Saturday, July 4, 2015

China to Establish Fund Aimed at Stabilizing Stock Market

Chinese government mad manipulations continue.

Since hitting a peak in June, the Shanghai Composite Index has plummeted by 29 percent, and more than 3 trillion dollars of “paper wealth” has been wiped out.

Although China has done much to open up its economy, since the communist days of Mao, and many free market businesses thrive, sadly the government has also adopted Keynesian  style manipulation of the economy as part of its policy.

This has led to a distorted real estate market and stock market. I have been warning in the EPJ Daily Alert that China could experience one of the greatest business cycle collapses in economic history.

These stop-gap measures to prop up a phony collapsing financial sector will, in the end, only make things worse.

BTW, the great champion of Keynesian style government spending and money printing. Paul Krugman never acknowledges in his NYT column and blog that the disaster in China is the result of the Chinese government following the  type of Keynesian policy he advocates.


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