If, today, you're not following the Donald's Twitter feed, you should be. It harbors vast entertainment.
I wonder who will suspend their campaign and rush to Shanghai to fix this. I'm truly impressed with how badly the Chinese are handling their financial problems. It is enough to make a Keynesian weep. Apparently they learned nothing from watching America attempt to create artificial wealth by pumping up home values. They decided to do it with stock values. Because that's what you really need to do when demand for goods and services slackens, loan a bunch of amateurs a huge pile of money on almost no security so they can invest in an over inflated stock market. That way, when your chickens come home to roost, you can be assured they are infected with H1N1.
Posted by: Peter G | August 24, 2015 at 10:04 AM
What's even more irksome is the Chinese government *ordered* small investors to keep and buy equities. If I weren't such a nice guy I'd hope the engineers that got my job were paid mostly in company stock.
Posted by: Bob | August 24, 2015 at 10:55 AM
To give them a modest amount of credit, the Chinese government has forbidden managers from unloading stock for five years I believe and is requiring companies to purchase their own stock. This will somewhat relieve the burden on the markets of all that overvalued junk they unloaded on small investors. But what, may I ask, is going to be the result when all those companies reallocate their resources away from direct investments or purchases of goods and services to buy bits of notional paper which are still a long way from reaching bottom? Why it is going to drive down their value even more isn't it? To be honest I think the Chinese still suck at capitalism. They still haven't got a big enough middle class to stick it to. If they were smart they would use a large hunk of their reserves to buy up the stocks and then just let the government take the hit themselves instead trying to unload it on what passes for their private sector. That's what governments are for and one could plausibly argue it is their fault.
Posted by: Peter G | August 24, 2015 at 11:15 AM
We're in agreement. What might help the Chinese economy is aggressive investment in infrastructure and technology. They have terrible pollution problems. It's not impossible they could turn things around quickly by turning their limited "free market" to concentrated advantage.
Posted by: Bob | August 24, 2015 at 12:50 PM