Of course the situation in Europe has been a huge distraction for mother events in the world so let me point something out that could be of huge consequences for New Zealand and other countries doing trade with China.
First of all the collapse of the Chinese stock market which has been taking place over the last couple of weeks is not a free standing event. The trigger to all this mayhem os of course the pending collapse of Main street America, also knowns as the real world economy. While Wall street has been racking it in with their fraudulent financial constructs the real economy has been decimated in both the US and Europe (With the exception of Germany) and people are simply not spending the same amount of money on cheap Chinese crap. The Chinese elite can no longer kick the can down the road by building empty cities and they have been buying up real estate around the globe with their fraudulent fiat currency (Auckland being one example!)
This stock market collapse is simple a matter of a problem long denied coming home to roost!
As one local reporter put it, despite being told not to say anything negative, “the government appeared to have lost its ability to manage the market.” Chinese stocks are down 4-5% at the open, pressing new cycle lows with Shenzhen and CHINEXT now down 25% from last week.
As The South China Morning Post reports, many investors said the government was at least partly to blame for the collapse because it encouraged them to go into the market – for months, state-owned media have issued daily commentaries to encourage people to load up on shares.
And now the payback: even more utter carnage:
The longer-term perspective:
Leading to the local version of “brokers with hands on their faces”:
As The South China Morning Post explains, a series of lifelines from Beijing failed to stop the slide in the mainland’s stock market on Thursday, with the key Shanghai Composite Index closing below the critical 4,000 mark for the first time in almost three months.
Analysts warned that the nation’s leadership would pay dearly if it failed to stabilise the market and prevent millions of small investors from losing their life savings.
“The government’s response to the fall confirms that it will use all the resources at its disposal to influence the market when things do not go the way it wants and potentially puts its legitimacy at risk,” said Steve Tsang, chair of the School of Contemporary Chinese Studies at the University of Nottingham.
The China Securities Regulatory Commission said last night that the stock market had recorded a significant drop, and the commission would launch an investigation into suspected market manipulation. Those suspected of committing an offence would be handed over to public security agencies.