In a breathtaking plunge, the New York stock market today dropped 1,000 points at the opening, attenuating to a still sharp but less ghastly 588-point plunge at the close. Nobody was happy at the loss being less.
If looks could kill, China would be dead from the world’s ocular arrows. The world saw China as the source of the financial effect that rippled around the globe.
An apparent bubble in the Chinese equity market popped. CNN Money suggests that the serious slide that started last week gained downhill momentum as China announced a 6-year low in its manufacturing sector. All those made-in-China computer components, electronic devices, china dolls, dishes, and doohickies have slowed on the assembly line.
While that’s bad news for China, it’s bad news for the rest of the world as well. Why? Well, for starters, China’s gargantuan growth of the past twenty years was sourcing the growth of other national economies too. Those that sourced the raw materials and energy China craved to feed its extraordinary growth were enriched by the enhanced trade.
Brazil with its rich resources comes to mind, but not so much the U.S. with its abundant domestic oil resources. Be reminded that while Brazil can export its natural resources including oil to China, U.S. oil must remain within U.S. borders. Thank you, Obama, for prohibiting U.S. oil exports.
If we think that our oil-export ban saved us from the slide today, it didn’t. While oil may be cheap by the barrel, prices for gasoline at the pump suffer from already high and rising taxes and boutique blends required by eco-freak states such as California. A 12-cent gasoline tax hike is already in the works in the state.
The New York Times paints a different picture, putting a brush in the hands of the U.S. Federal Reserve and whether it will actually raise interest rates as it said it would in September. Here’s a rhetorical question: Did actions of government, federal agencies or the Fed ever solve economic issues that markets – left to their own devices — couldn’t correct better?
“If markets keep falling, that could endanger American growth prospects,” said the Times, as if big government and overreaching regulation haven’t already stunted prospects for American growth.
How about this, people: We let world markets sort themselves out? Sure, some will dive and some will survive. With governmental intervention in free markets, we will all have an equitable share in the agony.