I don't know much about stocks and bonds..what caused the massive losses ?

what caused the massive losses ?

Another case of too much leverage in this system. In this instance, margin debt to finance equity purchases. The main problem with the Chinese financial system is the interest rate cap on bank deposits. Much like what happened in the U.S. with our deposit rate cap in the 1980's (disintermediation) and in the current low interest rate environment, artificially holding down interest rates will force capital to flow to higher yielding riskier investments.

I know many of you fear the free markets quite a bit. But government controls on the markets only creates even worse distortions.

Free markets are fine as long as they are not accompanied by "too big to fail" bailouts.

That was some shit huh?

My posting history would show that I would not have bailed out the financial system in 2008. The system needed a major flushing to rid us of Citi, AIG and other risk taking leaches on the system.

It would have been the most painful exercise in U.S. history, but it would have eliminated the moral hazard so ingrained in our system. Now we are much worse off.

I would guess China has the strongest economy in the world. True?

What is the driving force behind "too big to fail"?. Obviously corporations but there were a number of non corporate types pushing it also.

When Congress voted down TARP the first time, do you remember what happened to the Dow? Then GE's Immelt called the Treasury and said they could not roll over their commercial paper lending. "Oh my God GE is going to fail". The money market funds were going to break the buck. Everything was about to collapse. By not letting it, we went back to the same old bad practices, junk debt, LBO's, over indebted corporations (buy back stock and pay dividends with cash flow and debt), government borrowing, unfunded pension liabilities, phony Fed interest rates, etc, etc.

The politicians blinked. The Bush administration let Lehman fail to teach Wall Street a lesson. No one knew AIG would fail because of it. Then panic set in. Even Goldman needed Buffet money. Every single financial institution was about to fail. I would have let it happen. We needed to get back to sound money.

Long time guy, I am right there with you. If you've followed me here, I have been accused of not being a Republican because of my true free market (libertarian) beliefs. I am fine with that. I am all for sensible regulation and a modest social safety net. What I am not for is crony capitalism, which is exactly what you are outlining.

FHLB giving loans to private banks at government borrowing rates.
Fannie/Freddie backing private mortgages.
Ex/Im Bank backing loans for private corporations
Licensing rules that effectively block out competition.
Regulation that only Fortune 500 companies can afford to navigate.
Agricultural price supports and handouts (how do you like HFC in your soda?)
And yes implicit too big to fail on large financial institutions.

Enough! Danny, is this Russia?

I would guess China has the strongest economy in the world. True?

Not a financial expert, but given the stranglehold China has on the US economy, I can only imagine we will feel this quite heavily.

Nope. Germany does.

Germany is strong becuase it is small...thus controls....and oh yeah, that whole WWII thing when you get to start over????

Thats why.

Largest population of any European country not named Russia. Sure, compared to US or China, Germany is small, but they still have a huge economy - 4th largest GDP in the world.

China has lost 4 trillion in their markets in 30 days.

Could the U.S. survive that if it happened here ?

Define survive? I am taking my BUG OUT bag and heading to Ike's underground fortress...you suckers are on your own!

China's economic house of cards is built on an even weaker foundation than ours and that's saying a helluva lot.

Too big to fail, indeed.