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Thread: Greece ‘A Sideshow To China Meltdown,' Ex-BMO Chief Economist Says

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    Re: Greece ‘A Sideshow To China Meltdown,' Ex-BMO Chief Economist Says

    Quote Originally Posted by jmotivator View Post
    Well, then that totally changes the who makes up the 1%.
    your comment really refuted the point.

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    Re: Greece ‘A Sideshow To China Meltdown,' Ex-BMO Chief Economist Says

    Quote Originally Posted by Andalublue View Post
    The worrying thing about it is that it appears to have been caused by the exact same practices that caused the 2008 crash i.e. margin lending, short selling etc etc. Added to which, the Chinese government appears to be panicking and reacting in a similar fashion to how the US, European, and Japanese governments reacted 7 years ago, and for similarly politically-minded reasons. Of course, this might not be presaging yet another failure of market capitalism... but the signs are slightly concerning, at the very least.
    I personally just see it as the growing pains of a young Chinese stock market. They've still outperformed the S&P over the past few years in terms of growth. If not for the fear I have that Western Banks are exposed to this downturn (I haven't looked in to it but I'm sure we are), I would just chalk the whole thing up to that's what happens when you let people borrow on 100:1 margin.... you have booms and busts.

    China is still growing and fundamentally strong, in my opinion. They've just inflated their asset values and now they are watching that bubble pop, but they're still growing.

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    Re: Greece ‘A Sideshow To China Meltdown,' Ex-BMO Chief Economist Says

    Quote Originally Posted by jmotivator View Post
    Butthurt alert!

    It's no secret that the Chinese economy has been driven for years by foreign investment. They have dumped all this money into building ghost cities the size of large US cities that are less than 25% occupied.

    The song has stopped and everyone has turned in a frenzy to grab a chair only to find that most of the chairs were imaginary.
    You know these are stocks of private corporations held by private investors, right?
    "The crisis will end when fear changes sides" - Pablo Iglesias Turrión

    "Austerity is used as a cover to reconfigure society and increase inequality and injustice." - Jeremy Corbyn

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    Re: Greece ‘A Sideshow To China Meltdown,' Ex-BMO Chief Economist Says

    Quote Originally Posted by SlevinKelevra View Post
    your comment really refuted the point.
    Your point was stupid. Most of the wealth in the country is in investments that can and do have a way of vanishing.

    I could buy $1 million in gold today and my wealth derived from that gold would be $1 million. If the price of gold drops by 20% then I lose $200,000 of wealth without losing the underlying commodity.

    The losses in the Chinese stock market came from a loss in the valuation of the underlying resources.
    Give a man a fish and he eats for a day. Teach a man to fish and he stops voting for the Free Fish party.

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    Re: Greece ‘A Sideshow To China Meltdown,' Ex-BMO Chief Economist Says

    Quote Originally Posted by Andalublue View Post
    You know these are stocks of private corporations held by private investors, right?
    You realize the government has ordered trading of many stocks to halt, and demanded brokerages to invest in the markets even though they are likely to lose, right? Doesn't really sound so much like these private investors actually own the stocks....
    Give a man a fish and he eats for a day. Teach a man to fish and he stops voting for the Free Fish party.

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    Re: Greece ‘A Sideshow To China Meltdown,' Ex-BMO Chief Economist Says

    Quote Originally Posted by jmotivator View Post
    Your point was stupid. Most of the wealth in the country is in investments that can and do have a way of vanishing.

    I could buy $1 million in gold today and my wealth derived from that gold would be $1 million. If the price of gold drops by 20% then I lose $200,000 of wealth without losing the underlying commodity.

    The losses in the Chinese stock market came from a loss in the valuation of the underlying resources.

    Your view on unrealized capital/asset appreciation (paper wealth) doesn't reflect that you purchased the gold from someone, who in turn purchased it from someone.
    If the originator purchased it for 800,000, sold it to you for 1,000,000, and you sell it again for 800,000 .........
    no net wealth is lost. your individual net paper wealth might decline, yes.
    saying that this 2.5T is "lost" is a gross oversimplification of the real net wealth changes/transfers that occurred during the ramp up and the current decline of their market bubble.

    In a way, you've unconsciously admitted that market-cap is a useless #.
    I'm surprised you would.

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    Re: Greece ‘A Sideshow To China Meltdown,' Ex-BMO Chief Economist Says

    Quote Originally Posted by Peter Grimm View Post
    I personally just see it as the growing pains of a young Chinese stock market. They've still outperformed the S&P over the past few years in terms of growth. If not for the fear I have that Western Banks are exposed to this downturn (I haven't looked in to it but I'm sure we are), I would just chalk the whole thing up to that's what happens when you let people borrow on 100:1 margin.... you have booms and busts.

    China is still growing and fundamentally strong, in my opinion. They've just inflated their asset values and now they are watching that bubble pop, but they're still growing.
    Well, for everyone's sake, I hope you are right. Trouble is, it would appear that the stock markets don't appear to have rectified the regulation of high risk practices that brought about the 2008 crash. Why should we be confident that history won't repeat itself?
    "The crisis will end when fear changes sides" - Pablo Iglesias Turrión

    "Austerity is used as a cover to reconfigure society and increase inequality and injustice." - Jeremy Corbyn

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    Re: Greece ‘A Sideshow To China Meltdown,' Ex-BMO Chief Economist Says

    Quote Originally Posted by SlevinKelevra View Post
    Your view on unrealized capital/asset appreciation (paper wealth) doesn't reflect that you purchased the gold from someone, who in turn purchased it from someone.
    If the originator purchased it for 800,000, sold it to you for 1,000,000, and you sell it again for 800,000 .........
    no net wealth is lost. your individual net paper wealth might decline, yes.
    saying that this 2.5T is "lost" is a gross oversimplification of the real net wealth changes/transfers that occurred during the ramp up and the current decline of their market bubble.

    In a way, you've unconsciously admitted that market-cap is a useless #.
    I'm surprised you would.
    So in trying to save your argument you have chosen to ignore the value of goods in wealth determination?

    That is like saying the garden is devoid of yellow flowers... if you don't count the sun flowers.
    Give a man a fish and he eats for a day. Teach a man to fish and he stops voting for the Free Fish party.

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    Re: Greece ‘A Sideshow To China Meltdown,' Ex-BMO Chief Economist Says

    Quote Originally Posted by jmotivator View Post
    Let's discuss how much China is up after the crash is over. Until then let's address what the current crash does to the Chinese economy and how devastating it is to the pillars of Chinese economic growth: Real Estate and outside investment. China has no experience in dealing with Market crashes, and it shows in the way they approach the current crisis. They are more focused on propping up cosmetic economic indexes over addressing underlying structural problems. I mean, in an only half kidding way, I think at this point the best tool for market correction in China is dynamite. If they blew up all the empty commercial and residential units in the country they may be able to stop the bleeding by saving the Real Estate market.



    Yes, but you could say the same thing about any market collapse, that doesn't make it any less devastating. I have long used the analogy of a "wing stall" for how a government should handle a market crash. In the early 1900s flying was a new skill, and pilots were learning the hard way of the danger of wing stalls (when the air running over the inside wing drops too low to produce lift in a low speed turn, causing that wing to fall and the outside wing with lift to vault the plane into a spin). In the early days a wing stall was death. Pilots struggled for years to develop a protocol that pilots could use to correct wing stalls, but nobody could think fast enough to adjust to all the chaotic gimbals that a wing stall introduced.

    It wasn't until WWII that the wing stall was finally solved. The solution came from the wide distribution of parachutes. Since a pilot was now able to eject from a wing stalled plane, more pilots survived to tell the tale... and the tale was very revealing. What many pilots were reporting was that after ejecting from wing stalled planes they were left to watch their spinning planes right themselves and fly on into the wild blue yonder absent a pilot. What they learned was that the general forward thrush of the propeller and the drag of the wing and the tale slowly muted the chaotic gimbals until the plane was flying in a mostly stable direction and lift was returned to the stalled wing. Problem solved.

    The solution for pilots experiencing wing stall: take your hand off the stick. Fighting only makes it worse.

    That is my personal philosophy for how Government should deal with market crashes.



    We'll find out. I know that Chinese investment was all the rage over the last few years so I would guess the contagion is substantial.

    I would say that the pillar of Chinese economic growth is its export economy, although the country is (rightly) trying to shift to a consumer economy. China's stock market is crashing because consumer demand in the West has slowed, and since they allow investors to be so highly leveraged, the downturn has been magnified.

    The useless real estate projects have nothing to do with China's current problems, although the amount of bad debt on Chinese government books could be a cause for concern at some point in the future.

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    Re: Greece ‘A Sideshow To China Meltdown,' Ex-BMO Chief Economist Says

    Quote Originally Posted by jmotivator View Post
    So in trying to save your argument you have chosen to ignore the value of goods in wealth determination?

    That is like saying the garden is devoid of yellow flowers... if you don't count the sun flowers.

    That's "liberal" ideology, pick and choose the data
    "Small people talk about people, average people talk about events, great people talk about ideas" Eleanor Roosevelt

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