Well, baby steps! I’ll take them where I can get them!
So, Breitbart ran this story today ….
One of the important lessons to take away from China’s stock market crash is a lesson nobody on Earth should need repeated: communists lie. Collectivists of every stripe devoutly believe that lying to the people in order to maintain power and further their righteous agenda is not only acceptable, but required.
Knowledge is dangerous. Who knows what the Little People might do, if they have too much of it? Better to give them the illusion of freedom, and manipulate their choices by controlling the flow of information.
The Washington Post ran a heartbreaking story over the weekend about how China’s stock market crash wiped out small investors – poor farmers who wanted a taste of the good life that has been largely restricted to city-dwelling elites, and believed their government when it told them to invest their meager savings in the sure-fire success of the stock market.
This spring, the country was gripped by stock fever, a frenzy of borrowing and buying that saw Chinese markets soar to historic heights, drawing in tens of millions of first-time investors, including dozens of people in this northern Chinese village.
The rally was bolstered by rah-rah editorials in the state-controlled press. Invoking President Xi Jinping’s vision for a powerful and prosperous China, the People’s Daily called rising stock prices “carriers of the China dream.” When the benchmark index hit 4000 points, an editorial in the same party flagship promised it was “just the beginning” of the bull run.
But the bulls would soon retreat, taking with them that official confidence. After trying — and failing — to prop up the market through July, the state has faded from view. The morning after “Black Monday,” the 8.5 percent slide that sent global markets sinking this past week, the People’s Daily led with a rosy report on Tibet.
Now investors across the country are left wondering how what seemed like a sure thing so quickly turned into a suck on their life savings — and what the party leaders many trust might do about it.
The story includes sad vignettes from Nanliu, once the postcard example of a booming, rapidly modernizing China where even rural villagers could spend their afternoon buzzing about hot regime-endorsed stock picks instead of playing mahjong. The village chief became the town’s investment advisor. Hardscrabble farmers poured their life savings into the market… and then borrowed from relatives to invest even more.
Their money vanished in a matter of hours when the market plunged…. and some of the farmers lost even more by trusting propaganda from Beijing that “hostile foreign forces” were causing the market crisis, so “patriotic” investors should keep their chips on the table instead of cutting their losses and getting out. As one of the messages beamed at these poor folks put it, “Win glory for the country, even if you lose the last penny.”
Now the high-rolling market-savvy village chief has disappeared, and the farmers are mostly back in the fields… although for many, as the Post puts it, “the taste of fast money has been hard to forget.”
Like many around the world who have been taken for a ride by confidence men, they want to play again, and this time they’re certain they’ll win. Several of the farmers quoted in the article expressed unshaken confidence in Beijing’s wisdom – which is, of course, mandatory for good and “patriotic” citizens. The inability to admit mistakes and learn from pain remains a defining attribute of government-corporate fusions around the world.
Yeh, it’s prolly just confined to China. There’s no parallels to see in the rest of the world, right?
How many Americans took a bath during the crash of 2008? Every damned one of us who had a 401K. ….. Well, I mean except for those of us who saw and put it in a money market account before the crash.
Let me state this as plainly as I can. Even after the crash, the stock market was and is horridly over-valued. That is to say, the money invested in the various companies is much more than the various companies’ actual value. Ostensibly, stock market investments are bets towards future worth. But, it is not so, today. They’re all sucker bets, except for the people in the know. It’s called profit taking. The game is easy, but, illegal, if you’re not the right person or entity. Let’s say you possess a great amount of shares in a company you know is over-valued. It’s a matter of time before that company’s shares take a dump. What do you do? …… You convince other people into investing in the company as you divest yourself. That way the price of the stock doesn’t dive when you sell! Easy-peasy! Those left holding the bag? Well, that’s business!
But, now, we’ve gone beyond investing in companies. We all invest in mutual funds, which invest in a myriad of companies. Apparently, China was able to talk Chinese into doing the same thing Americans do. Nicely played! It’s fascinating to see that the markets can actually lose money over any period of time. How bad does it have to be when that happens? Hundreds of millions of people automatically and randomly throw money into our stock markets, every day. It’s our retirement plans!!!!!
For people in the know, this is an automatic win! For the rest of us peons, it’s an automatic loss.
If you’ve a job which offers an investment retirement plan (most often a 401K) then, at least every year you’ll have a pitchman from the people who manage your company’s retirement plan. They’ll show you the history of the stock markets and show you how we’ll all be $ millionaires!!!!!
But, we can’t all be. It would violate
a the fundamental rule of economics. It is simply the law of supply and demand. If we’re all millionaires, then, how much are the millions worth? Well, nothing. This is because prices are dictated by the amount the market is willing to bear ……. assuming supply of goods and services are readily available.
A couple of great examples is this ….. Why are the prices of eggs so high? That’s because of the avian flu, or so we’re told. It is the supply of eggs which is dictating the price! Why does a new car cost so much? It is because there are enough people with enough money to bear the market. Is a new car worth $30,000, $40,000, $50,000? Of course, not! All over this nation, (the US) you can buy a decent home for $50,000! Is a car worth a home?
But, it is that there are enough people with such capital which causes the price of vehicles to be so high. That is to say, the supply of the capital in the hands of a few, exceeds the demand of the many! Would you sell 100 vehicles at $50,000 a pop ($5,000,000) or 500 vehicles at $5,000 a pop ($2,500,000)?
Even when the current stock market scheme works, it creates a two-class system and destroys the working middle class.
When I retire, I plan to ensure the cash-out, or the payments, don’t prevent me from drawing Social Security. This is why they penalize you for withdrawing your 401K before your retirement age! You have to keep that money pumping into their system of wealth accumulation!
Now, don’t worry about me in my future retirement, and don’t worry about you, either. Assuming you had enough sense to buy a house rather than a $50,000 vehicle. You did, right?