The Real Financial Crisis



Scary things are happening in the world of international finance. Greece is broke. Computers that run the New York Stock Exchange, United Airlines and the Wall Street Journal are mysteriously malfunctioning…

Sounds bad, doesn’t it? But what you’re not seeing in the headlines is even scarier.

China’s stock market has crashed.

Yes, Communist China has a stock market (photo above). It’s not quite the same as in countries like the United States, but it’s similar, and it represents the hopes and dreams of Chinese investors, including thousands of villagers who risked their life savings in it, creating a massive bubble that has now burst. The Chinese government, which at first encouraged the poor, uneducated villagers to become traders, has tried frenziedly to stem the tide of selling and stabilize the market. And you know a Communist dictatorship has a lot more sheer power over its citizens than democracies do.

But nothing has worked so far.

The situation is eerily reminiscent of the collapse of America’s banking system 86 years ago. And you know what that ushered in. The Great Depression.

The mood in China is being described as “panic.” And markets in the rest of Asia are reeling from the shock waves.

Of course, as a dictatorship, China’s government has more power than America did to avert that kind of catastrophe. But at what price?

This experience could make China’s Communist bosses, who have been moving toward a free-market type of economy over the past few decades, gun shy. They could back away from their program of financial reform.

What that would mean to the global economy is anybody’s guess. But my guess is that it won’t be pretty.

Click for China’s stock market crisis.