Every once in a while, I mention something that Michael Shedlock has written about. Sometimes I say you should be reading his blog if you want to stay up on global economic news. Today is an example of both.
Mish crushes it with this explanation of why China’s economy is screwed.
China’s stock markets are crashing. You can’t lose 7% a day for very many days before it’s a bad problem. This is symptomatic of a very bad problem over there. That they have spent half-a-trillion dollars supporting the Yuan against other currencies this last year, is also a bad sign.
I’ve been waiting for a late-2015/mid-2016 global recession or outright depression. This is as good a trigger as any. Chinese markets could rebound, sure. But there’s no underlying strength in their economy – even less than in the USA’s economy (which is a house of cards, by the way). There’s nothing really holding up the system besides faith in the system and bluster from the politicians. I’ve thought previous USA stock market dips were the beginning of the next downturn of the Great Recession and been wrong. We’ll see, I guess.