This was definitely “workplace violence.”
Me either, there’s been too many stock analyst’s saying this for quite awhile, (Just go over to David Stockman’s contra corner for example and start reading) and now it’s beginning to look like their predictions are coming true… I was really hoping they were wrong, and I wouldn’t have to live through a depression worse than 1929. My parents, as kids, and their parents (my grandparents) went through the last one. Talking to them about it, it didn’t sound like fun… My Grandfather on my mom’s side never trusted banks after that…
Stockman is a champion. His latest article cuts through the all the troika’s mouthpieces’ bullshit.
My brother and I were discussing this last night. One of the topics that came up was how we both missed Bob Chapman. Bear in mind, Chapman’s “Quadrillion-Dollar Derivative Death Star” hasn’t popped…yet.
I am curious to see how much of this spills over here. The rational portion of my mind wants to hold to the fact that a LOT of folks are going to be seeking refuge in the USD.
That being said, due to all the tomfoolery, chicanery, and hornswagling going on behind closed doors, we have no idea how much leveraging has been done, and whether there is a Sheissesturm of CDS heading our way, or a swirling black hole of counterparty risk culminating in the greatest series of cascading cross-defaults in the history of the universe.
If you have some spare time, Maybe go over to www.usawatchdog.com Greg Hunter runs that site, There’s a good article up right now by Karl Denninger, Watch the video interview at the end of the article (if you have time,it 29 minutes long but, IMO worth it) Denninger does a great job of breaking things down so that’s it’s easily understood.
“The really worrying financial crisis is happening in China, not Greece”
“China looks like it is heading for its version of the 1929 stock market crash.”
http://www.telegraph.co.uk/finance/china-business/11725236/The-really-worrying-financial-crisis-is-happening-in-China-not-Greece.html
I hate conspiracy theorists; I try my best not to sound like one.
But in a country like China…is it really a conspiracy if the state runs the markets?
http://www.marketwatch.com/story/china-gains-gather-pace-2015-07-09?siteid=rss
Chinese shares made their biggest daily gain in six years Thursday, restoring confidence in Beijing’s suite of attempts to rescue its struggling stock market.
The Shanghai Composite SHCOMP, +5.76% 5.8% to 3709.33, after losses in eight of the last 10 trading days. The smaller Shenzhen market 399106, +3.76% rose 3.8%. Still, both indexes have lost around a third of their value in the past month. The small-cap ChiNext board 399006, +3.03% , which has shed some 38% from its June highs, rose 3%.
Some companies that had halted trading of their shares lifted suspensions, and their stock prices immediately rose by the maximum 10%. These include Hangzhou Iron & Steel Co., Zhejiang Huahai Pharmaceutical Co. and Leshi Internet Information and Technology Corp. Beijing. A total of 1,473 companies, or 51.1% of all stocks on the Shanghai and Shenzhen markets, remain suspended.
Uhhh…you shut down the stock market because everything is nose diving the maximum 10%, and when you reopen it immediately surges 10% in the other direction?
No conspiracy mah brotha.
Think of what a top does, right before it falls…it teeters back and forth…
What in the world is in Missouri area that all those attacks are going to?
http://www.archives.gov/st-louis/
The National Archives at St. Louis is home to the largest
Federal records collection outside of NARA’s Washington,
DC, and College Park, Maryland, locations. The St.
Louis facilities hold more than a 100 million civilian
and military personnel records dating back to the 19th
century. These records tell the story of American men
and women who served this country, some of whom
rose to national and international prominence as civilian
employees or members of the military. Visitors will find
the civilian and military records of former Presidents,
other political leaders, wartime heroes, famous athletes,
entertainers, artists, writers, scientists, journalists, and a
host of other professionals.
Guys.
You have to take this in context.
The Chinese market is up like 100+% in the last year. So even a 30% drop still means a 70% gain for people that invested last year.
Also, this is only Chinese A shares. No one outside of China can invest in theses shares due to Chinese law. H shares, which can be invested in by non Chinese are on a different exchange and they really haven’t moved much at all.
You always have to look at the data.
There are definitely some parallels with the “Roaring 20’s” in the US but it is fairly isolated to just the Chinese themselves right now.
Hopefully the global market will take this as a wakeup call that going “all in” in China is a bad idea. They don’t have robust markets and they don’t use a Anglo-Dutch economic laws. Which means it isn’t efficient and it isn’t transparent and it isn’t what people are used to in NYSE or NASDAQ or FTSE or DAX.
But it sounds scarier and makes better headlines if they make it out to be like the 1929 US market crash.
LOL
Since you have a better understanding of all this than I do, I submit this question to you.
What happens if these companies that aren’t internationally traded make key components for U.S. companies but end up going belly up? That could possibly cause businesses here to shut down or cut production which would result in more unemployed people which wouldn’t be good for our economy, right?
Or what if China panics and decides to demand payment on our debt they bought?
Any of that a possibility?
I saw it explained somewhere once that China only owned US bonds, which cannot be called on a whim. Could be wrong however.
I won’t pretend to know or understand the Chinese markets, but the math is a little more gloomy. Using those rough percentages, the gains are reduced to only 40%
Example: $100 invested, 100% gain = $200 value. 30% loss of $200 is $60, so investor now has $140 value.
Sent from my iPhone using Tapatalk
I saw a figure somewhere that Chinese markets lost somewhere in the $3.25 trillion range since June…
That’s a lot of yuan*.
Thanks for the vote of confidence. I don’t really know that much.
But I will answer to the best of my knowledge that I have gleaned from my favorite investing boards.
Once a share of a company is sold (in an IPO), it doesn’t matter to them, directly, what happens to share price. Just because a company’s share price goes down, it doesn’t mean that it will directly affect the company’s day to day operations. Eventually, the share owners, may take action and fire everyone if their share price doesn’t go up but a $100 share IPO that goes up to $200 and then drops to $140 isn’t very likely to affect the company directly unless they were planning on doing another stock sell to generate more capital at a higher share price. However, it will cream people that got caught up in the excitement and bought it at $189/share and it will absolutely destroy people who took out margin loans and bought it at a high share price but most of the time the worst thing that happens to a company when their stocks take a hit is that it makes it harder for them to get a good price on their next attempt to get more capital by releasing stocks. Some companies, that are flush in cash, might even see this as a good thing. They could then buy back some of their own shares and actually drive up the price. Particularly if their CEOs happen to have a lot of RSU’s or other deferred compensation plans that could benefit from having higher stock prices. Capital markets are really, really complex and I really don’t understand them that well myself but having a big stock market sell off generally won’t cause a company to go belly up.
You can’t really call in US Government Treasury Bonds (or any sovereign bonds to the best of my knowledge). They have a fixed maturity. You buy a 10 year T-bill, in 10 years you will get your principal back plus whatever interest rate you bought it at. They aren’t callable by you or I.
However, they could decide to start selling all their T-bills which would flood the market with what is considered “safe haven” investments. This could hurt the US by causing us to need to raise interest rates to compensate. For instance if the current US 10yr T-bill is 2% and the Chinese have a whole bunch of T-bills of various maturities that have a Yield to Maturity (YTM) of 5% that the dump on the market, no one will want to buy current T-bills at 2%. So the US will have to raise our interest rates so we can actually borrow money from outside sources.
The problem with that scenario is the way the Chinese keep their currency artificially low is by buying our T-bills. So they wouldn’t be helping themselves by doing that at all. Especially since they are getting their interest in USD.
It is really WAY more complicated than that, but that is the way I understand it.
The biggest problem with this problem in China is that panics are contagious like a zombie outbreak. One person sells their stock which causes the price to drop which causes someone else to panic and sell theirs until companies and even entire industries become “infected” and stocks which previously were valued at $200/share are now worth $140 and no one wants to be the guy left holding the $100/share IPO that is now worth $50/share. Then no one wants to put any money into the stock market so everyone puts their cash in the bank. Then the government/banks start lowering interest rates until some adventurous souls start buying stocks again. Then more people start investing, then still more people see that other people are getting rich because they bought when no one else would and the money starts pouring in again and the cycle starts back over. 
In the meantime though, companies can’t get any capital because no one wants to take the risk of the stock market (liquidity problem) so you get stagnation. Which can get into a death spiral that takes something big to restart everything.
Eventually, it always seems to return to the mean. (Or at least it has in the last 170 years or so) That can take 2 or 3 years or it can take 20 years (like Japan). That is the stock market gamble.
That is also why you MUST diversify and not put all your investments into one thing. The best description I heard was that you needed to be investing in at least one thing that you didn’t like the performance of. That way you were always buying what is down.
Being diversified in Domestic stock, International stock, Bonds, Cash, precious metals, real estate means that for instance right now, when everyone is panicking and jumping out of International and buying US Bonds, you can sell Bonds and buy more International. When the tide eventually runs back the other way, you will have earned a premium and you can sell International and buy more US bonds because the pendulum will undoubtedly swing back the other way.
Holy crap I am long winded. I am worse in person.:rolleyes:
I agree, but if someone was wise, and had an appropriate asset allocation (don’t bet the whole farm on Alibaba), then they probably rebalanced and “locked in” a very big portion of those gains in non-correlated assets. Like US stocks, commodities, Real estate, US Bonds, etc.
If they didn’t, I bet they will next time.
Whoa, you guys had me nervous there for a minute. But thankfully Bruce Jenner and all of his oops I mean HER daughter’s, and step-daughter’s Twitter feeds are still up and running . . .
This is a very good post. Well written, informative, but not information overload. Thanks for that.
Thank you! 
An accountant telling an engineer they said something good about financials…
Wow.
I think I just heard a flying pig land on top of the building.:jester: