It should be noted that when aspirational countries hit economic brick walls they often do not react well. Suddenly power shifts, as do markets and political perspective – in policy circles and in the general population. This creates instability, which threatens the powers that be. The powers that be then react.
This would be fun to watch if it wasn’t for the fact that an unstable China creates a number of problems for us, the USA, economically and perhaps in other ways. But here’s a good bit of advice from the author of the attached article.
When Shanghai was peaking at 5,000 in June, I gave you five words of advice: Get. The. Hell. Out. Now.
To which I’ll add five more: And. Stay. The. Hell. Out.
Well China stocks are cascading. Now the NYSE has suspended trading and may for the rest of the day? Yeah, things are fine. Totally cool.
We are told that the NYSE is “rebooting” now. But it’s been 2 hours and that’s a long bit.
The Chinese stock market is crashing hard. Over half of all the companies on the Shanghai Exchange have been suspended from trading. The government is directly intervening in the market and has failed to even slow the selloff.
We are beginning to see the Great Experiment, the post 2008 Crash experiment, disintegrate. A crack here. A crack there. A hairline fracture. A fissure. The underpinnings of printed money have always been unsound, but now the edifice appears to be unstable. Will a hard Greek gale bring the thing down, or will winds from somewhere else finally do this fiat superstructure in?
Guess we’ll find out soon enough.
OK, so Greece is messed up. We know that. It’s not a surprise. The call for a referendum from Athens was a surprise but not the end of the world.
It could be that investors are just looking overseas for opportunities after stocks hit highs in the US. Or it could indicate that the market is very concerned about future US economic growth. Either way CNBC assures us it’s probably not bad for American equities.
They say “don’t fight the Fed.”
This has been especially true from an equities investment perspective since the Crash.
The question now though is how much fight is left in the Fed.
We added the question mark to the end of this headline.
As we have noted for a while, the Ultimate Crony Capitalist state, China, is seeing very rough waters economically. A massive property bubble (and bust) fueled by Keynesian shortsightedness, not unlike the one we experienced here a few years ago, but much bigger is gripping the country. The Chinese dream is “maturing.” For the first time since emerging from the insanity of Mao the PRC is experiencing real economic pain.
Even with all the insanity out there right now the bulls it seems haven’t completely capitulated yet. Perhaps they shouldn’t, or perhaps they are delusional and they will find destruction. Or perhaps the bulls will provide just enough hope in the market to keep things from going into complete meltdown. A safety valve. Or maybe they are on the edge of giving up.
I have no idea. That’s what makes a market.
It’s never time to panic. That is certainly doubly true when it comes to investing. But it takes a disciplined mind to avoid freaking out as shares continue to march lower day after day. And in the midst of the chaos to make wise decisions.