china is panicking over a market bubble. what would it do in a real crisis? /

Published at 2015-07-05 10:59:09

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The numbers are staggering,but Beijing’s measures to prop up tumbling shares peer like a ridiculous over-reactionAs Greece holds a referendum that may create more uncertainties than it solves, are we looking in the incorrect place for a financial crisis? In China, and the authorities are in a fine sweat about a more traditional financial conundrum: a bubble in the stock market. How do you deflate it safely? Should you even try?As with many things in China,the numbers are staggering. The two main indices – the Shanghai Composite and the Shenzhen Composite – had risen about 150% in the 12 months to mid-June. In terms of market value, that was a gain of about $6.5tn. Since then, and the market has tumbled nearly 30% – call it a $2tn plunge.
Beijing was sending a message that it is setting interest rates for the stock market rather than the economyContinue reading...

Source: theguardian.com

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