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

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

    Greece

    As the Greek debt drama plays itself out one 60-euro withdrawal at a time, some economic observers are saying the world is paying attention to the wrong crisis.

    That's because in the space of three weeks, Chinas Shanghai Composite stock index has lost nearly 30 per cent of its value, wiping out some $2.3 trillion U.S. in wealth. As Bloomberg News put it, thats a loss of $1 billion for every minute of trading. Regulators have halted trading in more than 700 listed companies, and at least two dozen IPOs have been cancelled.

    And some economists fear the countrys response to the downturn could be worse than the stock market crash itself.


    There is a reason we haven't been hearing about the wonders of China's command economy for a while. It's in free fall. The Chinese government reactions to this are a good indicator why their problems will likely get much worse. They are focusing on all the worng things, taking actions that seem more driven by pride than fiscal pragmatism.
    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

    Isn't their stock market still up like 85% from January or something like that? "Free fall" is a bit overstated, I think. This is more of a retracement.

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

    Quote Originally Posted by jmotivator View Post
    Greece

    As the Greek debt drama plays itself out one 60-euro withdrawal at a time, some economic observers are saying the world is paying attention to the wrong crisis.

    That's because in the space of three weeks, China’s Shanghai Composite stock index has lost nearly 30 per cent of its value, wiping out some $2.3 trillion U.S. in wealth. As Bloomberg News put it, that’s a loss of $1 billion for every minute of trading. Regulators have halted trading in more than 700 listed companies, and at least two dozen IPOs have been cancelled.

    And some economists fear the country’s response to the downturn could be worse than the stock market crash itself.


    There is a reason we haven't been hearing about the wonders of China's command economy for a while. It's in free fall. The Chinese government reactions to this are a good indicator why their problems will likely get much worse. They are focusing on all the worng things, taking actions that seem more driven by pride than fiscal pragmatism.

    By the way, kudos for bringing up a news topic that's actually impactful and relevant, even if the fact that discussing it might require your readership to actually posess brains.

    I was sick of reading threads about the confederate flag, Sara Palin's daughter, and a tv commercial in new zealand. Kudos.

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

    My God another doom and gloom prediction. I've been waiting for China and especially their real estate market to collapse for 15 years.
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    Re: Greece A Sideshow To China Meltdown,' Ex-BMO Chief Economist Says

    Quote Originally Posted by Peter Grimm View Post
    Isn't their stock market still up like 85% from January or something like that? "Free fall" is a bit overstated, I think. This is more of a retracement.
    No, it is only up about 100 points over its highest January close. It lost 32% over the last month and the crash isn't over. This last close saw a 6% drop.

    Likewise the real estate market in China is crashing as well. Poly Real Estate Group, who mysteriously gained in trading in May even while the real estate market was in rapid decline has lost 30% of its value in the last month.

    I don't see any reason for the crash to stop at this point. Real estate seems primed to turn upside down before the end of the year as they have YEARS of overstock development. Without the underlying real estate inflation the Chinese economy loses one of its primary economic engines.
    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
    There is a reason we haven't been hearing about the wonders of China's command economy for a while. It's in free fall. The Chinese government reactions to this are a good indicator why their problems will likely get much worse. They are focusing on all the worng things, taking actions that seem more driven by pride than fiscal pragmatism.
    That's funny! You might like to look up the definition of 'command economy', where the means of production are publicly owned. China hasn't been a command economy for decades. The worst hit sectors of the market are privately-owned companies whose share prices have depended on small, private, retail investors.

    I agree that not much attention has been paid to this matter, and the stock market crash looks catastrophic and will continue to do so if it continues, but don't forget that it comes off the back of a sky-rocketing of share prices that has inflated the stock market 150% in the past 12 months. A subsequent 30% fall at the moment looks more like adjustment.

    Here's a good analysis of what's going on.

    China's stockmarket crash: A red flag | The Economist
    "The crisis will end when fear changes sides" - Pablo Iglesias Turrin

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

    Quote Originally Posted by SenorXm/Sirius View Post
    My God another doom and gloom prediction. I've been waiting for China and especially their real estate market to collapse for 15 years.
    Real estate prices are in collapse and have years of over stock, the markets have lost 30% of their value and show no sign of slowing. I'm not sure what you see as positive in the Chinese economy at this point.
    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

    China has been manipulating their stock market since it was started - I'm not sure why they are letting it fall because it's not a free market at all. The central government can certainly stop the free fall immediately so the question is, why aren't they?
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    Re: Greece A Sideshow To China Meltdown,' Ex-BMO Chief Economist Says

    Quote Originally Posted by Ockham View Post
    China has been manipulating their stock market since it was started - I'm not sure why they are letting it fall because it's not a free market at all. The central government can certainly stop the free fall immediately so the question is, why aren't they?
    Some folks think it's not for lack of trying

    from the article upthread
    China's stockmarket crash: A red flag | The Economist

    Yet China’s intervention has screamed of panic. Had the central bank stopped at cutting interest rates—justifiable support for the economy when inflation is so low—that would have been reasonable. Instead, there has been a spectacle of ever-more drastic actions to save the market. Regulators capped short selling. Pension funds pledged to buy more stocks. The government suspended initial public offerings, limiting the supply of shares to drive up the prices of those already listed. Brokers created a fund to buy shares, backed by central-bank cash. All the while, state media played cheerleader. Far from saving the market from drowning, the succession of life buoys only pushed it further under water. The CSI 300, an index of China’s biggest-listed companies, fell almost 10% over seven trading days after the rate cut. ChiNext, an index of high-growth companies that is often described as China's Nasdaq, fell by 25%.

    Theories have flourished about why the government has waded in so heavily.
    I may be wrong.

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

    Quote Originally Posted by Andalublue View Post
    That's funny! You might like to look up the definition of 'command economy', where the means of production are publicly owned. China hasn't been a command economy for decades. The worst hit sectors of the market are privately-owned companies whose share prices have depended on small, private, retail investors.

    I agree that not much attention has been paid to this matter, and the stock market crash looks catastrophic and will continue to do so if it continues, but don't forget that it comes off the back of a sky-rocketing of share prices that has inflated the stock market 150% in the past 12 months. A subsequent 30% fall at the moment looks more like adjustment.

    Here's a good analysis of what's going on.

    China's stockmarket crash: A red flag | The Economist

    First, you haven't defined Command Economy correctly. A command economy doesn't require state ownership, only that state dictates production and prices. China quite obviously does that.

    Second, you are calling a 30% fall an "adjustment" when the fall isn't even over.
    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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