MEN GO MAD IN HERDS

The Chinese real estate bubble has been imploding for the last year. The Chinese economy is barely growing at 1.6% after decades of 10% growth. There are millions of unoccupied condos. There are dozens of ghost cities and empty office towers. It’s the most corrupt nation on earth. We are in the midst of a global recession.It’s pure madness that the Chinese stock market would soar when its leading economic indicators crash to 2008 lows.

Its stock market has gone up 115% in the last 9 months. It has gone up 80% in the last 5 months. It has gone up 35% in the last month. Housewives and other uneducated gamblers have opened a record 10.8 million new stock accounts this year, more than the total number for all of 2012 and 2013 combined.

The Hong Kong stock market has gone up 14% in three weeks.

Since real estate investing is failing miserably, the Chinese middle class have piled into stocks on margin. Where have I seen that before? Margin debt on the Shanghai Stock Exchange climbed to a record 1.16 trillion yuan on Thursday. When has buying overvalued stocks on margin when the economy is tanking ever gone wrong before? Have we already forgotten 2000 and 2008? Humans truly act like irrational herds of cattle stampeding in whatever direction they are pushed by their keepers.

After the markets closed for the weekend today in China regulators announced they were clamping down on the use of shadow financing for equity purchases and increased the supply of shares available for short sellers. Bloomberg explained what happened a few hours ago:

Investors have used umbrella trusts, which allow for more leverage than brokerage financing, to ramp up wagers on Chinese stocks after monetary stimulus sparked a world-beating rally in the nation’s benchmark equity gauge. Permitting mutual funds to lend their holdings to short sellers would make it easier for bearish traders to bet on a retreat after the Shanghai Composite Index closed at a seven-year high on Friday.

The announcement immediately caused Chinese stock market futures to crash by 6%. A similar move in U.S. markets would be a 1,000 point crash in the Dow. Monday should be interesting. The Chinese Plunge Protection Team is probably conferring with Yellen and her minions to avoid a worldwide contagion of people coming to their senses.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/china%20futures.png

Bloomberg stumbles upon the truth of all the stock markets in the world hitting record highs:

Chinese investors have been piling into the equity market after the central bank cut interest rates twice since November and authorities from the China Securities Regulatory Commission to central bank Governor Zhou Xiaochuan endorsed the flow of funds into equities.

Central bankers in the U.S., Europe and Asia have created another massive bubble. This time it is a bubble in stocks, bonds and real estate simultaneously. There is no place to hide. We are now in the blow-off stage. Markets are totally disconnected from reality, amateurs and muppets have been lured into the fray, margin debt is off the charts around the globe, and confidence in the infallibility of Yellen, Draghi, and the Asian central bankers couldn’t be higher. These bankers have been tasked by their .1% masters to elevate markets across the globe so they can extract the remaining wealth of the clueless plebs. We are now in the death throes of this latest tulip mania. It may go on for many more months or today may be the peak, but one thing is for sure – it will crash and burn. What happens next is anyone’s guess. But I’d put my money on war, chaos, and revolution. There will be no impunity for our gambling.

“Nations, like individuals, cannot become desperate gamblers with impunity. Punishment is sure to overtake them sooner or later.” ― Charles Mackay

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Anonymous
Anonymous

Throughout time people have had an absolute love of studying history.

Which is why they have become so good at repeating it.

TE
TE

Yep, doubling down on every problem that created the worldwide disaster in 2008 to fix the problems.

Who, with the exception of you Admin, Karl, and about 1000 other voices trying to wake people from their slumber, that is who.

So, it dawns on me because it just too obviously “insane” to build Ghost Cities in the name of temporary profits, especially coming from an Empire that takes the long view, the very, very, long views, that they may not have “wasted” it.

I am not the only one that is smelling major, major, war in our immediate future. China has been busy using OUR fiat (from buying their produced “American” products) and forging, now, long-standing arrangements and relationships with nearly all, if not all, of our “enemies.”

I don’t think it was accidental that they used our money to buy our enemies alliance.

And when this dance starts in earnest, and China is forced to lay all cards on the table, and the decision comes down to either keep supplying our war effort, or not, either of those decisions may lead to a nuclear power leveling some of their current infrastructure.

Bombs are not free, nor quickly made, and no one would bomb the brand spanking new infrastructure with NO residents.

Whom is going to look crazy when we are living in tents – if lucky – and their survivors are being moved into modern high rises with faster internet than we are even allowed to have?

That is the way my mind works. In the end, my guess is as good as yours.

Skinny
Skinny

In most of the world the mantra is follow the money; in China, its follow the Party. The Party wanted to inflate the Shanghai Stock Exchange so it talked it up and the money followed. Now they realized they created a monster and they seek to quietly put the monster back in his cage. Good luck with that. Stocks are crashing around the globe and the bears will be gorging come Monday. I don’t think that monster is going back in his cage without a fight.

Anonymous
Anonymous

Quinn has yet to understand any of the truth behind 9/11.

He is just full of shit and still writing meaningless economic tripe.

Just another satisfied MORON !

Again he FAILS the…

9/11Litmus Test

David Chu

“It’s [China] the most corrupt nation on earth.”???

I suggest you look into your mirror:

Your beloved Great Land of GMO Milk and Fake Money is THE Greatest Corrupt and Most Evil nation on earth . . . throughout all of history, bar none!

Stucky

“Your beloved Great Land of GMO Milk and Fake Money is THE Greatest Corrupt and Most Evil nation on earth . . . throughout all of history, bar none!” ———– David Chu

People here have said that Chinks have really high IQs. There goes that theory down the toilet!

Stucky

China: so corrupt even the police are protesting … hardy fucking har har

backwardsevolution
backwardsevolution

David Chu – I wouldn’t be talking about milk. Remember the little “tainted milk” scandal in China?

China was U.S.-made. The U.S. came into China back in the 70’s, talked up the elite, told them they could make a ton of money, and the Chinese elite allowed the American multinationals in.

“The figures in 2010 showed that three-quarters of China’s top two hundred exporting companies – and these are Chinese statistics – are foreign-owned. There is a great deal of foreign investment in China, often from neighbouring countries like Taiwan. Foxconn, which produces computers for Apple in China, is a Taiwanese company.”

I’m not saying that China is not smart enough to have become a leading economic force, but not in the time they’ve had. The U.S. took their technological know-how into China, allowing China to get “up to speed” way faster than they could ever have done on their own, a process that would have taken China hundreds of years on their own.

The Chinese elite, in order to get rich (and, no, it was not done for the benefit of the peasants), allowed their country to be polluted, mined, rivers and soil destroyed, and all for a chance at billions of dollars to line their own pockets with.

You were sucked in for riches, and now your country is destroyed. The corrupt Chinese (the ones who are fleeing China with their new-found bribe money) are no more than parasites who ate up their country and then fled to greener pastures (pushing up prices all over the world with their monopoly money). No one should accept their money.

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