The Great Chinese Nothing

Just as quickly as the Chinese Stock market crashed – sending the western financial media into a tizzy, clicking their heels with delight the The Great Satan, China, would finally meet its comeuppance – it came roaring back as if nothing had happened, hence The Great Chinese Nothing.

It never occurred to anyone that maybe it’s just noise, fluctuations of a market that may have gotten overheated, but otherwise if still fundamentally intact. Markets are inherently volatile. But the media, desperate for ratings, tries to turn this noise into a signal, spreading unsubstantiated narratives like:

What if China’s economy is dying?
What if it’s a bubble?
What if capitalism is to blame?
…or rich people?

And so on…all useless, worthless speculation.

We’re talking China, the second biggest economy in the world and home to some of the most innovative and fastest growing companies in the world, not some crappy penny stock that was juiced by a fly-by-night newsletter.

What happens if in the next few months China’s stock market makes a new high? Does that invalidate all of the media’s pronouncements of China’s economic and financial demise, resetting the doomsday clock? Will the media be held accountable for being wrong? Of course not. If that were the case the financial media would have ceased to exist long ago. Freedom of the press means freedom to pull stuff out of your ass with impunity.

That’s kinda how 2008 was, too. Some financial institutions failed due to bad bets (and a bunch of other factors too numerous to list), and the stock market temporarily plunged – but eight years later, pretty much everything is fine again as if nothing had happened. S&P 500, exports, consumer spending, and profits & earnings are all at record highs. The 2008 banking problem wasn’t the ‘death of capitalism’ or ‘death of America’ as many on the left predicted (and hoped) it would be – just noise, fluctuations, and maybe a learning experience to not sell into panic. The problem was mostly confined to the financial sector and commodities, with no spillover as sectors such as large cap technology, web 2.0, and payment processing were unscathed.

But this sober reality doesn’t get as many clicks, as many page views, nor does it sell as many books as doom and gloom does.