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Al-Saqr posted:Can someone give me a quick and dirty on how stock market crashes like this can just magically happen out of thin air? or did a major housing bubble burst or something even happen that I missed? The Wall Street Journal posted:Funneling some of China’s $20 trillion in savings into stocks was a last-ditch effort to revive flagging economic growth by giving the country’s debt-laden companies a new source of financing. The aim was to trigger a slow and steady bull run, but the somnolent stock market exploded into one of the biggest bubbles in history.
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Jul 8, 2015 06:18
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ductonius posted:This. This will happen. Either the CCP lays the hammer down or great indivisible China will divide into dozens of warring states. Again. Is it really that bad? I cant imagine Syria level of destabilization happening.
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Jul 8, 2015 06:30
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ToxicAcne posted:Is it really that bad? I cant imagine Syria level of destabilization happening.
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Jul 8, 2015 06:36
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Al-Saqr posted:Can someone give me a quick and dirty on how stock market crashes like this can just magically happen out of thin air? or did a major housing bubble burst or something even happen that I missed? Stock is capital that yields rent in the form of dividends. Really it's not very different from buying land from an accounting perspective. You own the stock and get some revenue from that stock every quarter. If there was no speculation, stock prices would be entirely determined by expected future revenue. This is the price/earnings ratio people are talking about. Speculators buy because they expect the price to change. Speculators want to buy stocks that are low but look like they're going up, and sell stocks that are high but look like they will go down. By their very nature they amplify market movements. Speculators pile into rising prices (hoping to be getting in near the bottom) and sell into falling prices (hoping to get out near the top). I guess I should also explain how price moves in simple terms: if there are sellers who can't find a buyer, price moves down until those sellers can find a buyer. If there are buyers who can't find a seller, price moves up until those buyers can find a seller. When you have a ton of new buyers pile into a market, prices will have to rise unless there's a ton of new IPOs or stock issues to meet demand. When a bunch of people want to sell and nobody wants to buy, those sellers are going to have to lower their prices in order to get that stock off their hands. In this respect a stock market is like other markets except that stock markets tend to exhibit this sort of behavior more smoothly and reliably; stocks aren't like land where it can take years to clear inventory even at basement prices. Surges and crashes can happen for market fundamental reasons; for example if tomorrow Intel announced that it can't find enough silicon to meet demand for chips Apple stock would tumble on the expectation that dividends on Apple stock will be smaller in the future. If they found 30 billion barrels of oil in Utah, American oil stocks would surge on the expectation of future earnings. Surges and crashes can also happen when speculators amplify market movements too much or (in this case it seems) just create their own market movements. Since speculators naturally all want to buy low and sell high, they buy tons of shares when the market looks to be going up and panic sell when the market starts to tumble. This behavior drives price by itself: lots of buyers drives up prices and lots of sellers drives them down. Margin trading (borrowing money against some asset to buy stock) amplifies speculative effects even further. A speculator who takes out a $60,000 loan on $20,000 of collateral can buy 3x as much stock as before and drive up prices faster. The same speculator will have to sell even more urgently when the market dips -- he loses 3x as much value when the stock goes down and has to get out with enough cash to pay back his loan. When margin traders reach the point where they must panic sell or be unable to repay their debt is a "margin call" which we heard a lot about last week. So that's how this stock market crash happened. The government announced the prices would go up and it didn't take much more than an initial movement for people to pile their money into the market. It's hard to make money for the common man in today's China and there are few good investment options, so when the government tacitly pledged to support a bull market people bought in and people who didn't looked stupid after a 117% rise. But with the government practically encouraging speculative investment and so much margin trading that regulators cracked down on it last month the Shanghai market was always going to be volatile. Arglebargle III fucked around with this message at 06:46 on Jul 8, 2015 |
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Jul 8, 2015 06:36
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What does this mean for the value of the RMB? Either against the USD or GBP?
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Jul 8, 2015 07:50
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ductonius posted:This. This will happen. Either the CCP lays the hammer down or great indivisible China will divide into dozens of warring states. Again. The last time is occurred essentially because one man (Yuan Shikai) hosed and tried to make himself emperor: then died so military power went to provincial generals with nobody at the center capable of controlling them. The CCP will literally shoot another 40 million people before it allows that to happen again.
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Jul 8, 2015 09:16
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Typo posted:
I don't get why this is a foregone conclusion.
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Jul 8, 2015 10:25
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Let us English posted:What does this mean for the value of the RMB? Either against the USD or GBP? GBP who knows. But the RMB is pegged to the USD (I think with a tiny tiny amount of wiggle) so unless the entire country burns to the ground it won't change. It is not impossible the entire country will burn to the ground but I doubt it.
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Jul 8, 2015 10:46
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Who will be more scared, the Chinese people when they discover the government can't control the share market or the Chinese Government when they discover they can't control the share market?
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Jul 8, 2015 10:57
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Can someone explain to me what "Macro" is tracking in the following Zerohedge image? I see it in a lot of Zerohedge posts, but this is never explicitly defined.
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Jul 8, 2015 12:49
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Could it be manufacturing PMI? GDP growth? Has anyone got a good explanation of Umbrella trusts that a filthy gweilo like myself could understand?
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Jul 8, 2015 13:06
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Crashrat posted:Can someone explain to me what "Macro" is tracking in the following Zerohedge image? I see it in a lot of Zerohedge posts, but this is never explicitly defined. Looks like a futures index... Zero hedge does that alot - frustrating.
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Jul 8, 2015 13:07
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another_steve posted:Looks like a futures index... Yes the Hushen 300 Index listed as Shanghai Composite is fairly obvious. But I have no idea what they're tracking with that Macro number at all.
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Jul 8, 2015 13:27
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TheIneff posted:I don't get why this is a foregone conclusion. It might not have been at some times, but right now Xi Jinping and his princeling bros are in charge. They're red royalty, pretty much all the children of CCP high ups going all the way back to the revolution. They've already been amping up their propaganda in a retro THE PARTY UBER ALLES direction. It would be very surprising if they saw a serious movement towards reform fueled by economic unrest and DIDN'T take the opportunity to crack some skulls.
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Jul 8, 2015 14:49
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Al-Saqr posted:Can someone give me a quick and dirty on how stock market crashes like this can just magically happen out of thin air? or did a major housing bubble burst or something even happen that I missed? It's not really out of thin air anymore than the dot com crash was out of thin air, or the 1929 Wall Street crash was.
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Jul 8, 2015 14:57
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Al-Saqr posted:Can someone give me a quick and dirty on how stock market crashes like this can just magically happen out of thin air? or did a major housing bubble burst or something even happen that I missed? The same way 400 pound people suddenly keel over from heart attacks magically out of fat air
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Jul 8, 2015 15:23
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Arglebargle III posted:So that's how this stock market crash happened. The government announced the prices would go up and it didn't take much more than an initial movement for people to pile their money into the market. It's hard to make money for the common man in today's China and there are few good investment options, so when the government tacitly pledged to support a bull market people bought in and people who didn't looked stupid after a 117% rise. But with the government practically encouraging speculative investment and so much margin trading that regulators cracked down on it last month the Shanghai market was always going to be volatile. Wait, isn't this how the South Seas Bubble happened?
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Jul 8, 2015 15:48
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Al-Saqr posted:Can someone give me a quick and dirty on how stock market crashes like this can just magically happen out of thin air? or did a major housing bubble burst or something even happen that I missed? A stock market bubble is inherently unstable. That's what makes it a bubble. It doesn't necesarily need anything significant to spark a crash.
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Jul 8, 2015 15:56
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Crossposted from reddit: http://news.xinhuanet.com/finance/2015-07/08/c_127998498.htm Xinhua posted:ROUGH TRANSLATION So I guess everything is on fire and the CCP doesn't have any good ideas.
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Jul 8, 2015 16:01
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Bro Dad posted:Crossposted from reddit: They have been agressive as gently caress in relation to propping up the bubble, and their absolute authority will surely allow them to come up with even crazier stuff. I hope the western world is taking notes for when there's another big crash, because China just became an uncontrolled laboratory experiment. Who knows, some of this could actually work....
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Jul 8, 2015 16:15
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Bro Dad posted:Crossposted from reddit: This gets better and better. When this slide is finished, they really don't want anything left standing.
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Jul 8, 2015 16:16
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asdf32 posted:A stock market bubble is inherently unstable. That's what makes it a bubble. It doesn't necesarily need anything significant to spark a crash. Additionally, all bubbles are inherently unstable. It takes very little to turn a panic buy into a panic sell, a blip in China could easily ignite the Canadian Bubble crash.
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Jul 8, 2015 16:19
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On the one hand it isn't going to work but on the other hand I strongly approve shackling the rats to the sinking ship.
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Jul 8, 2015 16:21
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Shifty Pony posted:On the one hand it isn't going to work but on the other hand I strongly approve shackling the rats to the sinking ship. The first time in ages the CCP has done something right.
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Jul 8, 2015 16:26
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Well this is interestingquote:Individual investors in China, as we all know by now, have used generous margin financing terms to enter the stock market and then build up their portfolios. Less-known is that Chinese companies have been doing the same thing by using their own corporate stock to secure loans from banks.
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Jul 8, 2015 16:27
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If those stocks stay suspended they won't have to pay back the loan? So the CCP is basically shoveling tons of money under the other shoe to stop it from dropping, but that will only defer it unless people go crazy and start buying stock again.
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Jul 8, 2015 16:37
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From nytimes dealbook.quote:The New York Stock Exchange unexpectedly shut down trading in all of its listed stocks late Wednesday morning. welp, nice knowing you guys
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Jul 8, 2015 17:18
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Sounds like CCP is in full on panic mode.
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Jul 8, 2015 17:19
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Is it paranoid to imagine the Chinese hacked the NYSE to be able to point to them shutting down trading as a reason they did it too?
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Jul 8, 2015 17:24
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It was my first thought.
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Jul 8, 2015 17:25
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Twitter says the NYSE was running an upgrade last night so it's probably technical. Nothing to see here if that's the case.
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Jul 8, 2015 17:26
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When was the last time NYSE went down?
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Jul 8, 2015 17:32
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It was already said before, but this is so interesting and magical to see a crash in progress and a government with essentially unlimited power do anything to stop it. But it's all failing and everything is falling apart. 
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Jul 8, 2015 17:32
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Fall Sick and Die posted:Is it paranoid to imagine the Chinese hacked the NYSE to be able to point to them shutting down trading as a reason they did it too? The NYSE has incredibly tight security giving any state-level hackers very little to work with. If the Chinese had/have any known exploits to get in I doubt they'd burn one just to save face when it doesn't even help them all that much even in the short run. Not saying it's impossible to shut down the NYSE or that the Chinese wouldn't do it, just that the cost/benefit doesn't really add up in this case. im gay posted:When was the last time NYSE went down? As far as I know shutting down due to a computer glitch is unprecedented. However with how quickly they recovered I really doubt anything malicious occurred. If they really were running through an upgrade then they likely were watching for something to go wrong and rolled back at the first sign of trouble. Necc0 fucked around with this message at 17:51 on Jul 8, 2015 |
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Jul 8, 2015 17:46
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Logikv9 posted:It was already said before, but this is so interesting and magical to see a crash in progress and a government with essentially unlimited power do anything to stop it. 30 million people were murdered by Mao before anybody admitted there was a problem.
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Jul 8, 2015 17:50
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Nonsense posted:30 million people were murdered by Mao before anybody admitted there was a problem. This isn't particularly true on a number of levels, there were a number of individuals in the politburo who did in fact state there were problems, its how Mao initially lost his job.
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Jul 8, 2015 18:04
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Were the colors of stocks in China always reversed, with green meaning down and red meaning up? Or is this the least-effective way to improve investor confidence ever? http://english.sse.com.cn/ http://www.szse.cn/main/en/
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Jul 8, 2015 18:20
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I think the government asking pension funds to invest in the stock market was a mistake. What the hell is going to be left in those funds if the market keeps on dropping.
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Jul 8, 2015 18:47
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im gay posted:When was the last time NYSE went down? 2012 due to Hurricane Sandy.
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Jul 8, 2015 18:58
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Has anyone in power thought about just rolling back the servers to June 12 and telling everyone to start over? If not, they should totally try that next. I wouldn't be opposed to a small percentage of those trillions I just saved you. The last couple of weeks has been amazing watching this real life version of a one weird trick, investment bankers hate him... Please don't stop now.
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Jul 8, 2015 19:26
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