Australia media is reporting on a China collapse that might be “monstrous.”
An Australian news outlet is reporting, “Chinese chaos worse than Greece.”
WHILE the world worries about Greece, there’s an even bigger problem closer to home: China.
A stock market crash there has seen $3.2 trillion wiped from the value of Chinese shares in just three weeks, triggering an emergency response from the government and warnings of “monstrous” public disorder.
And the effects for Australia could be serious, affecting our key commodity exports and sparking the beginning of a period of recession-like conditions.
“State-owned newspapers have used their strongest language yet, telling people ‘not to lose their minds’ and ‘not to bury themselves in horror and anxiety’. [Our] positive measures will take time to produce results,” writes IG Markets.
“If China does not find support today, the disorder could be monstrous.”
In an extraordinary move, the People’s Bank of China has begun lending money to investors to buy shares in the flailing market. The Wall Street Journal reports this “liquidity assistance” will be provided to the regulator-owned China Securities Finance Corp, which will lend the money to brokerages, which will in turn lend to investors.
Loaning money to people to buy stock in order to try to boost stock prices sound like an incredibly desperate move. And if the government media is admitting that people are in danger of losing their minds and burying themselves in horror and anxiety, the situation must be really bad.
So now we have China added to the list with Greece and Puerto Rico. We know that in Europe there are other nations waiting to collapse after Greece does. Likewise, there are states and cities in the United States that are also effectively insolvent.
I have no way of timing all these things perfectly, but it does seem like the financial problems are accelerating and amplifying one another.