Comments on: Stock Market Relapse Because Of China?

By: Gate VP

Gate VP — Wed, 04 Feb 2009 04:03:28 +0000

… is China going to drag the stock markets down further or has it�s problems already been factored in?

I think that we’re at the start of lots of stock market issues. I really don’t get the feeling that Chinese problems have been fully priced in, but from what I can see the markets are only now pricing in inflation caused by Obama’s new “new deal”. (a truth that was pretty obvious in December and even early January)

So yeah, the markets are in for more hurt as the Chinese behemoth undergoes a big “paradigm shift” en route to achieving the next “factor” of growth. If you look at 10%/year over 10 years, you’re looking at more than a 2.5x growth. Established companies don’t grow like that without serious problems. Imagining that China is going to pull it off without some serious stumbling and waste seems pretty naive.

But from the bigger picture, I think this is really just a small part of the problem the markets are going to face. The problem the markets will face is that they’re valued and tracked in nominal terms. The world has “lost” a lot of paper money, now the government is printing a lot of paper money.

The average person doesn’t really grasp this. I think that the market is still grasping this.

And this causes a big problem when you talk about “down further”. I mean, adjusted for inflation, the markets are in an 8-year bear market. Heck if the market had not crashed in 2008 and merely gone sideways, the market would still be in a 8-year bear market.

So what’s up and down?

By: Jordan

Jordan — Tue, 20 Jan 2009 01:30:50 +0000

I’ve just started reading the book “The Elephant and the Dragon” which is about India & China. So far it has a lot of interesting details on the history of their economies, what their early problems were and how they have dramatically taken off, and what it means for our future. It is helping me to understand more about the countries before jumping to conclusions based on headlines in the news.

By: Four Pillars

Four Pillars — Mon, 19 Jan 2009 19:16:40 +0000

Thanks Thomas – I don’t know anything about Drupal but if it is hard to use then consider switching to WP.

By: Four Pillars

Four Pillars — Mon, 19 Jan 2009 16:27:10 +0000

Brian – the Intelligent Speculator was created by TheFinancialBlogger.com. He did this guest post to try to publicize it a bit and maybe get some more readers.

I have no connection to it.

By: Brian

Brian — Mon, 19 Jan 2009 15:44:09 +0000

FP,

Did you spawn off a new blog (IntelligentSpeculator.net)? or is that an affiliate?

Nice theme btw, its very clean.