Perspectives on the global economic changes

[Suraj]

Why do ppl say that the Chinese crash was engineered from outside? Their market had shot up like 150% in a couple of years, a steep correction is just a fact of life.

Because people are making a mistake by looking at the Chinese situation as a conventional market phenomenon of boom followed by bust. It's not. It's a political phenomenon, of a totalitarian government going out of its way to almost assert that people buy stocks out of patriotic duty, and not just implicitly, but almost explicitly guarantee the rise of the market, through the invisible hand of the all powerful state: "Go out and buy stocks. Don't worry about the market falling - we are there behind you to make sure it doesn't."

Turns out the market is falling, and CPC is throwing everything and the kitchen sink at the problem. The boom was engineered by the CPC, who explicitly championed the rise of their stock market, and front ran equity investment into their own blue chip SOE stocks, exhorting people to invest in the market. Now the same CPC is using those people's pensions to try and backstop the market, and getting burned trying to catch a falling knife. Can they succeed ? Sure, they can, by overwhelming use of fiat actions to avoid market pricing of the losses, and corresponding loss of credibility as an open economic system, something they aggressively seek. They're simply finding out that their goals to become a financial leader cannot happen by just waving their hands this way, and that free capital markets can be an unforgiving system.

[habal]

FII withdrew almost 1.5 trillion $ from Chinese capital markets in last 2 years. However the Chinese capital markets were not reflecting the drain of capital in their numbers due to volume of hot-money in system. So now again a small prick and they unwind themselves to latest situation.The help or the prick came from external impetus but rest they managed themselves.

[Austin]

Well no different from the QE's of US and EU who thought it was Patriotic Duty to support a falling bank and then the same bank through it was its own patriotic duty to channel that money to the market

Every Goberment be it communist or Democratic has a patriotic duty

[Suraj]

Well no different from the QE's of US and EU who thought it was Patriotic Duty to support a falling bank and then the same bank through it was its own patriotic duty to channel that money to the market

Every Goberment be it communist or Democratic has a patriotic duty

There are big differences technically, but the end result is the same: you can't fix hubris by fiat. All that's going to happen is that someone will be made the bagholder.

[Austin]

There are big differences technically, but the end result is the same: you can't fix hubris by fiat. All that's going to happen is that someone will be made the bagholder.

Technically both are fraud and ponzi scheme but Agreed that some one would be the People

[Suraj]

There are big differences technically, but the end result is the same: you can't fix hubris by fiat. All that's going to happen is that someone will be made the bagholder.

Technically both are fraud and ponzi scheme but Agreed that some one would be the People

How is the Chinese or US stock market a ponzi scheme ? Fraud and moral hazard, yes, but in different ways.

Further, volatility is one thing, but an 8% drop in the market, on top of a month long hemorrhaging in the stock markets, is far more dramatic and faster than anything anyone else accomplished. The Chinese always like doing things on an unprecedented scale - even a market crash.

[panduranghari]

The media/news orgy around Greeze, its potential default/Grexit etc. is nothing more than well orchestrated drama. It is sad to see people of Greeze suffer from financial mismanagement, in part its own doing. What is even more troubling is how small irrelevant country is being made a joke of by the international cartel. There are so many competing interest in the Greece saga that it is tough to say with certainty who benefits from whose demise. Greeks are not talking about selling national assets to meets its debt obligation. They would love to expunge their debt without selling anything. As long as they think that Euro member do not want to throw a member country out and create cracks in its one currency experiment, Greezes have some wiggle room to extort maximum benefit from Europeans. What Ooropeans don't realize that someone is using Greyce to crack/create doubts in the common currency system, because elimination/weakness of one rezerve currenshi helps prop up other rezerve curreshi. And the there is Eye-mf trying to transfer the burden of debt write off to developing nations. Is it possible that Greeze is being used as an experiment on how excessive debts of developed country could unfold?

I dont understand why there is a feeling there is a problem 'with' Greece? The IMF has always lent to countries and then demanded a piece of action. They did it to us in 1991. They have done this to innumerable countries.We haven't heard even a pip squeak from anyone, let alone ombaba. He also has chipped in hoping for resolution. Why? Another factor is Greece's position today is far weaker than what it was last week. Even after the referendum the markets are relatively stable. No contagion visible. Varoufakis perhaps saw this and resigned. So what gives? Greeks, even if they want to go back to drachma, have no facilities to do this. They will take at least an year to have functional drachma. Until then, those willing to lend to Greece will need to accept the IOU's Greek government writes up. We know very well what those IOU's will be worth in an open market? Greeks are in a corner and they have nothing to fight back with. There will be no debt forgiveness. NONE. If they forgive Greek debt, the others will do the same. And before they let others do that, they would let Greeks fester in their self generated effluent.

Greece wont be a poster child for the unfolding economic catastrophe of developed world. For that we have to wait until Britain unfolds. Greece has used up its options. Now only payment is a way out.

[Austin]

How is the Chinese or US stock market a ponzi scheme ? Fraud and moral hazard, yes, but in different ways.

The ponzi part is to print money increase debt on people , bail out the bank who in turn use that money at ZIRP to boost the stocks that is no natural co-relation with the economy , and make from the spread does not help the people just the bankers and cronies.

The chinese too are no different insisting people should put their money in stock and they have their own version of QE

[Suraj]

I don't think the situation is as bad for Greece as the EU makes it out to be. Surely there'll be tremendous short term pain when they leave the Euro. But they're also resilient in the face of adversity. It's when things settle down, that they'll proceed to screw things up again, if history is any indicator.

[Suraj]

How is the Chinese or US stock market a ponzi scheme ? Fraud and moral hazard, yes, but in different ways.

The ponzi part is to print money increase debt on people , bail out the bank who in turn use that money at ZIRP to boost the stocks that is no natural co-relation with the economy , and make from the spread does not help the people just the bankers and cronies.

The chinese too are no different insisting people should put their money in stock and they have their own version of QE

QE is not technically a ponzi scheme. Ponzi schemes literally involve taking from one to give another. QE is simply asset price inflation by fiat. It's similar to a ponzi scheme in the sense that they're both backed by a small base of capital and depend on rate of transaction activity to mask lack of overall solvency.

The problem with the Chinese crash is that it was entirely unnecessary. Unlike the US where there's a very broad equity market and a huge housing mortgage market, the Chinese savings base in the stock market is quite small to begin with. There's no reason for CPC to have cheerled the markets up, other than as a head fake because the real economy was in doldrums.

The problem with saying that 'it is all the same ponzi scheme' is that on the Chinese part, getting themselves into this mess was entirely voluntary, in an effort to do something better than the west, only to demonstrate that they're in reality no better than any other very undeveloped emerging market, as far as sophistication of the equity market goes.

The Chinese place enormous emphasis on presenting and saving face. In this situation, the CPC almost literally took a pie and smacked themselves in the face with it. They knew the dangers of stoking an equity bubble, and that controlling by fiat wouldn't work for them any better than it worked for anyone else, and they STILL went out and did it. They take great pride in learning from outside and doing things better and on greater scale, but in this case, they just managed to screw up on a greater scale, in a very predictable manner at that.

[Austin]

The problem with the Chinese crash is that it was entirely unnecessary. Unlike the US where there's a very broad equity market and a huge housing mortgage market, the Chinese savings base in the stock market is quite small to begin with. There's no reason for CPC to have cheerled the markets up, other than as a head fake because the real economy was in doldrums.

The problem with saying that 'it is all the same ponzi scheme' is that on the Chinese part, getting themselves into this mess was entirely voluntary, in an effort to do something better than the west, only to demonstrate that they're in reality no better than any other very undeveloped emerging market, as far as sophistication of the equity market goes.

The Chinese place enormous emphasis on presenting and saving face. In this situation, the CPC almost literally took a pie and smacked themselves in the face with it. They knew the dangers of stoking an equity bubble, and that controlling by fiat wouldn't work for them any better than it worked for anyone else, and they STILL went out and did it. They take great pride in learning from outside and doing things better and on greater scale, but in this case, they just managed to screw up on a greater scale, in a very predictable manner at that.

People do make mistakes and learn from it wont be the first CPC did or the last they would do.

I think the stock market is just a side show for the CPC the real show would be to manage 6-7 % GDP growth thats the real deal , the stock market are like the cream on the cake not the cake itself.

I suspect our own market is in some sort of asset inflation bubble with with Shanghai falling it already feel some effect.

[amit]

Ok the gloves are off.

EU Tells Tsipras the Party’s Over as Euro Exit Door Swings Open

I particularly liked this quote from the Lithuanian President Dalia Grybauskaite:

“You can’t have one country enjoying a feast, overspending and having everyone else pay for it, including our citizens with much lower pensions and wages,” said Grybauskaite.

Just about sums it up. Grexit seems that much nearer. Wonder what Tsipras will do. He has till Sunday.

[Suraj]

People do make mistakes and learn from it wont be the first CPC did or the last they would do.

I think the stock market is just a side show for the CPC the real show would be to manage 6-7 % GDP growth thats the real deal , the stock market are like the cream on the cake not the cake itself.

I suspect our own market is in some sort of asset inflation bubble with with Shanghai falling it already feel some effect.

The CPC is not allowed to make such mistakes deliberately. That is the nature of their social contract - their totalitarian state repression is tolerated, in return for unwavering economic growth, decade after decade. The west in general has no such social contract - they simply vote in another party. In China, there's no 'other party'. Everything is all about the CPC. And when the CPC explicitly goads people to buy stocks and pumps up the market, and the whole thing falls, despite all manner of panicky efforts to 'fix' it, including throw people's accumulated pension savings at it, it affects the CPC's credibility at retaining power, and increases the potential for revolution.

The problem is, they weakened their own hold on their own populace, through an act of hubris entirely of their own creation. They could have tried to fix the real economy. Instead they tried to take peoples' attention away from it, and screwed up up so well that they're out of money that could have been invested in the real economy rather than to pump up stocks.

[Suraj]

Ok the gloves are off.
EU Tells Tsipras the Party’s Over as Euro Exit Door Swings Open
I particularly liked this quote from the Lithuanian President Dalia Grybauskaite:

“You can’t have one country enjoying a feast, overspending and having everyone else pay for it, including our citizens with much lower pensions and wages,” said Grybauskaite.

Just about sums it up. Grexit seems that much nearer. Wonder what Tsipras will do. He has till Sunday.

The story is no longer about Greece. It's all about asserting that the costs will be high enough such that no one else tries what Greece tried. I find the Greece-blaming quite tiresome. Yes, they're lazy, entitled people with no history of sustained industrial production to befit their artificially high standard of living. And every lender gave them all that money while being entirely aware of all that. EU folks blaming Greece sound a lot like the police officer guy in Casablanca who goes 'I'm shocked! Shocked I tell you, that there's gambling going on in this establishment!'

[amit]

The problem with the Chinese crash is that it was entirely unnecessary. Unlike the US where there's a very broad equity market and a huge housing mortgage market, the Chinese savings base in the stock market is quite small to begin with. There's no reason for CPC to have cheerled the markets up, other than as a head fake because the real economy was in doldrums.

The problem with saying that 'it is all the same ponzi scheme' is that on the Chinese part, getting themselves into this mess was entirely voluntary, in an effort to do something better than the west, only to demonstrate that they're in reality no better than any other very undeveloped emerging market, as far as sophistication of the equity market goes.

The Chinese place enormous emphasis on presenting and saving face. In this situation, the CPC almost literally took a pie and smacked themselves in the face with it. They knew the dangers of stoking an equity bubble, and that controlling by fiat wouldn't work for them any better than it worked for anyone else, and they STILL went out and did it. They take great pride in learning from outside and doing things better and on greater scale, but in this case, they just managed to screw up on a greater scale, in a very predictable manner at that.

People do make mistakes and learn from it wont be the first CPC did or the last they would do.

I think the stock market is just a side show for the CPC the real show would be to manage 6-7 % GDP growth thats the real deal , the stock market are like the cream on the cake not the cake itself.

I suspect our own market is in some sort of asset inflation bubble with with Shanghai falling it already feel some effect.

The point is with lower economic growth rate the market priced in the likelihood of another massive stimulus package. And various international investors sweet talked the market up further.

CPC, instead of putting brakes to the speculation just stoked it along. I suspect it's to give folks a feel good factor. Chinese authorities are on record saying that they need a minimum of 7.5 per cent growth to ensure that enough new jobs are created to absorb the number of graduates that come out of school each year. With wages rising, I think the unemployment situation may not be pretty - I mean the "real" situation and not the one put out by the Chinese.

The problem IMO is that despite a nearly $10 trillion economy, the Chinese economy is still very much third world in terms of institutions as well as sophistication.

[amit]

The story is no longer about Greece. It's all about asserting that the costs will be high enough such that no one else tries what Greece tried. I find the Greece-blaming quite tiresome. Yes, they're lazy, entitled people with no history of sustained industrial production to befit their artificially high standard of living. And every lender gave them all that money while being entirely aware of all that. EU folks blaming Greece sound a lot like the police officer guy in Casablanca who goes 'I'm shocked! Shocked I tell you, that there's gambling going on in this establishment!'

Agree with you, it's no longer about Greece and I have a feeling that EU wants to make a example of the country in the sense that, "It's either my way or the highway!"

EU can afford to do that because Greece is such a small economy but imagine what would happen if Portugal decided to take the same route. That would entail a real unraveling of the Euro zone.

Just goes to show that despite nearly 30 years the entire EU region is not as homogenous as they try to pretend to be. The point I made about the difference in approach between Northern Europe and Southern Europe in terms of fiscal prudence is IMO becoming more apparent. And if you look at the Bloomberg report I posted, it's the small nations which are really in forefront in criticising Greece. They stand to lose the most from an unravelling.

PS: I need to add a caveat. I have feeling that Tsipras was trying to see how far he could go. I don't think he wants out from EU. That will destroy his political career as he won't be able to pay even his government staff if EU doesn't give money. I think he'll come around with a face saving plan come Sunday.

[Austin]

The CPC is not allowed to make such mistakes deliberately. That is the nature of their social contract - their totalitarian state repression is tolerated, in return for unwavering economic growth, decade after decade. The west in general has no such social contract - they simply vote in another party. In China, there's no 'other party'. Everything is all about the CPC. And when the CPC explicitly goads people to buy stocks and pumps up the market, and the whole thing falls, despite all manner of panicky efforts to 'fix' it, including throw people's accumulated pension savings at it, it affects the CPC's credibility at retaining power, and increases the potential for revolution.

Even the West has socalism but its a democratic socialism , and CPC has been a totalitarian state no matter their economic growth or not .....even if they become a democracy it would be no different compared to indian one where for the 40 years congress ruled and it was a TINA , you can expect something similar if they opt for democracy route.

BTW how many western institution have their pension money exposed to stock market ?

They could have tried to fix the real economy. Instead they tried to take peoples' attention away from it, and screwed up up so well that they're out of money that could have been invested in the real economy rather than to pump up stocks.

You can make an identical argument even for QE

[Austin]

How The Selloff in Chinese Markets is Impacting India

http://profit.ndtv.com/news/global-mark ... ome-latest

[Singha]

a huge loss of face for the ruling class at the minimum. people will look at future exhortations very skeptically.

well atleast the rural poor would not have purchased stocks (unless their govt pension funds did but that is sovereign guarateed) and would escape the losses here.

[UlanBatori]

Still, note that Chinese market has fallen 32 percent since 2012 (today's news). But it rose 150 percent in a few years before that. So this has just brought the slope down to something more sustainable. Not great, but not collapse-time. As for Greece, I seem to remember Argentina as the favorite problem-child to cause market jitters way back.

Something I thought I posted (maybe in another thread): Suraj: Why can't the EU simply come in (with military force if needed) and take over enough Greek real estate to pay for the loans? A few islands in the Mediterranean (call them Bavaria South) should be worth the needed billions, hain? 'LebensRaum'? That would certainly get some attention from Greece and anyone else who is on a borrowing binge? Surely there is enough sentiment in EU to do this - what stops them? (no, don't say 'decency' etc, about the EU). If someone comes into your country and takes $150B of your money, wouldn't you go to war if needed to get it back?
A lawsuit to freeze all Greek assets worldwide as 'lien'? Seize all Greek-flagged ships on the high seas? Airliners? Ouzo? Forget Olympic Flame: it uses Eyeranian gas, Pakistani rags and Indian matchsticks, probably. Handle Made In China.

[panduranghari]

The CPC is not allowed to make such mistakes deliberately. That is the nature of their social contract - their totalitarian state repression is tolerated, in return for unwavering economic growth, decade after decade. The west in general has no such social contract - they simply vote in another party. In China, there's no 'other party'. Everything is all about the CPC. And when the CPC explicitly goads people to buy stocks and pumps up the market, and the whole thing falls, despite all manner of panicky efforts to 'fix' it, including throw people's accumulated pension savings at it, it affects the CPC's credibility at retaining power, and increases the potential for revolution.

The problem is, they weakened their own hold on their own populace, through an act of hubris entirely of their own creation. They could have tried to fix the real economy. Instead they tried to take peoples' attention away from it, and screwed up up so well that they're out of money that could have been invested in the real economy rather than to pump up stocks.

Suraj saar,

If you get a chance read William Rostov. He has written about top down and bottom up economies. He has given enough evidence to show how economy grows and matures. Essentially there are 5 stages to economic growth.

The first 3 are similar to top down and bottom up economies. The top down have a lead in the first 3 stages. However, to hit the stage 4 and then stage 5 of the rocket of economic growth, top down fails unless it opens up and allows private entrepreneurship to rise. The state control cannot and WILL NOT allow stage 4 or 5 to happen.

This is a proverbial rock-hard place argument for the CPC. Opening up Chinese economy to private enterprise which has no state sanction will lead to loss of control for the CPC.



India is bottom up economy, inspite of the permit raj. We are well poised.

[panduranghari]

Just goes to show that despite nearly 30 years the entire EU region is not as homogenous as they try to pretend to be. The point I made about the difference in approach between Northern Europe and Southern Europe in terms of fiscal prudence is IMO becoming more apparent. And if you look at the Bloomberg report I posted, it's the small nations which are really in forefront in criticising Greece. They stand to lose the most from an unravelling.

PS: I need to add a caveat. I have feeling that Tsipras was trying to see how far he could go. I don't think he wants out from EU. That will destroy his political career as he won't be able to pay even his government staff if EU doesn't give money. I think he'll come around with a face saving plan come Sunday.

This is the typical anglo saxon hokum. Northern Europe- Southern Europe differential is another wall street inspired nonsense. There is more than what meets the eye. We are looking at paradigm change arguments here, not just continuation of the status quo. America has the most to loose from the continuation of European crisis.

[amit]

^^^^^^^
CTs make for nice entertainment reading. Only problem is they become boring and predictable after a while. Why don't you expand your post with some facts and data points?

[Theo_Fidel]

Still, note that Chinese market has fallen 32 percent since 2012 (today's news). But it rose 150 percent in a few years before that. So this has just brought the slope down to something more sustainable. Not great, but not collapse-time. As for Greece, I seem to remember Argentina as the favorite problem-child to cause market jitters way back.

O! Yak herder! The reason we focus on Greece is there are much lessons to be learned from this dead-end, head into brick wall, episode… ..MNREGA anyone…
On Panda Wonderland, so far almost nothing to be learned there. None of it is translatable to Yindia, so we continue to ponder with quiet bewilderment and regular raspberries…

[UlanBatori]

New York Stock Exchange Suspends Trading at 11:32 EDT.

So why is gold tanking worse than the stock market? Makes no sense.

[Suraj]

Even the West has socalism but its a democratic socialism , and CPC has been a totalitarian state no matter their economic growth or not .....even if they become a democracy it would be no different compared to indian one where for the 40 years congress ruled and it was a TINA , you can expect something similar if they opt for democracy route.

I did not say 'socialism'. I said 'social contract'. Very different things. In India, at least we can and did create opposition to INC. In PRC, there's no such thing as an opposition.

You can make an identical argument even for QE

Of course they're failing just like the west failed. That's the whole point - they're not allowed to fail like the west. The CPC's raisin dieter is that they do better than those elsewhere who failed. If they just become known as someone who both succeeds and fails worse than anyone else, then they lose the strength of their social contract with the masses.

[Suraj]

New York Stock Exchange Suspends Trading at 11:32 EDT.

So why is gold tanking worse than the stock market? Makes no sense.

Computer system error. There's no prior trading pattern suggesting it's an emergency halt. VIX is up a little on the China news, but major blue chips seem alright. Certainly not worth a market halt.

[TSJones]

New York Stock Exchange Suspends Trading at 11:32 EDT.

So why is gold tanking worse than the stock market? Makes no sense.

A. Chinese have pulled in their horns and they're not buying. They're at the pagoda asking their ancestors WTF happened?

B. The wedding season in India is miserable right now. No dowry, no tickee, no buyee.

Now that right there is a huge chunk of the market.

[svinayak]

New York Stock Exchange Suspends Trading at 11:32 EDT.

So why is gold tanking worse than the stock market? Makes no sense.

They want to isolate the chinese bear market from the US stock market


Gold is manipulated low to keep the currency high value.

Gold price will look very odd low price when the asset prices everywhere is crashing


----------

There was covert link between the markets in US and China on most assets including Gold.
This will be blown open soon

[Austin]

ZNN is running continuous story on NYSE , WSJ and United Airlines glitch , thought none related

[Satya_anveshi]

Today's NYSE shutdown on "technical" grounds conveniently coincided with large sell orders on DOW.

What it just tells is that Chinese are not as good at lying as US folks are. They could have killed a dissident/splittist leader and closed down the market for a few days to mourn the death. They should time their good runs and bad runs with those of US.

[Singha]

imo cheen just scored a return goal on the NYSE.

nyse does not run from a couple of desktop in the basement...its supposed to have tfta fail safe secure infra as the leader of the 'free world' markets.

[Satya_anveshi]

Chinese are invested in US RE, which is at maddeningly high . Expecting those guys to exit so interest rate increase this year is... fugget it.
I hope soothie soosai sheets keep themselves busy in middle-yeast and don't venture flying into buildings with insurance opportunities, then it will be truly 2001 deja vu all over again.

[panduranghari]

^^^^^^^
CTs make for nice entertainment reading. Only problem is they become boring and predictable after a while. Why don't you expand your post with some facts and data points?

I have done this before. I do not wish to rehash the same arguments.

[panduranghari]

New York Stock Exchange Suspends Trading at 11:32 EDT.

So why is gold tanking worse than the stock market? Makes no sense.

Gold has to eventually tank to sub 200$. The paper and physical separation has to happen for the financial system to function.

[Bade]

Chinese RE investment like also more recently Indian RE investment in the US, is largely cash only. So it will not move very likely, even if interest rates go up in the US... and prices fall.

[Suraj]

Chances of a Fed rate hike are weak. June Fed minutes show only 1 in 10 Fed officials were in favor of a rate hike, so such a measure would never get the necessary quorum now.

[UlanBatori]

New York Stock Exchange Suspends Trading at 11:32 EDT.
So why is gold tanking worse than the stock market? Makes no sense.

A. Chinese have pulled in their horns and they're not buying. They're at the pagoda asking their ancestors WTF happened?
B. The wedding season in India is miserable right now. No dowry, no tickee, no buyee.
Now that right there is a huge chunk of the market.

You'll be a hit at STRATFOR and the WSJ with that wonderful insight. Indians don't wait until wedding week to buy gold - the gold is bought when the bribes/under-the-table real estate deals are made. At wedding time it's mostly all transactions where real gold ornaments are taken to the local store to be exchanged for thin foil so that the bride can look like she's wearing $10M of gold, which would take a weightlifter to wear around the neck all day otherwise. For dowry one buys a Mercedes Benz car Lexus SUV these days. Plus some real estate. In fact, gold supply goes UP during wedding season because of all the Gold Loans taken out to fund the wedding extravaganzas.

Something is seriously wrong if interest rate is 0.000001%, inflation is 5%, stock market is tanking and gold is down, all at the same time. I think it is market manipulation by the Pakis: since the day I bought into the Fidelity Select Gold fund (it was already down 30% from the peak), gold has been steadily going down. I put some trust in Indian rupees, and that is down from around 31 to the $ down to 70 to the $. I also bought Oil&Gas, and look what happened to that market (OK, I made a few pennies there and got out b4 it crashed and bought back in much lower, and am still down but only a bit). Now I am considering buying Lockheed and Boeing and Raytheon to bring Peace On Earth.

So the only thing that has stayed up and keeps going up is the US dollar, which is the most overproduced and fundamentally valueless of all commodities (per all the 1000s of posts on these threads over the past 7 years). A few trillion of new paper printed in the past 7 years. And its market price keeps going up. Demand is proportional to Supply^N, N>1.

HOW is this being managed? If you guys don't understand this, your econ knowledge is seriously obsolete.

[Prem]

Chinese RE investment like also more recently Indian RE investment in the US, is largely cash only. So it will not move very likely, even if interest rates go up in the US... and prices fall.

Both Indian and Chinese RE investment is about 20-25B a year and recent phenomenon. It has very little impact on economy at national level , only in selective neighborhoods.

[Suraj]

Something is seriously wrong if interest rate is 0.000001%, inflation is 5%, stock market is tanking and gold is down, all at the same time. I think it is market manipulation by the Pakis: since the day I bought into the Fidelity Select Gold fund (it was already down 30% from the peak), gold has been steadily going down. I put some trust in Indian rupees, and that is down from around 31 to the $ down to 70 to the $. I also bought Oil&Gas, and look what happened to that market (OK, I made a few pennies there and got out b4 it crashed and bought back in much lower, and am still down but only a bit). Now I am considering buying Lockheed and Boeing and Raytheon to bring Peace On Earth.

So the only thing that has stayed up and keeps going up is the US dollar, which is the most overproduced and fundamentally valueless of all commodities (per all the 1000s of posts on these threads over the past 7 years). A few trillion of new paper printed in the past 7 years. And its market price keeps going up. Demand is proportional to Supply^N, N>1.

HOW is this being managed? If you guys don't understand this, your econ knowledge is seriously obsolete.

It's called a deflationary spiral, and the associated demand destruction. There's really nothing that gains in value in a deflationary spiral. Commodities and currencies are both bad choices in a volatile market unless you time it right. Equities can be good, especially blue chip companies making real things, not financial sector cos, as can stable bonds, like treasuries. You'll earn a pittance but not much likelihood of capital loss unless interest rates rise, which is also unlikely. Hard assets like real estate in a good location helps, especially if you gain cash flow from rentals. There's no one sure shot place you can keep your money to ride this out. You have to be nimble.