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Where's the floor?
China Stocks Swoon Despite Orders From Beijing
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  • Jacksonian_Libertarian

    The world is 7 years into “Great Depression 2.0”, this is why despite insanely “loose monetary policies” inflation is a non-factor. Unlike inflation which is just an annoyance, deflation is destructive, causing businesses to go bankrupt, unemployment and foreclosures to skyrocket, as well as the growth of tons of bad Socialist government policies that make everything worse. Another side effect of a “Great Depression” is the horrifying wars that it generates, as political elites attempt to save themselves by deflecting blame from their mismanagement by waving the “Bloody Shirt”.
    You fight Deflation with Inflation, and it is clear that despite the insanely “loose monetary policies” there is not enough new money to create any Inflation. I recommend that the US payoff all foreign holdings of US Treasuries, some $6+ trillion, take these Treasuries and open an inheritable individual retirement account for every American citizen of about $20,000. This would put $6+ trillion outside the US which would change the value of the Dollar on world markets, which would reduce imports and expand exports. It would also fix the Social Security system which is a vile Ponzi scheme.
    On a side note, Bankers love deflation, it makes all their loan portfolios grow invisibly in value. Is it any wonder then why they haven’t fixed the money supply balance from Deflation back to an economy growing Inflation?

  • http://radical-moderation.blogspot.com/ TheRadicalModerate

    Two things can make this really weird:

    1) The massive degree to which public Chinese corporations are owned by the government makes the Chinese stock market a little like buying shares in a sovereign wealth fund. When you see the stock market going into free-fall, it is to some extent a vote of no-confidence in government policy–certainly much more so than it is in the West.

    2) I’m starting to wonder if China doesn’t have some of the characteristics of an oil state, except, instead of oil, the natural resource is labor. When global demand picks up, China does fine. When demand is slack, China gets hurt more than everybody else. But, just as energy efficiency and new supplies have changed the geostrategic picture for oil states, high productivity and automation may be changing the picture for “labor states”.

  • boonteetan

    Japan stock market’s fall in 1989-1990 had never been fully recovered. China recent market’s plunge would be temporary, an adjustment to over-valued stocks. Beijing must take note of what happened in Tokyo 25 years ago, and
    authorities concerned should find an optimal solution at the soonest.

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