I love those fantasy stories about central bankers being all-powerful and able to levitate stock markets forever. They make me all warm and fuzzy. In case you hadn’t noticed, the Chinese central bankers and communist party politicians have been desperately trying to stop their stock market from crashing. EPIC FAIL!!!
It plunged another 5% overnight. They have halted trading on 40% of their stocks and it keeps falling. They ban short selling and it continues to fall. They ban the press from talking negatively about the stock market and it keeps falling. They instruct their government agencies to buy stocks and it continues to fall. The omnipotence of central bankers is being proven to be a fraud.
Anyone who doesn’t think the US markets could drop 32% in a month is just drinking the central bank kool-aid. Our markets plunged 55% from their 2008 highs in a matter of months. And the majority of the losses occurred on 10 trading days. Think about that for a second.
Please note the chart below. The Chinese stock market went parabolic in 2006, soaring 500% by 2007. Wall Street shysters were hyping Chinese stocks like there was no tomorrow. Guess what happened next? That’s right – it lost 70% of its value in a year. Fast forward to late 2014. It happened again. Little old Chinese ladies piled into the market on margin and it soared 250% in a matter of months.
If you think the collapse is over, you don’t understand collapses. Once they start, there is no stopping them – like an avalanche coming down a mountain. The Chine stock market collapse has another 30% to go – at least. If you think this won’t impact the world economy – you are a dolt. While everyone is focused on the backwater 3rd world country of Greece – the 2nd largest economy in the world is crashing. Hold on tight. It’s going to be a bumpy ride.
Due to the fact the Chinese stocks continue to plunge, today’s chart is an update from last week’s chart on the Chinese stock market as measured by the Shanghai Composite Index. While much of the world’s attention has been focused on Greece (understandably so with a new Sunday deadline for Athens to reach a deal with the institutions or face Grexit), it is worth keeping in mind that China is home to the world’s second largest economy and provides much of the world’s economic growth. Investors are particularly concerned since the plunge in Chinese stock prices continues despite the fact that the Chinese government has bought up shares of many large-cap stocks, stopped IPOs, cut trading fees and halted trading in many companies (over 1,300 at last count). Despite all this government intervention, the Shanghai Composite is down 32% in less than one month.
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