(no subject)

[randomness]

There's so much to say about the ongoing stock market crash in China but I'm on the road so I can't really take time to post.

The very short story is that the market is crashing. The government is panicking because it unwisely tied its reputation to a rising market. It compounded its error by trying all kinds of measures to stop the fall--all of which have failed--which have damaged their reputation even more because it has made it clear that the authorities have no idea what they are doing.

Millions of people have lost money speculating in this market. Prices are falling so fast that most of the stocks traded on the Shanghai and Shenzhen exchanges have had their trading suspended, either because their prices have fallen to their daily limits or because their companies have requested that their stocks be suspended. At the rate things are going, there won't be any stocks left to trade at all by the end of the week.

It's an amazing spectacle. The authorities look powerless and incompetent. Mostly it's something the Chinese government did to themselves. And it was all so predictable: it is the nature of market bubbles to burst even faster than they inflate.

Comments

[nihilistic-kid.livejournal.com]

Does that mean it'll be possible to buy real estate in Shanghai soon?

[r-ness.livejournal.com]

One of the impressively stupid measures the Chinese regulators took last week was to allow posting real estate as collateral for margin loans. As Bloomberg put it: "China Tells Investors: Go Ahead, Bet the House on Stocks".

So if enough brokerages went ahead and let their customers put up real estate as collateral--which, for now, it seems like brokerages are very reluctant to do--then as the market continues to fall there might be significant distress selling of property across China.

Which, of course, is just what they need right now.

[digitalemur.livejournal.com]

Wow. Yeah, it sure is a spectacle. My mind immediately goes to the public health effects of market crashes, because while we only have correlative data, we do have some indication that market crashes in countries with poor social safety nets are linked to higher suicide rates as well as higher rates of mental health problems. I don't know how that's going to look given different social models for mental and physical health in different cultures, but my sympathies are with those who are affected or going to be affected over the next few years.

[muffyjo]

Combine that with the 4 hour outage yesterday and the stock market is having a really fascinating time of it right now.

[achinhibitor.livejournal.com]

When I read this, I think "If the tanking stock market finally detonates the bursting of the Chinese real-estate bubble, the public health effects will be the least of their worries." (I could easily be wrong there, I haven't thought about it from that angle...)