This is scary. I don't see how $19 billion more of investment will make a difference, if pledging to invest China's centi-billion pension funds didn't calm the markets. The ship is sinking; that's abundantly clear. What isn't so certain is what the after-shocks will be like. I'm really concerned that we're witnessing the start of the next global recession. Particularly when western governments and central banks are woefully unprepared to combat another crash.
I agree that 19B isn't likely to re-inflate the bubble. It seems strange how the government is so vocally taking a stand in a battle they cannot win. To do so only makes it look like their influence over the economy is more limited. I don't think that the shockwaves will carry to the US and European economies to the extent that it will cause a downturn. I don't know much about African economies, but I do know that China was investing heavily in Africa. This could reverberate there. Also, I believe Australia exports a lot of raw material to China.
Pushing money into the market to save it seems like madness to me. Companies need to valued based on what they produce or upon the future expectations of their production. Maybe this is an intervention that can help lead to a softer landing but it looks like a panic. In the long term it's probably an adjustment that Chinese companies need but it's happening in a very dangerous way.
I agree. These desperate actions might indicate a more desperate situation. From the Chinese people I know, and from my experiences over there, I get the sense that things could be far worse than what is widely assumed. The official economic data is heavily manipulated, if not fabricated at times, and estimates of their debt are huge. Servicing debt is sapping investment, and the market was the only place to get returns that outpaced very high interest rates on debt. I think the market was working as a crowd sourced bailout.
Pretty much seems like China's m.o. I wonder what the hell is gonna happen to Venezuela.It seems strange how the government is so vocally taking a stand in a battle they cannot win. To do so only makes it look like their influence over the economy is more limited.
They have big debt payments due in October if I remember correctly. I wouldn't be surprised if they defaulted then. They'd likely be joining Greece, Ukraine, and Puerto Rico as sovereign (or semi-sovereign) nations in default. I"m concerned we're rushing headlong into the sovereign debt crisis that we seemed perpetually "on the brink of" in 2012.