Tuesday, July 14, 2015

Present Crash: Double Blast from the Past

Present Crash: Double Blast from the Past
By Erick San Juan

While all Western eyes remain firmly focused on Greece, a potentially much more significant financial crisis is developing on the other side of the world. In some quarters, it’s already being called China’s 1929 – the year of the most infamous stock market crash in history and the start of the economic catastrophe of the Great Depression. (Source: Jeremy Warner, 7/9/2015)

That’s not all, a double blast from the past, the global financial crisis of 2008-2009.

From the article of Pam Martens and Russ Martens (July 8) – “It’s starting to feel like we never actually emerged from the 2008 crisis: the U.S. government and the Federal Reserve simply threw $13 trillion at the crisis and walked away, hoping that an endless zero-interest-rate-policy (Zirp) would patch over the cracks in the global financial system. What we seem to have now is an endless series of rolling crises instead of one big global crisis. The rolling crises, from Puerto Rico to Greece to China’s stock market, all have one thing in common – the unravelling of too much debt. That could rapidly turn into a full-fledged global crisis if policymakers misdiagnose what’s happening, treating the problems as isolated crises instead of a interconnected debt hangover from the go-go years.

The plunging price action in industrial commodities this week strongly suggests that debt was not sufficiently purged in the 2008-2009 economic meltdown and debt liquidation is back with a vengeance.

The China stock market, the second largest in the world after the U.S., locked down 72 percent of its stocks on Wednesday, according to Bloomberg, with “at least 1,331 companies halted on mainland exchanges and another 747 falling by the 10 percent daily limit.” This has effectively frozen $2.6 trillion of stock from trading, according to Bloomberg.

The Shanghai Composite, which clearly would have fallen by a much greater amount if all stocks had been trading, fell 5.9 percent at the close, bringing its loss to 32 percent from its peak set less than a month ago. The Shenzhen Composite Index, consisting of smaller companies and tech stocks, has plunged 40 percent from its peak this year.”

People repeating history, actually the worst part of it. Remember how the Japanese became jetsetters and even bought US golf courses and the Empire State Building, then the stock market plunged and so many Japanese big business did 'Harakiri'. Then the Soviets became the new jetsetters in the mid 90’s because of Gorbachev’s Glastnost and Perestroika, until the November 1998 chopping of the Berlin Wall which I witnessed with amazement, when almost the whole Eastern establishment collapsed.
Now we can see the possible implosion in China due to the open-secret in-fighting between the economic and political leaders versus the military hardliners headed by Xi Jinping.

Japanese acquisitions of American assets have been a frequent occurrence. Thirty years ago, they were the cause for anxiety. Now, they should just be a reminder that China probably won't take over the U.S. either, no matter what their billionaires manage to buy.

And we thought that China is too big to fail. I thought that it’s only in the Philippines that we are bombarded with good news coming from the government. With the collapse of Greece, suddenly the truth that I know for so many years is now a reality with China losing big in the international market.

Propaganda after propaganda that the spinmasters are desperately doing to cover up the real state of China’s economy suddenly catch up with them with a big bang.

Lesson to our own financial and economic ‘experts’, what goes around comes around, thrash in, thrash out.

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