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Rolling Boulders Uphill
Rolling Boulders Uphill
As symbols of futility go, that of Sisyphus takes some beating. In Greek mythology, Sisyphus was captured by the gods after having freed humanity from Death. They punished him, of course: he would spend the rest of his days pushing a boulder up to the top of a mountain. Just when he reached the summit, as perpetual torment for his efforts, the boulder would inexorably roll back down again. Sisyphus was condemned to push the boulder uphill for all eternity. His was the original rolling stone.
The American author Henry David Thoreau would go on to echo the essential pointlessness of Sisyphus’ struggle. In his own memorable phrase,
“Most men lead lives of quiet desperation and go to the grave with the song still in them.”
Today’s Sisyphus is China. More particularly, the Chinese authorities. They are determined to roll that boulder uphill.
The path of least resistance for the boulder, however, is downward. Gravity, after all, is a bitch. The Chinese stock market is still comparatively young, and as stable as any toddler overwhelmed by parental expectations.
With their boulder beset by the giant suck of gravity, China’s Sisyphus first cut rates, and trimmed banks’ reserve ratios.
The boulder continued to roll downhill.
So Sisyphus announced plans to slash brokerage costs. But the boulder was not in a mood to listen.
Sisyphus is nothing if not persistent. Next up: a relaxation of rules on margin trading. But the boulder remained impassive, and continued to roll downhill. Sisyphus threatened to look into illegal market manipulation, and to round up the usual suspects. Bothered, replied the boulder as it kept on rolling.
Sisyphus tried to repeal gravitational laws. He banned numerous accounts from selling the market short. But the boulder rolled on down.
So Sisyphus knocked heads together on the exchange, and rustled up a package of 120 billion yuan to help support the boulder. The boulder still fell.
– See more at: http://www.cobdencentre.org/2015/09/rolling-boulders-uphill/#sthash.fiA4zCoj.dpuf
The China Syndrome
The China Syndrome
Getting Ugly
I am sure that you have all been watching the meltdown in the Chinese stock markets. I posted a blog (in the China Ad Nauseam section) on May 6 about the Chinese stock market, finishing up with the statement that “this is going to get really ugly.” It looks like the ugliness is here.
I claim no particular prescience here and I certainly wouldn’t want anyone to mistake my writings for investment advice. With this one, the only question was when it would blow, not if. My own investment abilities are largely encapsulated in the famous saying that “the graveyards of Wall Street are filled with the bodies of men who were right too soon.” But this is still better than being right too late.
I won’t bother to repeat all the statistics about the meltdown, which are readily available elsewhere. I just want to make two points.
In the meantime, the Shanghai Composite has bounced a bit, but only after China’s authorities had thrown everything and then some at the situation, including bans on short selling an banning large domestic institutional investors from selling at all, via StockCharts, click to enlarge.
No “Yellen Put”
The first is the implication of what is happening in China for asset prices around the world. The Chinese government is doing everything possible to prop up the market at this point: cutting interest rates, reducing reserve requirements, providing central bank liquidity to brokers, directing government entities to buy shares, organizing “private sector” (as if that phrase means anything in China) stabilization funds, restricting IPOs, loosening margin requirements, restricting short selling, and suspending share trading.
…click on the above link to read the rest of the article…
Panicked Chinese Government Imposes Desperate Measures to “Aggressively” Rescue a Lot More Than Just Crashing Stocks
Panicked Chinese Government Imposes Desperate Measures to “Aggressively” Rescue a Lot More Than Just Crashing Stocks
Stock-market rescue measures, concocted by the government, have been hailing down for days, including an interest rate cut by the People’s Bank of China a week ago. But the collapse proceeded with brutal relentlessness. So now, Premier Li Keqiang pulled out all stops and the State Council is calling the shots in the market, the craziest, most desperate shots.
From July 4 last year through June 12 this year, the Shanghai Stock Exchange (SSE) soared 150%. It was the era when stocks would create unlimited wealth out of nothing in no time, when all comers, from street vendors to farmers, would get their government-promoted chance to get rich quick.
“When our national economy is in its worst shape in more than a decade and many corporates have run into trouble, our stock market suddenly shot up to make everybody happy,” George Chen, Managing Editor for the International Edition of the South China Morning Post, wrote in mid-April. He described the phenomenon this way:
The bulls can always find reasons to defend why the market was up, but I rarely heard anyone explaining the disconnect between the weak real economy and the so-called bull run.
Even the state media probably got over-excited. One Chinese newspaper commentary tried to name the surprising market performance as the latest achievement of President Xi Jinping because the top leadership in the country wanted to “create a new opportunity for wealth redistribution for everyone” to narrow the income gap. Redistribute wealth through the stock market in a socialist country like China? Sounds an exciting new economic theory.
He must have caught some flak from the bulls at the time.
Then came June 13. In the three weeks since, the SSE plunged nearly 30%, including 5.8% on Friday, wiping out nearly $3 trillion in get-rich-quick riches, despite the efforts undertaken by the government and the PBOC to put a stop to it.
…click on the above link to read the rest of the article…
