China and the Markets (Basically, Some Links)
Submitted by Experience Not Logic Blog
Friend and loyal reader Chuck Billinger suggested I post something about the Shanghai Stock Exchange’s decline over the past year, particularly in relation to this week’s continued slide and the financial trouble on Wall Street. Chuck, I’m sorry, but I feel woefully inadequate in jumping into this inquiry. Sure, this hasn’t stopped me before, but this is one of those areas where it’s best for me to just lean forward and listen to what others have to say on the subject. As such, I’ll write a bit of vague doom and gloom, and then point you to some reading.
Folks have been comparing this latest financial disaster to the Great One that kicked off in the US in 1929. If I remember correctly, that Depression spread across the world resulting in rampant inflation which fueled nationalism and got some (I’ve gotta go with objectively) bad people into power in some powerful countries. International trade slowed to a trickle as protective tariffs were established. The US started something called the New Deal, which was largely ineffective. And it took years of war during which unprecedented atrocities were committed for the global economy to get back on track. The winners of the war ended as competitors, and the world entered one of its most peaceful and certainly the most dangerous period in human history. To sum up: I really hope global inflation is kept in check because instability can lead to a really crappy outcome, especially in an era when more than one country has WMDs (and today’s WMDs make the first ones look like child’s play).
That said, I am mostly optimistic, despite Russia’s stock market. I don’t know if there’s a rational reason for my optimism, but I’d rather prepare for the worst while assuming the best because I don’t know if I could fall asleep at night otherwise.
And, here are the promised links in order of most general coverage to coverage of specific things. Unfortunately, most of the news cycle on China is still focused on tainted milk:
Wall Street’s Meltdown and What it Means for China at Managing the Dragon
Is China Safe? at China Financial Markets
U.S. Meltdown Reflects Regulators’ Failures, Wu Says at Bloomberg
China to Cut Stamp Duty, Buy Bank Shares, Xinhua Says at Bloomberg
Panic dumping leads to third successive fall in index at Shanghai Daily
Seize this crisis to internationalize China’s currency at Shanghai Daily Opinion Section
AIG and China: Could A “Special Relationship” Translate into Cash? at TIME: China Blog
Morgan Stanley/CIC at Brad Setser: Follow the Money
