Shanghai Index Mini-Crash. Shares Down Another 8% Today.
I haven't seen anyone else in the press, on Wall Street or in the blogosphere that was as critical of China as I have been. And, most of that criticism came when the enthusiasm for China was off the charts. All while the Wall Street machine pumped away.
Is there anything else I can say about China? We've talked about a currency that is effectively worthless, a banking system in shambles, overproduction and overindustrialization on a scale never before seen, the lowest consumer spending numbers of any major economy ever recorded, a stock market gambling machine at levels that would make 1929 blush, completely incompetent government, a completely incompetent central bank, an out of control economy and the ultimate potential for economic collapse leading to armed conflict or revolution. That about sums it up.
By the way, did anyone see the BBC story about prominent U.S. business leaders who were plotting to overthrow the U.S. government during the 1930s in an effort to install a fascist leader? More politely represented as someone with the authority and power to get things done by circumventing the rule of law? No one really knows what happened but it was interesting. My point is that economic uncertainty can create very dire social instability. Especially in a country, China, where human rights violations are some of the worst in the world.
Today the Shanghai Composite had another mini-crash and was down 8%. The cause? Maybe the fact that bank reserve requirements were raised for the 15th time in the last eighteen months. China is imploding and there is nothing anyone can do to stop it. I suspect the ultimate downside risk to the Shanghai Index is down about 95%. Why 95%? Because picking zero isn't an option. I believe we are about half way there without looking.
It's a deflationary world.
Is there anything else I can say about China? We've talked about a currency that is effectively worthless, a banking system in shambles, overproduction and overindustrialization on a scale never before seen, the lowest consumer spending numbers of any major economy ever recorded, a stock market gambling machine at levels that would make 1929 blush, completely incompetent government, a completely incompetent central bank, an out of control economy and the ultimate potential for economic collapse leading to armed conflict or revolution. That about sums it up.
By the way, did anyone see the BBC story about prominent U.S. business leaders who were plotting to overthrow the U.S. government during the 1930s in an effort to install a fascist leader? More politely represented as someone with the authority and power to get things done by circumventing the rule of law? No one really knows what happened but it was interesting. My point is that economic uncertainty can create very dire social instability. Especially in a country, China, where human rights violations are some of the worst in the world.
Today the Shanghai Composite had another mini-crash and was down 8%. The cause? Maybe the fact that bank reserve requirements were raised for the 15th time in the last eighteen months. China is imploding and there is nothing anyone can do to stop it. I suspect the ultimate downside risk to the Shanghai Index is down about 95%. Why 95%? Because picking zero isn't an option. I believe we are about half way there without looking.
It's a deflationary world.
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