Tuesday, July 7, 2015

Crash

I just read about this at Daily Kos,- while everyone has been watching Greece, the Chinese stock market has undergone a colossal crash over the last couple of weeks.



 I don't have a clue what to make of this, but it sure sounds crazy.  You might want to take a look at the article.

3 comments:

the yellow fringe said...

I have read a bit on this. First the Chinese stock market is not very big in proportion to the economy. The of 30% in the last month do not hurt their economy like 30% decline would hurt us. It is however a big concern of the communist government who is trying to fix it, but so far it goes down even with their efforts to stop it. Part of the problem is their stock market is not sophisticated, earnings to price ratio means nothing, so it became a bubble that popped. Like here in "29", they have been buying stock on credit, when it declined debts were called due and that caused more selling and so on down the rabbit hole. Many of Chinese companies have pulled their stock off the market, another problem, how can it be a true stock market when companies can halt their trading when it goes down? The slide in their market is hugh, but you see everyone worry about Greece not China. Except in China, the government could eventually "lose face" if this continues.

Green Eagle said...

I have heard this, and agree with your argument that, because of limited investment in the Chinese stock market, it does not presage a total collapse of their economy. However, I would like to point out that the decrease of value in the Chinese market so far is greater in proportion than the equivalent drop in the NYSE in the next six months, with stocks regaining 60% of their lost value. It was at that point that the real collapse began, not to be ended until 1933, when Democrats were able to take over and set things right. So no, I do not expect the whole Chinese economy to crumble, but volatility like this is still a very troubling sign, with the world's largest economy in the hands of people that seem to have little idea of how to handle it (not that our idiotic supply-siders or the austerity goons in Europe are much better.)

the yellow fringe said...

Agreed.