Wednesday, July 08, 2015

Capitalism: You're Doing It Wrong

China might have a communist government but their economy is based on capitalism.  Or, it was.

China's markets are down 25-40% in the past few weeks.  Over $2T of wealth has disappeared.

They've blocked over 50% of the stocks from being traded.  Imagine being told you cannot sell an asset.

But that isn't the focus of this post.

This is.

Last night's news, shared by ZH:
China’s securities regulator banned major shareholders, corporate executives and directors from selling any of their stakes for six months, the latest effort to stop a $3.5 trillion rout in the nation’s equity market.
The "major" shareholders in any economy are the entrepreneurs, innovators and business leaders.  Also known as the people to CREATE wealth.

Anyone with half a brain knows A) they are your country's bread and butter, and B) if they don't see a reason to risk their time, effort and personal wealth for a chance at big gains, they won't.

Whatever short-term fix this may have given the communist leaders in China will be dwarfed by the long-term impact.  Guaranteed.

BTW, I read about this China market crash a year ago in one of Jim Rickards' books.  I've mentioned him before as my preferred source for economic analysis and predictions.  His pessimism is measured with maturity from a long career in both the markets and in helping the US government with financial terrorism modeling.

His books:
Currency Wars
Death of Money

His blog.

Also: kudos goes to ZeroHedge which has been off-line most of today due to a spike in traffic.

UPDATED 2 minutes later:

Trading has been stopped on the NYSE (MarketWatch)

CNBC: "This does not bode well." (ZH)

"No Quotation" is the new buzz term for 2015.

UPDATED 2:10pm:

The NYSE is still offline - 2+ hours now.  A technical glitch.  Our dear leader has been briefed.

Knuckledraggin Ken commented on the China market problems:
Let’s see, China’s having severe financial problems, we owe China a shitload of money… China’s gonna come collecting.
UPDATED 7.9.15 6:30am:

I stand corrected.

Blocking large shareholders from selling for six months seemed extreme a day ago.

But threatening to arrest traders who bet on a downward market - a reality that occurs about, oh, 50% of the time?  WTF are the Chinese communists thinking?  Are they that threatened? 

At least they aren't arresting "hoarders" and other bourgeoisie wreckers..  That we know of.

ZH: Utter Desperation: Chinese Police Vow To Arrest "Malicious Short Sellers"
In what can only be described as total and utter desperation, China's Public Security Ministry and China Securities Regulatory Commission are discussing a plan to take action against "hostile short sellers"
Had they allowed the markets to absorb investor sentiment over the past month, this "crisis" would be over and we'd be hearing about "buying opportunities" in China right now.

Can you even imagine our leaders plotting to arrest American citizens for legal activities?

Completely unrelated from Gateway Pundit:  IRS SCANDAL WIDENS: Obama Officials Discussed PROSECUTING CONSERVATIVE GROUPS

Commies. I hate them just as much as they hate me.

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