropping. this is a culture where taxi drivers borrow money to invest in the market when it's going up. we are already seeing the oil price tanking because of this. I would worry much about bond purchases.

 

China and raw materials has been really stupid. Monopolies still can't ignore market pricing at crazy prices.

Plus they don't understand the superpower part that every contact can be vetoed by the gun. They have no way of forcing those materials to be delivered and fulfilled.

Plus materials are useless to you use them or sell them.

 

too much money and nothing to do with it IMO. that's also why they massively overbuilt infrastructure.

 

I still think there's going to be some civil rebel as too many people make money there to be suppressed

 

A bloody Chinese civil war could be very scary. I hope it doesn't come to that, but I am afraid the Communist Government is not going to go quietly into that good night.

I don't know enough about economics or world policy to know exactly what a Chinese cooling will cause, much less if it is a recession/depression, but it causes me concern.

 

you'd think it would have already happened. generally countries coming out of poverty don't revolt.

 

it could have a huge rippling effect, but i'd guess we'd be fine long term. it's the countries that rely on china to buy their materials that would start going bankrupt. brazil and Russia would be in deep shit.

 

And from what I understand, Russia is already up to their necks with the tanking of the oil market.

 

All of those countries are fueling their social programs with oil revenue. They can't afford to reduce supply either

 

Volst53 just posted a very important lesson in economics - and life - for that matter. Once people get used to having things, and/or stuff - like money, they don't like to give it up.

 

This is getting scary:

http://www.wsj.com/articles/chinese...t-to-stem-distress-in-stock-market-1436362924


But before the day was over the equities selloff had spilled into offshore trading in the Chinese yuan and worsened a drop in global commodity prices.

It didn’t help that China’s central bank extended funds for loans to buy shares. Nor that the agency that oversees China’s oil giants and other state enterprises forbade them from selling their shareholdings.

The benchmark Shanghai Composite Index ended Wednesday 5.9% lower, after falling as much as 8.2% early in the session. The drop meant that $3.5 trillion yuan ($572.21 billion) in market value has been erased since a mid-June high—or a third of total capitalization

Even China’s safe-but-dull government bonds tumbled as brokerages and mutual funds sold debt to raise cash in order to follow the government decree to buy stocks.

“Market confidence has collapsed,” said Shen Jun, a strategist at BOC International Holdings Ltd., the investment-banking unit of state-owned Bank of China Ltd. Risks are growing, Mr. Shen said, that the stock-market crisis will “evolve into a financial crisis.”

Until now, the Chinese government has been widely applauded for its deftness in managing economic matters. For instance, its massive stimulus program launched in late 2008 helped the Chinese economy weather the global financial crisis.

It also saddled the economy with debt, a property bubble and wasteful projects throughout the country. As part of a strategy to help the companies unwind the debts they had taken on in that push, policy makers encouraged stock investing.

 

We have to stop trying to stop boom and bust through central government action

 

I'd argue that the advent of the fed has reduced booms and busts. that doesn't mean they don't screw up occasionally.

 

How much of an impact can this have on our stock market?

 

down 200 points today. if it continues, it could create a market crash easily.

 

I say (here in the States) it is the Fed and unemployment insurance. And I don't want to go back to pre-1929 boom/bust cycles, myself. Just be smarter about it. A little recession and slow growth is OK. It cannot be 30% growth all the time.

 

Welp, that would suck

 

Mother...

 

unemployment insurance is bad for the economy. it delays people making the hard decisions. anything over 60 days is too long. but I digress.

that's china's problem. they want to keep the growth going and damn the consequences.