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China’s stock market bubble: A goring concern

economist.com

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Re: China’s stock market bubble: A goring concern

#11

Post by davidw »

kenny-log_ins wrote: post #3

I find myself noticing that a lot of the solutions that The Economist proposes are very similar - opening markets, decreasing regulation - make everything more "liberal". They always make compelling arguments for their suggestions but I also find myself wondering whether they ever argue for any alternative

They also advocate for things like gun control and health care reform in the US. I believe they've also advocated things like a carbon tax, as they give credence to the scientific consensus on global warming.

They also tend to be fairly 'practical' in their support for candidates. I recall some years ago when they absolutely laid into Silvio Berlusconi and recommended the left-wing candidate despite Berlusconi being, in theory at least, the more 'business friendly' candidate. They rightly argued that he was mostly just friendly to his own businesses.

So, yes, they are 'liberal' in the European sense, but not necessarily 'libertarian' in the US sense.

Edit: their about page is informative: http://www.economist.com/help/about-us#About_Economistcom

Re: China’s stock market bubble: A goring concern

#12

Post by mauricemir »

kcorbitt wrote: post #8

> Global investors are not buying into the mania: the shares of companies listed in both Hong Kong and Shanghai are now 30% more expensive in the latter. I'm quite confused by this statement -- if the shares on both exchanges are equivalent, this seems like an insanely good arbitrage opportunity. Are China's capital controls really tight enough to prevent Chinese nationals from finding a way to invest in the same sto…

Yes there are complex share cases that disbar investors based on nationality.

Re: China’s stock market bubble: A goring concern

#13

Post by bildung »

funkylexoo wrote: post #7
kenny-log_ins wrote: post #3

I find myself noticing that a lot of the solutions that The Economist proposes are very similar - opening markets, decreasing regulation - make everything more "liberal". They always make compelling arguments for their suggestions but I also find myself wondering whether they ever argue for any alternative

If you instinctively and intellectually adhere to a system of values, why would you advocate something that goes against it?

> If you instinctively and intellectually adhere to a system of values, why would you advocate something that goes against it?

Because less market regulation is not a value by itself, its a policy, a means to an end. My interpretation of kenny-log_ins' post was the hidden accusation that the Economist doesn't properly seperate the two, and thus falls victim to ideology.

Re: China’s stock market bubble: A goring concern

#14

Post by wjnc »

eyko wrote: post #6
kenny-log_ins wrote: post #3

I find myself noticing that a lot of the solutions that The Economist proposes are very similar - opening markets, decreasing regulation - make everything more "liberal". They always make compelling arguments for their suggestions but I also find myself wondering whether they ever argue for any alternative

As a short term solution, I would say they're probably right. However, sane advice would be to look for a sustainable alternative. I guess it's just because they have a liberal bias, but in any case I can't see The Economist proposing a slower, yet more sustainable growth. "After double-digit growth for much of the past decade, sales have slumped" - you don't say... or perhaps they expect that rate of growth to conti…

-Against fuel subsidies in Indonesia [1]

-.. and in general [2]

-For carbon tax [3]

(all imho: ) They are traditional liberal, and / but with a realist approach to economics. Massive market failures exist and need work. Market failures more often originate in government, than that new market failures need more government.

[1] http://www.economist.com/news/asia/21638179-jokowi-abandons-...

[2] http://www.economist.com/news/leaders/21639501-fall-price-oi...

[3] http://www.economist.com/news/leaders/21580146-world-will-on...

Re: China’s stock market bubble: A goring concern

#15

Post by EliRivers »

kcorbitt wrote: post #8

> Global investors are not buying into the mania: the shares of companies listed in both Hong Kong and Shanghai are now 30% more expensive in the latter. I'm quite confused by this statement -- if the shares on both exchanges are equivalent, this seems like an insanely good arbitrage opportunity. Are China's capital controls really tight enough to prevent Chinese nationals from finding a way to invest in the same sto…

I read a related analysis (can't recall where, sadly) which indicated that some speculators (as opposed to investors) actually preferred to speculate in Shanghai, as they expect the shares to bubble higher before they sell them on; if they speculated in HK, they'd just not make as much profit.

Obviously, there's an associated higher risk, but that's the game.

Re: China’s stock market bubble: A goring concern

#16

Post by yc1010 »

kcorbitt wrote: post #8

> Global investors are not buying into the mania: the shares of companies listed in both Hong Kong and Shanghai are now 30% more expensive in the latter. I'm quite confused by this statement -- if the shares on both exchanges are equivalent, this seems like an insanely good arbitrage opportunity. Are China's capital controls really tight enough to prevent Chinese nationals from finding a way to invest in the same sto…

> Global investors are not buying into the mania

I thought non Chinese investors were not allowed to "buy in" anyways

Re: China’s stock market bubble: A goring concern

#17

Post by caoilte »

kenny-log_ins wrote: post #3

I find myself noticing that a lot of the solutions that The Economist proposes are very similar - opening markets, decreasing regulation - make everything more "liberal". They always make compelling arguments for their suggestions but I also find myself wondering whether they ever argue for any alternative

Yeah. :-).

You should read the Economics of the Colonial Cringe. I think you'd enjoy it.

http://www.theatlantic.com/technology/archive/1991/10/-quot-...

Re: China’s stock market bubble: A goring concern

#18

Post by hga »

pjc50 wrote: post #9
kcorbitt wrote: post #8

> Global investors are not buying into the mania: the shares of companies listed in both Hong Kong and Shanghai are now 30% more expensive in the latter. I'm quite confused by this statement -- if the shares on both exchanges are equivalent, this seems like an insanely good arbitrage opportunity. Are China's capital controls really tight enough to prevent Chinese nationals from finding a way to invest in the same sto…

Are China's capital controls really tight enough to prevent Chinese nationals from finding a way to invest in the same stocks on the HK index for a 30% discount? The answer has to be yes - otherwise, as you say, it would be arbitraged away. It's still a bit leaky, but when it leaks it seems that investors much prefer to diversify into ownership of overseas property. Why capital controls? Because China is more nationa…

China follows a nasty policy of financial repression (https://en.wikipedia.org/wiki/Financial_repression) in which the interests of "the people" is an afterthought at best.

ADDED: combine that with little to no social safety net, and the One Child policy which most? often results in 4 grandparents supported by 2 children supported by 1 grandchild (not quite so bad in the rural areas, but still inadequate, especially if a child dies), and you have the worst social planning mess outside of outright genocide (which the PRC did a lot of through the Cultural Revolution) that I'm aware of.

Re: China’s stock market bubble: A goring concern

#19

Post by danmaz74 »

davidw wrote: post #11
kenny-log_ins wrote: post #3

I find myself noticing that a lot of the solutions that The Economist proposes are very similar - opening markets, decreasing regulation - make everything more "liberal". They always make compelling arguments for their suggestions but I also find myself wondering whether they ever argue for any alternative

They also advocate for things like gun control and health care reform in the US. I believe they've also advocated things like a carbon tax, as they give credence to the scientific consensus on global warming. They also tend to be fairly 'practical' in their support for candidates. I recall some years ago when they absolutely laid into Silvio Berlusconi and recommended the left-wing candidate despite Berlusconi being,…

Berlusconi was really the most "business friendly" candidate. His own business, that is :D

Re: China’s stock market bubble: A goring concern

#20

Post by jazzyk »

mrec wrote: post #4
kenny-log_ins wrote: post #3

I find myself noticing that a lot of the solutions that The Economist proposes are very similar - opening markets, decreasing regulation - make everything more "liberal". They always make compelling arguments for their suggestions but I also find myself wondering whether they ever argue for any alternative

The Economist has always been "The answer is free markets! What was the question?". I always find it a reassuring read, in the sense that well-written, well-researched, persuasive articles that I disagree with are a sign that I haven't been completely engulfed by my own little information bubble, but take it with a pinch of salt.

I have been a subscriber to the Economist for over 25 years. In recent years, I have noticed a subtle, but noticeable, change from the small-business-friendly to the statist, big-business-friedly tone .

A look at the ownership structure may explain the shift - The Economist is now 50%-owned by big business interests

http://en.wikipedia.org/wiki/Economist_Group

BTW, they endorsed B. Obama for president twice, in 2008 and 2012, who has been, despite all the populist rhetoric, very friendly to Wall Street and big business (not a single Wall Street criminal has been indicted)

I still like them, for the excellent writing, but I find myself agreeing less with them over the past several years.

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