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The Chinese stock market is so far divorced from the real Chinese economy as to be a joke. The government intervention is direct and strong, far stronger than a

by s_q_b 11y ago

The Chinese stock market is so far divorced from the real Chinese economy as to be a joke. The government intervention is direct and strong, far stronger than anything we saw in 2008. These companies' listed values might have well have been picked by a roulette wheel.

rchaud 11y ago
What numbers are you comparing though? The headline figure for TARP in the US was $700 billion, but even the GAO audit cannot perfectly trace how much it actually cost, as opportunity cost can't be calculated. Financing TARP took resources away from infrastructure projects or other projects for which positive economic externalities apply directly to society, not just bondholders. China has 4x the population of the US. How "big" would the intervention have to be to be stronger than anything in 2008?
- adventured 11y ago
  TARP was fully repaid. It didn't take money away from routine infrastructure spending. TARP was financed through deficit spending, and it never amounted to $700 billion as it was reduced to a limit of $475 billion. The final tally was $426b put in, $441b repaid. At this point China has thrown roughly a trillion dollars just at trying to prop up their stock market [1]. That doesn't include what they've burned trying to control their currency, what they've spent trying to keep their real estate bubble from completely falling apart, and what they've spent dealing with zombie companies and their vast shadow corporate and muni debt, and so on. [1] http://uk.reuters.com/article/uk-china-markets-rescue-idUKKCN0PX0AU20150723 http://uk.reuters.com/article/uk-china-markets-rescue-idUKKC...
  - s_q_b 11y ago
    A nit I'd like to pick is also that China has a vastly smaller PPP adjusted total GDP. So even four times the number of people, even a guaranteed loan program the size of TARP would be a larger intervention. To digress a little bit, I know this may be heresy, but TARP was the single most courageous and under appreciated accomplishment of the G.W. Bush administration. It's an economic miracle that when push came to shove, suddenly we were all Keynesians again.

by s_q_b 11y ago

rchaud 11y ago

What numbers are you comparing though? The headline figure for TARP in the US was $700 billion, but even the GAO audit cannot perfectly trace how much it actually cost, as opportunity cost can't be calculated. Financing TARP took resources away from infrastructure projects or other projects for which positive economic externalities apply directly to society, not just bondholders. China has 4x the population of the US. How "big" would the intervention have to be to be stronger than anything in 2008?

adventured 11y ago
TARP was fully repaid. It didn't take money away from routine infrastructure spending. TARP was financed through deficit spending, and it never amounted to $700 billion as it was reduced to a limit of $475 billion. The final tally was $426b put in, $441b repaid. At this point China has thrown roughly a trillion dollars just at trying to prop up their stock market [1]. That doesn't include what they've burned trying to control their currency, what they've spent trying to keep their real estate bubble from completely falling apart, and what they've spent dealing with zombie companies and their vast shadow corporate and muni debt, and so on. [1] http://uk.reuters.com/article/uk-china-markets-rescue-idUKKCN0PX0AU20150723 http://uk.reuters.com/article/uk-china-markets-rescue-idUKKC...
- s_q_b 11y ago
  A nit I'd like to pick is also that China has a vastly smaller PPP adjusted total GDP. So even four times the number of people, even a guaranteed loan program the size of TARP would be a larger intervention. To digress a little bit, I know this may be heresy, but TARP was the single most courageous and under appreciated accomplishment of the G.W. Bush administration. It's an economic miracle that when push came to shove, suddenly we were all Keynesians again.