And for the third day in a row, China devalues her currency. From what I can see, the Chinese economy is in full-on meltdown mode. How this will impact our own is a cause for concern.
Obviously hindsight but maybe I should have had a bit more conviction with my thoughts... It's not a criticism as such but sometimes I find the financial media a little narrow in their global perspective, having a very US-centric slant without fully getting to grips with what's going on elsewhere. I'm British but I've worked in the States in the past and kind of fully appreciated (and almost wanted) that perspective. As an outsider I could see the slant. Now that I've also lived in Asia for a number of years, it's even more interesting to see the different ways to look at specific stories.
If I had money, I'd wait until October (when, usually, there is a general loss on the market) and jump right in with a few grands, just to see what happens. This was a correction, not the sign of the apocalypse, therefore the market will definitely rebound (from a historic point of view) and will bring an 100% sure profit.
I honestly don´t see the end-game for China on this. One problem is that i think we all think they are these super-intelligent guys who have this master plan that is going to crush us... but honestly everything they are doing is just going to further cement the US as the world´s economic power. For the past few years, China has been trying to chip away at the fact that the US dollar is the universal currency in the world. This fact gives the US a huge advantage over every other country, mainly in that we can print money and the devaluation of our currency is diluted all over the world, so it never really devalues the US dollar. But with China devaluing their own currency so drastically in such a short amount of time, no other country is going to want to hold their currency.. instead, they are goign to stick to holding the dollar. Furthorme, devaluing their own currency makes it much cheaper for the US to repay our debts. A signficant part of our debt is held by people in China.. this just makes it much easier for us to repay them and makes it less valuable for them. I am starting to think they are not these diabolical masterminds, but instead just a new kid at capitalism making radical, reactionary moves.
I think we will in a world of contagion, the 2008 crisis solidified that in my eyes. I will definitely be interesting (and maybe painful), to see where we go next. The Fed Reserve announcing that they are holding off the rate increase for a little longer did bring some stability into the market, but unfortunately not enough. I just know that my dream of another pre-2007 world might have to hold off for a little while longer
The Fed hasn't yet officially said they are holding off a rate hike. It was just a side comment from William Dudley, part of the rate-setting committee. But there are also others within the committee that believe that US growth is looking decent at the moment, meaning that they see no problem in raising rates. So nothing yet is agreed. We have some interesting weeks ahead.
Update: The Chinese government has halted or is thinking of halting their intervention in the stock market and in anticipation of this decision Shanghai stocks dropped 3.5%. Again. It's expected that China's stock market chaos will get worse . . .
http://www.bloomberg.com/news/artic...rokerages-to-boost-market-and-buy-back-shares The Chinese market exchanges are having some willies this (Aug 31) morning but futures in Europe-Africs-Middle East don't too bad yet.
