Re:China stock trading halted early after 7% plunge again
by zhte415 on Thursday January 07, 2016 @08:39AM
(#10857791)
A wealth effect.
An ill-sighted policy, but striving at a wealth effect. The housing market was already crashing in 2012, and gold was booming so much so it seemed like a peak. Wages were stagnant and had been for some time. So where to encourage people to have a feeling of generating wealth? A stagnant stock market.
I have a feeling the Chinese leadership, as a body that agrees on consensus, understand western economic and political history better than anywhere else in the world. They also have a sense of control over messages that get sent out by official media.
This combination led to a belief that nothing can go wrong when the 2 are put together: in this case a stampede to the stock market and quite a few savvy investors recognising this.
This search for a wealth effect reflects something much deeper, however: There is deep malaise in China's economy which is felt across the board, and there is a desperate desire to keep the ball that has rolled for the past 20 years to continue rolling.
An ill-sighted policy, but striving at a wealth effect. The housing market was already crashing in 2012, and gold was booming so much so it seemed like a peak. Wages were stagnant and had been for some time. So where to encourage people to have a feeling of generating wealth? A stagnant stock market.
I have a feeling the Chinese leadership, as a body that agrees on consensus, understand western economic and political history better than anywhere else in the world. They also have a sense of control over messages that get sent out by official media.
This combination led to a belief that nothing can go wrong when the 2 are put together: in this case a stampede to the stock market and quite a few savvy investors recognising this.
This search for a wealth effect reflects something much deeper, however: There is deep malaise in China's economy which is felt across the board, and there is a desperate desire to keep the ball that has rolled for the past 20 years to continue rolling.