The Stock Market Roller-Coaster Tsunami in China

The Chinese are finding out what it’s like be Americans, who have suffered repeatedly from the roller-coaster of land speculation and the fluctuations of the stock-market in the U.S.

Wikipedia lists twenty-two stock market crashes in the United States since 1772—about one every ten years on average (the next one should arrive in about two years in 2017). Most of the names of these crashes begin with the word “Panic”, and Business Insider gives us “The Complete History of US Real Estate Bubbles Since 1800” revealing that the real estate market in the United Sates peaks and crashes about every 18 years. “The world’s worst downturns are always preceded by land speculation (the chasing of the economic rent) fueled by misguided credit creation courtesy of the banks.”

The Guardian in the UK says, “Real estate agents in Australia, Britain and Canada are bracing for a surge of new interest in their already hot property markets, with early signs that wealthy Chinese investors are seeking a safe haven from the turmoil in Shanghai’s stock markets.”

Should we warn wealthy Chinese that it might be a bad idea moving from the stock market to real estate—like leaping from the frying pan into a fire?

A Market Watch Op-Ed piece alleged, “China’s stock-market crash is just beginning.”

The Wall Street Journal, “China’s leaders are clearly freaked out about the (Chinese) stock market. Global investors need to wonder how nervous they should be, too.”

CNN Money reports, “China’s stock markets are suffering their worst crash since the global financial crisis.”

This is where it helps to pause and remember that the global financial crises started in the United States. “August 2007: The Landslide Begins: It became apparent in August 2007 that the financial market could not solve the subprime crisis on its own and the problems spread beyond the United States borders.” – investopedia.com

For China, where did this all start? To find out, let’s begin with Shanghai’s public schools.


This Al Jazeera English news segment aired June 23, 2007.

On December 9, 2010, a CNN Go Asia headline said, “Shanghai has the world’s smartest teens”.

If you heard the news of Shanghai students beating out 65 countries in student scholastic performance tests in three key categories of ability, the Al Jazeera English video embedded with this post may provide part of the answer of how that happened.

While many American students are applying makeup, drinking sodas, eating candy and French fries in class while texting friends and ignoring teachers let alone reading or doing homework, Al Jazeera reports of twelve year olds in Shenyang, China learning how to be stock brokers.

These students buy and sell and learn how to get the latest information on global stocks.

One Student, Ding Chuan, was asked how his investment portfolio (a class assignment where the students don’t actually buy stocks) was doing, and he replied that last year his investments hit 10,000. Now, his portfolio is at 20,000. He wants to be a millionaire when he grows up.

Xiu Shu Jun, the headmistress for the school, says, “We decided to do it because we wanted to give the children a more realistic and practical financial education.”

I wonder if that realistic education includes the part where you lose all your money.

Tony Cheng, the Al Jazeera reporter, says, “It is ironic that the largest Communist nation in the world has become obsessed with this capitalist pastime.”

Cheng says, “Stock trading goes against about every principal Chairman Mao stood for, and he would be pretty horrified to learn that there are now more registered (stock) traders in China than there are members of the Communist Party.”

Mao’s statue in Shenyang is surrounded by banks. After all, Tony Cheng says, today to be rich in China is glorious.

I say, What Tony Cheng doesn’t tell us is when Deng Xiaoping came to power by arresting those that would have continued the Cultural Revolution, China’s central government repudiated revolutionary Maoism and launched a Chinese style of socialist-capitalism.

Meanwhile, outside of school where children are being indoctrinate into capitalistic tendencies, China’s citizens bought stocks hoping to get rich quick not realizing that this is the same as going to the casinos of Macau, Monte Carlo and Las Vegas and throwing all of your money on the roulette table.

It seems that the Chinese are learning the hard way that in a capitalist economy what goes up also comes down.

______________________________

Lloyd Lofthouse is the award-winning author of My Splendid Concubine [3rd edition]. When you love a Chinese woman, you marry her family and culture too. This is the lusty love story Sir Robert Hart did not want the world to discover.

#1 - Joanna Daneman review posted June 19 2014

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