business

China stock market burns investors with boom-and-bust

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The Stock Market in China is more of a casino, a lot like the USA before 1929. Lots of retail investors (really day traders) gambling on stock movements looking to get rich quick with very little knowledge or understanding of what they are involved with, rather than long term investors in the underlying businesses. Government manipulation of the market will (and has) made it worse.

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“Supply-side reforms” is why President Xi has failed China. His problem is not only zombie industries over-producing unsell-able goods...but voracious zombies coming in from the countryside.

As more of the poor come to China’s cities, the available resources in those cities shrink, thus raising prices for food, utilities and shelter. As prices rise, the government becomes responsible for ensuring that food and shelter remained affordable, thus requiring an increase in jobs at higher wages. Higher wages means that goods sold from each person’s labor has to be sold at higher prices in order to be able to pay the workers their higher wages. Higher prices for goods thus produced means that those goods have to be sold at the new higher prices in countries where the goods are exported. As other countries, like India and Vietnam, produce cheaper exports and take over market share from China, Chinese goods then accumulate in warehouses and on the docks, because their price is non-competitive to Vietnam and India. This is what President Xi is facing right now. How do you get rid of over-capacity?

At that point, the government began selling China’s goods at cheaper prices, meaning below what it cost to produce, in order to maintain China’s market share and to keep the urbanized rural poor employed and able to afford eating, pissing and sleeping. In selling at below-production prices, China has had to finance the difference with its foreign reserves, basically giving away China’s wealth. That cost has resulted in a loss of $100 billion per month for the past 18 months. And still, the rural poor keep coming, numbering one billion people more. These hungry zombies keep flooding into the cities, requiring more of the cities’ resources, driving up prices for food, water and shelter and, as shown above, ultimately draining China of its foreign reserves. Will it stop? When will it stop?

You know that the cities cannot absorb an additional one billion people who, essentially, are zombies feeding on your wealth and prosperity. This insanity can only stop when the Pearl River Union, the Yangtze People’s Republic and the Yellow River Federation free themselves of the CPC’s insane policies and resist urbanization of a billion zombies into your beautiful urban world.

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Didn't these investors read the small print?

No, they were driven by greed to make a fast buck

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Then who are all these Chinese people coming here and spending huge bucks?

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As the standard blurb goes "Don't trade real money untill you have a proven track record of success, past performance does not indicate future profits and never trade money you can't afford to lose" The first two pargraph were all you needed to read to know they would lose all their money.

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