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Watching the Great Bubble of China deflate. What happens in China does not stay in China.
The hair-on-fire headline reads, in full: “Doomsday clock for global market crash strikes one minute to midnight as central banks lose control.” But here’s the thing — the headline does not appear in a hair-on-fire, Chicken-Little website such as (one might slanderously call) Zero Hedge, David Stockman’s Contra Corner, Wolf Street or (dare I append this name to the list of Titans?) The Daily Impact. It appears on the website of one of the world’s top mainstream newspapers, Britain’s The Daily Telegraph. And here’s the subhead: “China currency devaluation signals endgame leaving equity markets free to collapse under the weight of impossible expectations.”
Worried yet? Don’t be. It’s way too late.
One of the hair-on-fire websites (first clue: it’s name is The Economic Collapse Blog) lists 23 — count them, 23 — countries whose stock markets are crashing right now. The largest of them, of course, is China, whose markets have been imploding for two months. For most of that time the mainstream media has been murmuring assurances to the rest of us trying to learn of stocks with how to invest 10000 dollars — it’s over, it’s stable now, it’s contained, it won’t affect us — while things got worse, faster, over a wider area.
As the Telegraph article points out, it was China that saved the world after the 2008-9 crash, by expanding its economy ruthlessly, with borrowed and imaginary money (that is, money imagined into existence by the central bank). They built high-rise apartment buildings, whole cities of them, in which no one lives. They built freeways on which no one drives — they poured more concrete in three years than the United States has poured in its entire history. Now, mired in debt that is coming due, its currency devalued, its stock market crashing, China teeters on the brink of unimaginable catastrophe.
The seizures afflicting China’s economy are a major reason why the prices of virtually every industrial commodity have crashed this year, with dramatic effects on the economies and the currencies of the countries whose welfare depends on the sale of the assets nature deposited under their territory. The fairy tale has been that these “emerging” nations, which of course will never deplete their deposits of whatever, will take over the engine of endless global growth as the mantle falls from the shoulders of the exhausted roosters — the United States, China, etc. Instead, each of these countries is in turmoil, its currency fraying, its markets roiled, its economy seizing up.
Money, real and imaginary, is rampaging out of China, out of Greece, out of the emerging markets, out of the bond market, and. yes, out of the American stock market. According to staid and optimistic CNBC, it’s a “stampede,” with domestic equity funds losing $20 billion in investor funding in July, nearly $160 billion in 12 months. The outflows are far worse than they were in the 2009 crisis. Ask not for whom the Chinese gong tolls; it tolls for three.
As the markets, including the US markets, continue to stagger along the edge of the cliff like the proverbial drunken sailors, the Dipsticks (a.k.a. the Masters of the Universe) continue to buy the dip, praying fervently to the great god Mammon that each reverse is a temporary hiccup and not the manifestation of the immutable law of gravity.
Never mind what your smartphone thinks the time is. It’s a minute to midnight, all over the world.
Si se suede…yes we can survive this, just not in any way as the society we think we are.
Interesting how modern electronics alter what is input, the term is si se puede.
And, back in the good old US of A shale oil patch, the ongoing price collapse is helping things along:
http://www.msn.com/en-us/money/other/crude-carnage-threatens-stock-breakdown/ar-BBlT9eU?li=AA9ZWtY
And the eternally useful idiot, Jim Cramer, does his positive spin:
http://www.msn.com/en-us/money/markets/cramer-remix-why-a-drop-in-oil-is-a-good-thing/ar-BBlTnpZ?li=AAaehx7
Of course it is one month till the final collapse…
1 month 4 days 9 hours and 37 minutes. For final final collapse, that is.
Recently there was this article (to back up what you write here, Mr. Lewis):
23 Nations Around The World Where Stock Market Crashes Are Already Happening
http://theeconomiccollapseblog.com/archives/23-nations-around-the-world-where-stock-market-crashes-are-already-happening
[Begins]
You can stop waiting for a global financial crisis to happen. The truth is that one is happening right now. All over the world, stock markets are already crashing. Most of these stock market crashes are occurring in nations that are known as “emerging markets”. In recent years, developing countries in Asia, South America and Africa loaded up on lots of cheap loans that were denominated in U.S. dollars. But now that the U.S. dollar has been surging, those borrowers are finding that it takes much more of their own local currencies to service those loans. At the same time, prices are crashing for many of the commodities that those countries export.
Most stocks are already down 20%+, selling at 52 week lows. Only a very few stocks are holding the averages up. Strong companies are busy buying up the assets of their weaker, over leveraged competitors, ex oil, biotech. Why the media covers and people buy, risky, financially weak, companies with a story and not much else is a real mystery. Ex Twitter, Etsy, and hundreds of others.
What next, the final QE, followed by hyperinflation? If China is bust, and there is no other engine to soak up QE, will we be off to the races?
Now Ambrose is telling us not to worry, the Chinese have it under control and we won’t collapse this year.
On the other side of the coin, Oil dropped to a $39 Handle today.
RE
I hope Sue Ann Arnall changed her mind and deposited that $975m check from Harold while he still has money –
http://www.businessinsider.com/r-harold-hamm-offers-975-million-divorce-check-ex-wife-rejects-it-2015-1
– Continental Resources is down 25 percent:
http://www.msn.com/en-us/money/markets/plunge-in-oil-stocks-erases-dollar17-billion-as-exxon-hits-5-year-low/ar-BBm33zI?li=AA4Zjn
So, Dave Cohen says “You can panic maybe if your pension fund is going up in smoke. Eventually some of this unraveling will reach the “real economy” where you and me live. Most of the big damage is going to happen in China, not here in America.”
Most of the damage will not happen here in America. I just can’t believe what’s coming out of his fingers.
“Otherwise, relax and enjoy the ride. There’s a big difference between pointing out the failures of global central bank policy and predicting the end of the world.”
I really wish I could make sense out of his thinking process. We’re safe here in America.
Recently Cohen went off about how Peak Oil didn’t happen or hasn’t happened. Now, I’ll be the first to acknowledge it never rolled out the way Heindberg and the others called it back in 2005, but to point to an article about increasing production seems to be just the kind of Flatland thinking Cohen accuses others of doing.
Is this guy for real or just a sack of anger waiting to pop like those characters in the movie, “Aliens”?
Here’s a funny story some of you might find interesting. I finally felt up to going back to some sort of farming and volunteered at a local restoration farm. Run by white young girls (I couldn’t call them women, and if they were male I’d call them boys) who are graduates of the Ivy League schools and other top notch bastions of education. They live in the clouds and in the gentrifying areas of Brooklyn (Crown Heights and Bed Sty) and see nothing wrong with their presence in these neighborhoods.
Well, these well educated girls are not seeing as many volunteers this season and are telling people that this is an indication that people are finding jobs. Wow, over 60K for that piece of paper telling them how smart they are and this is the best critical thinking conclusions they can come up with.
Not that people are working at Amazon like companies, don’t have the day off when volunteer days are, are too exhausted to come, are too shamed they don’t have work or have committed suicide and no one knows or cares. But, hey these Little Mary Sunshines don’t know anything about the economic situation unfolding, how rapidly Climate Change is occurring and that there are dead bodies on the beaches in Italy.
I shake my head at them; all they want to know is what i do for a living. Since I no longer answer that question people scratch their heads and feel frustrated that they can’t easily place me in some silo or box. Not many men (and a gay one at that) can talk about women’s bodies and the changes it goes through during pregnancy and menopause over lunch cooked by a Guyanese woman who only wanted to know when was the right time for her to buy a house (and she’s a fan of Celente).
Cohen is the only human out of 7.3 billion who has managed to overcome every single one of the over 250 inherent cognitive biases every minute of every waking moment. He’s above the rest of us apes. How did he reach this bias free enlightment? He wrote his flatland essays. All based on the work of thousands of folks over many generations who devoted their adult lives to studying psychology, neuroscience, neurobiology and all aspects of human behavior. Somehow not one of them was able to connect the dots like Dave did. My ex, who is a lovely woman, was cursed with bipolar disorder and Cohen’s swings from analytical matter of fact observations (often with humorous sarcasm) to overly aggressive attacks of imperfect well meaning people along with his regular grandiose self assessment/praise reminds me of her duality. Or he could just be the worlds biggest prick – who knows “I’m not a scientist”. His attacks on his commenters are even worse. I believe he is a talented writer (Not as good as mr Lewis) and did a great deal of work on the flatland essays which I generally agreed with cause I am something of a biological/behavioral determinist on the species level. The thing is it’s an old theory and the only thing new is the new research contributing towards it. None of which Dave did, so there will be no forthcoming Nobel prize for flatland. Sorry Dave. Philip I do believe any of us can make sense of Dave, but I’m open to suggestions.
Apneaman
I appreciate the response to my comment and more so that it was you one of the regulars that are part of our small little community of commentators on these out on fringes sites.
Yes, I don’t know why Dave does what he does (I’d like to know to understand him) but his behavior is really up and down and makes it difficult to fell safe around. I too like what he writes about (though I feel he is too word for me). I truly love Tom’s writing, he’s short, succinct, engaging and provokes some critical thinking by supplying some good (and not too many) links to other sources.
I’d love to give those Ivy League Girl Farmers a copy of a book I’ve made of various postings of Tom, but I fear he may be more sophisticated and challenging than their well educated minds can bear.
And Tom gives great sarcasm too.
There’s in addition another shining wit by the name of Paul Krugman, who recently declared that the whole trouble with the world economy right now is that ***governments aren’t bogged down in enough debt.***
http://www.zerohedge.com/news/2015-08-21/paul-krugman-what-ails-world-right-now-governments-aren't-deep-enough-debt
Quite evidently we’ve reached the point where people are pointing at sh*t and calling it chocolate ice cream.