Is this that crisis in China?
More like that crisis everywhere. China's stock market (which closed trading early this morning by our time—they're ahead of us) has seen an appalling day of trading. The Shanghai Composite Index has seen its biggest one-day slump since 2007, dropping 8.5 per cent at 3209 points. But European and US markets are now going through similar jitters. Europe's 300 largest companies have had around €400bn wiped off their value today, while the American Dow Jones industrial average briefly fell by over 1000 points (6 per cent) as trading opened.What does that mean?
The problems China has experienced in recent months are causing global policymakers to lose faith in its government's ability to control the situation. “I think there is now growing realisation—domestically and offshore—that the Chinese leadership are not in control of the situation,” Fraser Howie, the co-author of Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise, told the Guardian. And as the global shockwaves start to hit, the tone of senior experts' analysis has become steadily more panicked. "As in August 1997, 1998, 2007 and 2008 we could be in the early stage of a very serious situation," tweeted Larry Summers, the former US treasury secretary. The name "black Monday," also given to cataclysmic stock market events in 1987 and 1929, gives some sense of the seriousness with which many view the developing situation.Why has this happened?
China revealed an 8.3 per cent decline in exports back in June, and in a bid to reverse this drop it began devaluing its currency, the Yuan. A shock currency devaluation almost two weeks ago has had markets panicking ever since. Many regional economies and emerging markets worldwide are highly dependent on China—until recently the country's economy was growing extremely fast—meaning that problems in China are likely to have serious consequences elsewhere. Meanwhile, populist US presidential hopeful Donald Trump is seeking to make political capital out of the situation, tweeting: "Markets are crashing—all caused by poor planning and allowing China and Asia to dictate the agenda. This could get very messy! Vote Trump."How do I find out more?
Good hashtags to follow include...#GreatFallofChina
£40bn wiped off the FTSE 100 this morning by the #GreatFallOfChinahttp://t.co/g3W8Ndi73vpic.twitter.com/S5Oz7BWm5i
— Graeme Wearden (@graemewearden) August 24, 2015
We're all going to die #GreatFallOfChinapic.twitter.com/y5pl3ZXWxe — General Boles (@GeneralBoles) August 24, 2015
And #BlackMonday:
mark it down: media/cons who ignored the 100% rise of the market under obama last 6 years will suddenly blame him for #BlackMonday
— Oliver Willis (@owillis) August 24, 2015
Says a lot about "free market" capitalism that it's still got nothing on hiding your money under your mattress. #BlackMonday — Tim Stanley (@timothy_stanley) August 24, 2015
And if all else fails you can follow this hysterical advice from former Gordon Brown advisor Damian McBride:We're all upset about One Direction splitting up, but #blackmonday is an over-reaction.
— Richard Osman (@richardosman) August 24, 2015
Advice on the looming crash, No.1: get hard cash in a safe place now; don't assume banks & cashpoints will be open, or bank cards will work.
— Damian McBride (@DPMcBride) August 24, 2015
Crash advice No.2: do you have enough bottled water, tinned goods & other essentials at home to live a month indoors? If not, get shopping.
— Damian McBride (@DPMcBride) August 24, 2015
Crash advice No.3: agree a rally point with your loved ones in case transport and communication gets cut off; somewhere you can all head to.
— Damian McBride (@DPMcBride) August 24, 2015
