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I honestly don't get why they let it get so crazy? In what world would a gain at that rate be sustainable without a huge crash? The worst part is they executed

I honestly don't get why they let it get so crazy? In what world would a gain at that rate be sustainable without a huge crash? The worst part is they executed the public awareness campaign which convinced the middle/lower class to fund this bump, Then, take significant loses during the correction. Why not take some action before it came to this if it was artificial?

ausjke 11y ago
this dangerous move could lead to instability, which is the worst thing the party expected to see, the only explanation, as once mentioned by a radio host, is most likely the current leaders have no idea what to do. In the past 20~ years the leaders in China are graduated from the best engineer school in China, the current one is far from that, somehow he became overly confident and to some extent reckless, I feel that's one way to explain what are happening there nowadays, including this busted stock cycle.
adventured 11y ago
It was a mistake of desperation. They had previously inflated a massive property bubble, both residential and commercial, that was in the process of exploding and severely damaging the economy. The stock market bubble they intentionally created, was meant to offset that event (perhaps both economically and psychologically). As the stock market bubble began, people shifted their capital from housing to stocks - many were relying on the perpetual upward movement to keep themselves solvent vs the losses in their real estate assets. China is still a heavy-handed command economy in many ways. The Communist Party's reputation and 'people authority' is directly tied to the economy delivering continual material progress gains (which the party then takes a lot of credit for, with the downside being the implied responsibility if things go badly). The desperation stems from 2007-2009, when the global economy crashed, and ended their over-boom (some of it was fake, backed by highly leveraged consumers and a slightly cheap currency that had been pegged to an artificially cheap dollar). At that point, China made a decision to inflate bubbles rather than accept much slower growth. The real estate bubble bought them a couple of years before it turned back against them. China is now eating through their capital reserves rapidly, while trying to prop up the most over-valued stock market on earth, and simultaneously dealing with a manufacturing sector that has been shrinking for five straight months (to go with the big bust in several specific segments like steel). They're trying to fight reality, when they should have instead learned from Japan's similar past mistakes in trying to prop up fake growth with bubbles (China is even making the same zombie corporation mistakes that Japan did).
- deleted 11y ago
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ethbro 11y ago
How many politicians (elected or not is irrelevant) do you know of who make difficult long-term decisions, that they don't have to, when things are good?

ausjke 11y ago

this dangerous move could lead to instability, which is the worst thing the party expected to see, the only explanation, as once mentioned by a radio host, is most likely the current leaders have no idea what to do. In the past 20~ years the leaders in China are graduated from the best engineer school in China, the current one is far from that, somehow he became overly confident and to some extent reckless, I feel that's one way to explain what are happening there nowadays, including this busted stock cycle.

adventured 11y ago

It was a mistake of desperation. They had previously inflated a massive property bubble, both residential and commercial, that was in the process of exploding and severely damaging the economy. The stock market bubble they intentionally created, was meant to offset that event (perhaps both economically and psychologically). As the stock market bubble began, people shifted their capital from housing to stocks - many were relying on the perpetual upward movement to keep themselves solvent vs the losses in their real estate assets. China is still a heavy-handed command economy in many ways. The Communist Party's reputation and 'people authority' is directly tied to the economy delivering continual material progress gains (which the party then takes a lot of credit for, with the downside being the implied responsibility if things go badly). The desperation stems from 2007-2009, when the global economy crashed, and ended their over-boom (some of it was fake, backed by highly leveraged consumers and a slightly cheap currency that had been pegged to an artificially cheap dollar). At that point, China made a decision to inflate bubbles rather than accept much slower growth. The real estate bubble bought them a couple of years before it turned back against them. China is now eating through their capital reserves rapidly, while trying to prop up the most over-valued stock market on earth, and simultaneously dealing with a manufacturing sector that has been shrinking for five straight months (to go with the big bust in several specific segments like steel). They're trying to fight reality, when they should have instead learned from Japan's similar past mistakes in trying to prop up fake growth with bubbles (China is even making the same zombie corporation mistakes that Japan did).

deleted 11y ago
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ethbro 11y ago

How many politicians (elected or not is irrelevant) do you know of who make difficult long-term decisions, that they don't have to, when things are good?