Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

SELLING OUT OF PRECIOUS METALS AND BUYING BITCOIN…. Very Bad Idea
By: Steve St. Angelo

The Bitcoin Bubble Explained in 4 Charts
By: Jake Weber

VXX Sends an Awesome Message from Another Galaxy
By: Rick Ackerman

Asian Metals Market Update: November-22-2017
By: Chintan Karnani, Insignia Consultants

Gold Seeker Closing Report: Gold and Silver Gain With Stocks
By: Chris Mullen, Gold Seeker Report

Ira Epstein's Metals Video 11 21 2017
By: Ira Epstein

Bitcoin, Bail Ins And Bullion
By: Mike Maloney

Tactics For The Gold Bull Era
By: Stewart Thomson

Dow Peaking? The Quick Guide to Diversifying Your Stock Profits
By: Jeff Clark

What History Says for Gold Stocks in 2018-2019
By: Jordan Roy-Byrne CMT, MFTA

 
Search

GoldSeek Web

 
Events in China and Greece threaten 2008-style credit freeze


 -- Published: Monday, 6 July 2015 | Print  | Disqus 

By Peter Cooper

The stock market crash in China and Greece’s probable exit from the euro threaten to cause an October 2008-style credit freeze. This led to a plunge in global trade in the first half of 2009 with volumes down around 40 per cent in Dubai, the Middle East’s biggest port.

China is a bigger problem than Greece. It’s stock market crash has already cost the equivalent of ten times Greek annual GDP. This was the final stage of the credit bubble in China that started in 2009 with an epic bailout package equal to half its GDP, the biggest in history.

1929-style crash

That this should climax in a 1929-style bubble and crash in its stock market was inevitable. But we still have to deal with its consequences. Chinese domestic demand will now collapse with the funding for its continued expansion.

It’s a ’sudden shock’ experience that Dubai saw in 2009-2010, a very painful and immediate end to a long period of prosperity. Credit will become far more expensive in China, just as Dubai bond yields went through the roof.

But this just is not good news for anybody. China has become an important trading partner and source of investment for many nations. They will all suffer in the wake of the stumbling giant.

Will its 100 million plus tourists now stay at home? How will its companies raise the money to build projects in Africa? How much lower will industrial commodity prices go if Chinese demand is shot to pieces?

Chinese demand

In so many markets the weakness in demand from local sources has been compensated by demand from the temporarily super-rich Chinese buoyed up by a bubble economy. They are going to have to go back to being poor, at least for as long as it takes to sort out this mess.

History does not have many examples of quick recoveries from sudden stops. The US did not really recover from the Wall Street Crash until its belated entry into the Second World War.

True Dubai turned its real estate crash and debt crisis around in a few years. But this was a much smaller economy with rather special local factors plus the support of Abu Dhabi and a surge in oil prices (click here).

However, those economic analysts who see Chinese stocks as somehow an isolated phenomenon with no impact on the global economy are very misguided. Without the planned tsunami of IPOs to raise new cash in China, bond yields are on the way up and there will be a credit squeeze.

Grexit

Europe’s problems with Greece of course don’t help either. This is going to put the cost of borrowing up in other nations like Spain and Portugal that might be the next to leave the eurozone.

Indeed, what we are seeing is an end to the days of easy money that have supported global financial markets and powered stock markets to spectacular levels absent any real economic recovery. And the Fed has not moved rates an inch. It won’t be able to either.

This is the start of a crisis for both bonds and stock markets in which gold and silver will be the only winners as the final or ultimate asset bubble. Getting the timing of this right is absolutely impossible, and it would be foolish to try, just as it is utter folly to bet against this trend.

Peter Cooper is the editor and publisher of ArabianMoney and a 20-year veteran of Dubai business journalism.

http://www.arabianmoney.net/

 


| Digg This Article
 -- Published: Monday, 6 July 2015 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.