Thursday 23 March 2017

Financial tremors as China's big bet goes bad

Editorial

Editorial

A man walks by the New York Stock Exchange (NYSE) in New York City. As the global economy continues to react from events in China, markets dropped significantly around the world on Monday
A man walks by the New York Stock Exchange (NYSE) in New York City. As the global economy continues to react from events in China, markets dropped significantly around the world on Monday

Seismic financial tremors are not really supposed to happen in August. But, then again, when have economists ever been completely dependable when forecasting? When the bell rang yesterday in New York, the Dow fell a jolting 1,089 points, its biggest ever points drop. One analyst said that US markets were "bordering on the edge of panic" but not quite there yet. He remembered the crash of 1987 and said this didn't feel as bad.

There were assessments that this was more like the "flash crash" of 2010, when billions of dollars were wiped off some of the world's biggest companies in a matter of minutes, only to recover almost as quickly.

The correction may have been unavoidable. China had gambled heavily that its big markets - Europe and the US - would rapidly recover after the slump. They haven't, and now China's big bet has gone bad.

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