Author: abramicus

SHANGHAI STOCK MARKET DROPS 30% IN THREE WEEKS! [Copy link] 中文

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Post time 2015-7-6 10:20:41 |Display all floors
dusty1 Post time: 2015-7-6 10:18
It's a stock market prices go up and down its normal

It's also normal to blame all ills on foreigners.......they have already started doing it.



I've made my living, Mr. Thompson, in large part as a gambler. Some days I make twenty bets, some days I make none. There are weeks, sometimes months, in fact, when I don't make any bet at all because ...

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Post time 2015-7-6 10:21:57 |Display all floors
Revolutionar Post time: 2015-7-6 10:20
It's also normal to blame all ills on foreigners.......they have already started doing it.

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Post time 2015-7-6 11:26:01 |Display all floors
dusty1 Post time: 2015-7-6 10:19
The only government guarantee stock market in the world

You ain't learned nothing yet.  Quantitative Easing is kiddie stuff, just see our Quantitative Gambling!

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Post time 2015-7-6 11:27:52 |Display all floors
abramicus Post time: 2015-7-6 11:26
You ain't learned nothing yet.  Quantitative Easing is kiddie stuff, just see our Quantitative Gam ...

Ill look into it

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Post time 2015-7-6 11:46:27 |Display all floors
Revolutionar Post time: 2015-7-6 10:20
It's also normal to blame all ills on foreigners.......they have already started doing it.

I have not read of any specific allegation against foreigners, except a reference to JP Morgan "talking down" the stock market.  But if you read what its fund managers have said, they merely said that pullbacks are normal especially for a bull market that has risen by 110% in six months.  Suspending margin rules in order to not force sales of assets that have declined in price can hide the paper losses from being reflected in the market price, but when the holders of these stocks finally liquidate, they may have to fork everything over to their margin lenders, who in turn may never recoup the margin loans they have extended to these buyers, that could ricochet back into the losses of the banks and shadow banks.

For all the talk about rooting out corruption, we have seen the tip of the real iceberg of corruption in this stock market run-up.  

Corruption has won big time.

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Post time 2015-7-6 12:47:29 |Display all floors
abramicus Post time: 2015-7-6 11:46
I have not read of any specific allegation against foreigners, except a reference to JP Morgan "ta ...

Selling shares is not corruption.....



I've made my living, Mr. Thompson, in large part as a gambler. Some days I make twenty bets, some days I make none. There are weeks, sometimes months, in fact, when I don't make any bet at all because ...

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Post time 2015-7-6 13:29:41 |Display all floors
HOW DO YOU ERADICATE SYSTEMIC CORRUPTION, NOT JUST INDIVIDUAL CORRUPTION???

You are getting the picture.  It is the running up of the market using margin accounts that could be.  It benefits the shadow banks using financing corporations (trust companies and stock-matching-endowment companies) that offer loans in their own names to private investors, for collateral as low as 10% of the face value of the loan.  In effect, the private investor SELLS a bond to a trust company or stock-matching-endowment company, using his stock plus a non-stock asset as collateral, in exchange for which, he invests the cash paid to him in the stock market, using the stock as a collateral, as noted above.  The trust company gets the other 90% of the face value of the bond from a standard bank, by SELLING this bond as a "Wealth Management Product" to the bank, which is essentially a loan, much like home mortgages were sold to banks by finance companies that lent to borrowers of limited credit ratings at high interest rates.  These loans to stock buyers (instead of home buyers) is called a Wealth Management Product.  These can be repackaged and sold to regular commercial banks, which then tender 90% of the face value of the loan to the trust/stock-matching-endowment company, and collect on the interest paid by the stock buyer to the trust company, to the tune of 10% of a 15% interest on the loan.  The trust company or stock-matching-company does not risk any capital, as its capital comes from a regular commercial bank, and simply collects 5% profit on every loan it generates and sells to the standard commercial bank.

This is a carefully scripted replay of the US mortgage default crisis, except that instead of homes as collateral plus the down payment, stocks and a 10% down payment serve as the collateral.  The interest rate is about 15% for above-board trust or stock-matching-endowment companies loans.  But there are conceivably other black market loan sharks who would use the same methodology and charge 20% interest.  These loans are uninsured so there is no possibility of a re-insurer like AIG going bankrupt.  But they are sold to banks, nonetheless, who when faced with defaults by the original borrowers (stock buyers) will have to absorb the losses entire, on their balance sheets.  Thus the stock market rescue may help the small private investor, but it definitely also helps the shadow banks, the trust companies and the stock-matching-endowment companies, who stand to lose billions of Yuan if the market continues to fall.  

The fact that big banks are involved with the blessings of their regulators makes this stock market rescue less an act of charity, than an act of self-preservation by the big boys and their backers.

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