STOCK MARKETS: So there’s no such thing as China contagion, huh?

Western floors run red again

marketskitch19152

Now clearly, as nothing that happens in Asia is ever of any interest whatsoever to the West (we being a global village an’ all) we must look for further for explanations of why every market is down and most blood pressure is up. It could be….

  1. Holidays are over so nobody feels up for it God I hate this job and do you know if I gave up now I could live in Thailand ’til I’m 93.
  2. Two weeks away has made me realise the game’s up and as everyone on the subway felt the same, it’s probably time to sell.
  3. I am totally confused by this BS about US recovery being well under way on the one hand and Janet Yellen never quite wanting to get beyond the sixth veil. Sell! Sell! Sell! Sell your house, your kids….

Could be one or all of those things; but it’s probably also related to this.

27 thoughts on “STOCK MARKETS: So there’s no such thing as China contagion, huh?

  1. China’s plan after 2008 was to keep the plates spinning by deficit spending and funny money invention. Ghost cities and motorways to nowhere etc.

    This might have worked if the rest of the world had not thought that ‘everything was ok’ and used China as an excuse to continue with the exploitative and cynical financial trickery.

    Money creation steals value, if anyone can falsify that hypothesis I’d be very interested.

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  2. Yes Jim, Minsky argued that corrections happened every 7-8 years (1998,2007/8, 2015/16).This time the central banks have only one option left to avoid massive deflation and that’s ctrl+P on a huge scale.

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  3. It will ever be thus KFC for as long as there is a bias toward financialisation as the driver of growth and route to prosperity. We know damn well that the way to produce sustainable prosperity is to build things people want to buy, you can’t build attractive products without innovation. The de-industrialisation of the 70s and 80s and the deregulation of markets during the same period imbued the upcoming generation with the false belief that you could hypothecate your way to wealth.

    Meanwhile the Germans were studying electronic engineering and metallurgy…..

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  4. I just wonder what the next ‘rabbit out of the hat’ may be. It just maybe that there are no more rabbits and if not , thenthings are going to get very nasty.

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  5. There’s is only one rabbit now. More Govt debt. And if that stops (individual debt and company debt increases have just about already) then the world is f++ked. QE might help a little especially if it’s used to buy shares (like Switzerland might be doing) but QE has done its bit now I think.

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  6. Well it’s diverted attention away from Greece for the moment, who can now, I suppose, be given an extra hard kicking.

    The MMT theorists will understand how, after Bretton, divorcing money from a tie with gold or any physical and finite restraint has given sovereign countries the power to both create and destroy it at will. However, it has also enabled and encouraged governments to manipulate and distort both their internal and other external, natural market forces.

    There’s a huge, unreported world financial war going on, I believe it’s still mainly about oil and I think, this time, the kicked-can is reaching the end of the road.

    Thanks for the Blog, Slog.

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  7. Take the .com boom,a new industry is formed but investment is taken away from say farming,yet we need to eat,which value is more important,not price but value,also if you have 10 apples & £10 pounds(in a closed economy) then the price is £1 per apple,but if your a millionaire that 1/millionth of their wealth & may take you say 0.001secs to afford it,but on minimum wage of £6 it takes you 6mins to earn that apple,so if you increase the money supply on one side of the equation by ten fold it will take 0.01 secs for the millionaire & 1h.40mins for the minimum for a £10 apple the price changes the value needed to earn unless you increase the wages by 10 fold also,if you increase wages & not prices then the opposite happens,but the problem is then can the seller make enough to keep bringing apples to market to sell,hence why profiteering is bad,printing money without targeting where the undervaluation has occurred is also bad,you will just compound the over/under valuations that resulted in you needing to print the money in the first place!

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  8. Before China recently sold $100 billion worth of US Treasury bonds, they first devalued their yuan by about 5%, which made their dollar holdings worth 5% more and so cashed in an extra $5 bn. On Friday China sold their dollars from the US Treasury sales for Yuan. This drove the yuan back up again and added even more to their trade.

    The U.S. has not previously suffered a debasement of their currency because their debt has always been transferred to other nations. International trading has been in dollars, and as long as their counterparts kept them, the trade remained sterilized and America had another free lunch.

    We are now witnessing a challenge to the dollar’s supremacy as the world’s reserve currency. Countries intending to trade oil in other than petro-dollars are likely to be destabilised and regime-changed as were Iraq and Lybia.

    It could, nay will, get nasty.

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  9. Although I don’t claim to really understand the economic detail of the half-hidden war that’s being fought out in the global financial battlefields, I can’t help thinking of the Titanic as a metaphor. With the 20/20 of hindsight, it became clear that there had been a train of ocean liner disasters and near-disasters over the previous decade, and another was clearly likely simply by the law of averages – yet the ships were becoming whole orders of magnitude bigger, as were their passenger complements. Then when one looks at the sinking itself, they knew roughly how long they had to float,(the designer was on board and gave a very accurate forecast) that there weren’t enough boats for everyone: yet they were slow to act, poorly-organised, there was no improvisation of rafts from ripping up areas of the wooden decking, and many of the lifeboats weren’t even full.

    Assuming you’re right, KJH, the world financial system’s behaviour is the equivalent of the Titanic’s passengers and crew bravely playing bingo while the ship sinks, with the collective governmental pronouncements and press punditry partly shouting the odds for the bingo and occasionally announcing “the ship has stopped because it’s a beautiful starlit night”.

    Hubris…’twas ever thus…

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  10. Big fat chickens, riddled with geneticly modified ‘bird flu’, are coming home to roost. Or is it roast ?

    I do hope America, in its economic war against everyone, badly over-reach themselves. The world would be a much nicer place if the yanks were reduced to the stone age.

    Of course, we, as america’s little pony, would get annihilated in the process. Camerloin and his stooges would still get to pick up their bribe (lucrative speaking tour) for commiting treason.

    Just as an aside, the UN is coming to blighty to investigate the 2.5 thousand people who were murdered in the last 6 weeks by being declared “fit for work”.

    The UN Raporteur will be bringing his biggest whitewash brush and studiously ignoring the thousands of other deaths which have happened outside the 6 week window in question.

    The great unwashed simply don’t care, of course, as they have been pre-programed by an endless stream of anti welfare propaganda churned out by the State Propaganda Organization (Free press).

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  11. Unfortunately, half of all the world’s military spending is done by the USA so, theoretically, they would be able to take on the rest of the world.

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  12. True. 2,380 died within 6 wks of being found “fit for work”.
    Iain Duncan-Smith should be broken on the wheel, then hoisted for the crows/gulls to finish off.
    His sidekicks, a life sentence peat digging / mine clearance on the Falklands.

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  13. But who will pick up the loses? Pension funds. Or who because some entity will do. Bond write offs means one winners (the liability holder) and one loser (the asset holder).

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