Oops! The Chinese government’s efforts to stop China’s stock market route are failing. Looks like yet another demonstration of the Command and Control Futility Principle: Governments and central banks can control one or more, but not all variables in a multi-variable system. The Chinese government (Commanders and Controllers through and through) is trying to control many variables: the economy, interest rates, the value of the yuan, the amount of debt and particularly margin debt, and its stock markets, and is losing control of all of them. Don’t tell anyone in the US government, but there is a lesson here. From Tyler Durden at zerohedge.com:
This was not supposed to happen.
After pledging, investing and otherwise guaranteeing the Chinese stock market to the tune of 10% of GDP, and intervening on at least 40 different occasions in the past month ever since China’s stock bubble burst in late June, with the subsequent crash nearly taking the Shanghai Composite red for the year, overnight China officially lost control for the second time, when after a weak start to the Monday trading session, things turned very ugly in the last hour, when the Shanghai Composite plunged by 8.48%, closing nearly at the lows, and tumbling some 345 points for its biggest one-day drop since February 2007 and its second biggest crash in history!
To continue reading: Chinese Stocks Suffer Second Biggest Crash In History
