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EdwardT
Trad climber
Retired
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Jul 27, 2015 - 05:52am PT
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Uh oh!
China's Shanghai Composite index shed 8.5% on Monday, a bone-rattling decline that raises questions about the government's ability to prevent a crash.
Beijing managed to stabilize markets with a dramatic rescue in late June and early July, intervening in a number of ways to limit losses for investors.
But the rout has now resumed: Monday's slump was the biggest daily percentage decline since 2007.
The vast majority of companies listed in Shanghai, including many large state-owned firms, fell by the maximum daily limit of 10%. Losses in Shanghai, and on the smaller Shenzhen Composite index, accelerated into the close. Shenzhen, which is heavy on tech stocks, closed down 7%.
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MikeL
Social climber
Seattle, WA
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Jul 27, 2015 - 08:26am PT
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Good post, Jan.
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Reilly
Mountain climber
The Other Monrovia- CA
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Jul 27, 2015 - 08:28am PT
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When looking at China's stock markets do keep in mind that the number of
investors there is a small percentage of the population; they're China's
A-listers, if you will. You're not going to find massive pension funds
and the like there and foreigners aren't allowed to trade. Trading there
is more akin to gambling. It shouldn't have very wide repercussions
although it will out of proportion.
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Brokedownclimber
Trad climber
Douglas, WY
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Jul 27, 2015 - 10:22am PT
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Reilly-
Never discount the herd mentality when it comes to investors... ;)
It does, however, indicate the overbought marketplace in China, and reflects the gambling nature of paper investments. The possible "domino" effect on other world markets cannot be estimated, as many of the A-listers in the Chinese marketplace may need to begin liquidating assets in other markets (USA and Eurozone) to cover the short term losses at home. That could trigger a wave of selloffs.
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Reilly
Mountain climber
The Other Monrovia- CA
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Jul 27, 2015 - 10:29am PT
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Right you are Broke and, painful as it may be, we desperately need a good
solid 10% 'correction' here to cover our hedge funds' shorts and scare the
weak-willed (and weak-minded) out of the equities markets.
I'm back from Pinedale but I didn't pull the trigger on the 40 acre spread -
the accompanying house wasn't of the quality of the land. :-(
The wife still thinks she needs to be closer to 'culture', like in Breckenridge, CO.
Pinedale has all the culture I need, i.e., Teton Brewing Co.
It would be nice to have you as a neighbor, so to speak. ;-)
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Brokedownclimber
Trad climber
Douglas, WY
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Jul 27, 2015 - 10:30am PT
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Jan is dead on with 7 of her 8 reasons listed above. The only one that I would dispute is #3, regarding the Greek Oligarchs. For the most part, they have moved their ownership of shipping assets out of Greece; just because of Greek registry of vessels doesn't mean that the profits are all coming to Greece. Who knows where the ownership resides? Nigeria? Libya? Many of these despotic African hellhole states allow ships of other nations to "flag" their vessels with their national flags. Getting to the fortunes of the Greek shipping magnates is, if not impossible, very difficult through the webs of corporate dispersals of assets. They didn't get rich by being dumb or politically naïve.
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blahblah
Gym climber
Boulder
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Jul 27, 2015 - 11:33am PT
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-Greece has no natural resources and the climate is not conducive to hard workBold Text (unlike northern Europe, Japan, or Korea)
Surprised no one called BS on this old cliche, which seems out of 1915 (or 1815 or earlier) rather than 2015.
How about they don't have that good old "Protestant Work Ethic"?
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Reilly
Mountain climber
The Other Monrovia- CA
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Jul 27, 2015 - 11:39am PT
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How dare Jan make such an insensitive comment about the weather!
The climate is hotter now than in 1915 and I hope it too isn't butthurt
by having its data impugned! Did you also know that the Arctic isn't
conducive to growing olives?
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Jan
Mountain climber
Colorado, Nepal & Okinawa
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Jul 27, 2015 - 02:09pm PT
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Thanks Reilly.
Last thing I knew Protestantism was still confined to the northern countries of Europe and hence the Protestant Work Ethic as well.
Some people have noticed that there seems to be a Confucian work ethic also. Still it seems confined to cooler countries or those with good air conditioning. Former Prime Minister Lee Kwan Yew is quoted as saying that the success of Singapore rests on air conditioning, that without it, they would have remained a sleepy third world port.
And what about the more polite term for first versus third world which is the "North South Divide," a term coined by Willy Brandt? And then there are the northern blue states who subsidize the southern red states in our own country. Seems like a lot of exceptions to something that supposedly doesn't exist anymore.
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Fritz
Trad climber
Choss Creek, ID
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Jul 27, 2015 - 05:05pm PT
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It's good to see the S & P 500 down only 0.58% today after the Shanghai market droppped 8.5%.
Reilly! Re your comment: we desperately need a good solid 10% 'correction' here to cover our hedge funds' shorts and scare the
weak-willed (and weak-minded) out of the equities markets.
Fuk the Hedge funds & the weak-willed & weak minded. There appears to be enough negative news at present and soon to come, for U.S. stock markets to make some substantial gains------or not.
I ain't (too) skeered & I ain't selling.
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WBraun
climber
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Jul 27, 2015 - 05:37pm PT
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Bottom line
The planet is steeped in gross materialism and greed.
Stupid people on this planet have lost their minds in materialism ......
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Reilly
Mountain climber
The Other Monrovia- CA
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Jul 27, 2015 - 05:45pm PT
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I ain't (too) skeered
Maybe you aren't, Fritzi, but Brasil is drifting towards the brink of the
financial Iguazu. That will make Greece look a cake walk. How long can
Venezuela and Argentina tread water? Will Italy face reality and enact
the needed reforms? Will the Spanish realize they're on the right path
with Rajoy and stay the course? India seems to be drifting into a big
eddy that might become a hole if the water rises and our 'recovery' seems
to be on its last legs. Did I mention the Tobin Q ratios are at dangerous
levels? Lest I be accused of calling the glass half empty let me state
that it is my opinion that a correction will prevent the glass from emptying.
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Brokedownclimber
Trad climber
Douglas, WY
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Jul 27, 2015 - 06:25pm PT
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Maybe it's again time to review the question of : "What is money?" Yeah, it's the root of all evil, but not for greed or avarice.
What we're dealing with is the end game of Fiat Currency, where money is "borrowed in to existence." Such "money" is honored by the various lending institutions (Banks) for repayment of debts and settlement of obligations. The borrowers all have the problem of repayment with interest, which isn't "borrowed in to existence." It must be paid through the liquidation of something physical or labor. The banks have the most appealing product: money. It's hard to say no to the offer of a loan, and governments are as gullible as any individual.
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rottingjohnny
Sport climber
mammoth lakes ca
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Jul 27, 2015 - 08:37pm PT
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I'll take a chance and answer for brokedown..he probably doesn't give a sh#t at this point in life..
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Brokedownclimber
Trad climber
Douglas, WY
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Jul 28, 2015 - 05:59am PT
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I'd say that rottingjohnny nailed it without even having to ask me...
I suspect that the motive for proposing such an inane question was to determine if I'd go on a borrowing binge, or continue living my normal ascetic lifestyle.
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Brokedownclimber
Trad climber
Douglas, WY
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Aug 24, 2015 - 06:20pm PT
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The Greek crisis is far from over, since the Prime Minister Tsirpas is preparing to resign. The Greeks have received some 13 Billion Euros as a first installment, which will simply pay off the bankers their interest.
I post this now, as the US Stock Market crashes. Many of the more perceptive posters on this thread made the prediction that the Chinese Markets would crater, followed by the US Markets.
This is a simple fact of life, based on Fiat Currencies and loose credit policies.
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Reilly
Mountain climber
The Other Monrovia- CA
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Aug 24, 2015 - 06:48pm PT
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Well, Broke, the Chinese economy's decline is rather more nuanced, especially
as key info is at a premium*. The fact that the gubmint did nothing today
is interesting but not surprising. I read it as a signal from the Party
that while they may pick the band (and the tunes the band plays) it is your
choice to dance, or not. That many people will have to go back to shoveling
sh!t into the paddies because they thought they could get rich quickly on
the Shanghai market is a drop in the bucket and that is why that market
is so squirrely - no foreign money allowed and, hence, no liquidity.
Mark my words, Brasil is next unless they pull some prize rabbits out of
Dilma's hat. Ha, you thought I was going to say something crass, right?
China's troubles are their troubles, along with any commodity producer,
but Brasil has deep structural problems that compound the drop in commodity
prices.
Credit default swap indices spreads yesterday and today reached very
worrisome levels. This will get worse before it gets better. But I am
prepared to buy sooner than later. I really don't see this correction
going a whole lot further south. Say what you will but there is more good
than bad in our economy right now and we're not a commodity playa any more,
other than oil, and oil stocks are looking more tempting by the day.
*The lack thereof diminishes market efficiency as a lot of data is missing
or its verity is highly suspect, maybe not on a par with Argentina but that's
a really low bar. Actually, it is probably worse than Argentina because
the numbers are so large. When they cook the books in China that's some,
I can't help myself, dim sums.
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