Chaos in the China stock market!

[Frodo]

The silver lining:

China Slowdown Could End Up Being Good News for U.S.

By BOB DAVIS
Sept. 8, 2015 1:40 p.m. ET

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[The Mikado]

Perhaps we may be able to draw some parallels to the Soviet Union in the 1970s when growth there started to slow as the extrinsic development the USSR had relied on for decades began to show its lack of sustainability.

The Soviets were able to mask their economic internal rot for another decade due to the oil shock skyrocketing the price of oil, which gave the Soviets something to fall back on as their industrial base decayed. It wasn't until 1986 when the oil price collapsed (all the way down to $7 a barrel, imagine that today!) that the USSR had to face the music that their economy was completely dysfunctional.

[muon2]

Perhaps we may be able to draw some parallels to the Soviet Union in the 1970s when growth there started to slow as the extrinsic development the USSR had relied on for decades began to show its lack of sustainability.

The Soviets were able to mask their economic internal rot for another decade due to the oil shock skyrocketing the price of oil, which gave the Soviets something to fall back on as their industrial base decayed. It wasn't until 1986 when the oil price collapsed (all the way down to $7 a barrel, imagine that today!) that the USSR had to face the music that their economy was completely dysfunctional.

Even adjusting for inflation that's only abut $15 in today's dollars. So the low $39/bbl for WTI last month is still more than double the equivalent price in 1986.

[Sol]

Out of complete ignorance, why didn't the USSR attempt to do what China did rather than liberalize politically?

[Taco Truck 🚚]

Out of complete ignorance, why didn't the USSR attempt to do what China did rather than liberalize politically?

Communism was around a lot longer in Russia.  There wasn't anyone alive who knew anything about a market based economy.

[🦀🎂🦀🎂]

Gorby misjudged. He thought glasnost would be essential for revitalising the USSR in that if citizens were free to express their views, the government would automatically work to fix the problem. However, it quickly became a positive feedback loop when people realised their longstanding gripes were shared by the citizenry, transforming the Soviet public opinion from dull disapproval to inflamed and angry.

[Frodo]

Amidst the slowdown in China's economy, it appears its consumer sector is holding up rather well, if we use Alibaba as a proxy:

Alibaba shows how consumers are now king in China's economy

OCT 29, 2015 - 9:41 AM

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[jaichind]

Fun fact, despite the chaos and rapid drop of the Mainland China stocks in Aug 2015 and Jan 2016 as well as the weakening of the RMB.  If you looks at the market cap of PRC+HK stock markets in USD terms as a percentage of world market cap.  On 2/24/2015 it was around 14.3% and as of 2/24/2016 it is now 16.1%.  So PRC+HK market cap in USD terms actually grew in relative terms from a year ago.  If you look at the same data for US stock market, on 2/24/2015 the US stock market cap was 36.9% as a share of world market cap.  As of 2/24 2016 it is now 37.0%.

[Swedge]

Very difficult to see where this is going