China's Annotated Collapse Into Centrally-Planned Market Hell

Tyler Durden's picture

By now it is clear to everyone, even the most hardened neoliberals, that what is going on in China is nothing short of the complete collapse of a centrally-planned market into sheer chaos, a bubble which while punctuated by the occasional dead cat bounce, is now finished and it is only a matter of time before all the "nouveau riche" farmers and grandparents see all their paper profits wiped out and hopefully go silently into that good night without starting mass riots or a revolution.

Since by some counts there are anywhere between 20 and 40 million of them, it could be a close call, one which the Politburo would dread to see to its fruition and as such the Chinese government together with the People's Bank of China have engaged in the most desperate and unprecedented series of market bailouts, one which puts good 'ole plain vanilla QE in the "quaint" category.

But most curiously, it wasn't until China literally threatened short (or any other for that matter) sellers with arrest last night, that the market finally staged a furious rebound.

Will that rebound hold, or like every other dead cat bounce in history, fade quickly if not quietly into memory, we shall see over the next several days.

In the meantime, for those curious what it looks like when a centrally-planned market devolves into complete chaotic hell despite the relentless intervention of the local authorities and central planners, look no further than the chart below...

 

And while it may seem that China has literally thrown the kitchen sink at its "maliciously" crashing stock market (odd how there were no complaints about malicious buying on the way up...), the reality is that China still has quite a few tricks up its sleeve, starting with a plain vanilla rate cut, proceeding to expanded stock buybacks, a complete short-selling bank, and finally culminating with that inevitably Hail Mary of every central bank: "outright share purchasing."

 

The good news is that what China is doing should be a lesson to all other global markets, which to a lesser or greater extent, are all as manipulated, rigged and centrally-planned as China's. Seen in this light, China is merely a harbinger of what is coming to a banana market near you...

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Bunga Bunga's picture
"Centrally-Planned Market" is a double oxymoron.
sosoome's picture

Ha! 

And besides that, it's a contradiction of terms.

Pinto Currency's picture

 

 

They've only added $15 trillion of debt since 2009.

It is no secret that results in stock bubbles.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10611931...

SickDollar's picture

Something is definitely WONG!!!!!!!

Captain Debtcrash's picture

As is outlined here, China is unlikely to supplant the United States in the upcoming monetary shift as many appear to believe.  It is not superior long term planning to the west, it is central planning just like any other.  Sure they may appear to make some right moves, but so too did the Soviets.  Remember Sputnik?

TruthInSunshine's picture

This is the kick off to the 2015 global economic crisis.

While everyone is fixated on Grexit and the EU contagion that will follow, China, which is the factory floor of the globe (in large measure), and upon whom most multinational corporations were counting on to consume their wares & products, is in full meltdown mode (it's only just begun).

Look at exports reported by the Philippines today for just one small example of what's to come from the ongoing Chinese economic meltdown.

Japan, with a real 440% debt to GDP ratio (versus their "official" 225% debt to GDP ratio), will be next to implode - in no small part due to Kuroda-san's insane policies and Abenomics (as advised by none other than Paul "When Mars Attacks" Krugman).

ZerOhead's picture

I hear you but they have to get the wars started first I think.

It's tough to justify war spending when people are seen starving and homeless in the streets just like the like the Greeks will soon be as their economic collapse deepens.

neilhorn's picture

We've only added $11 trillion of debt since 2009.

FIFY

WhackoWarner's picture

Maybe this is a foreshadowing event? Maybe some folks should be vewy vewy cawfull about the high horses they mount.  Or the stones they throw.

may very well be that  idiots who cannot learn from the past may benefit , perhaps , from the future staring at them...

BoPeople's picture

Ya know because Goldman Sachs is so good about advising countries about what is good for them and their people.

disabledvet's picture

YOU KILLED THE BRIDE'S FATHER!

Tom Servo's picture

Didn't mean to?!  You put your sword right through his head!

 

Oh dear!  Is he all right?

 

nmewn's picture

Buy Chinese solars on the cheap!...ROTFLMAO!

Tom Servo's picture

I hope Leo isn't living in a dumpster in Athens...

 

deimos178's picture

Schadenfreude, sweet, sweet, schadenfreude. It couldn't have happened to a  sorrier and more worthy bunch of assholes.

ebworthen's picture

Just like in the U.S., the losers in the casino markets will be the little people.

The politicians and apparatchiks will get their pay and pensions, the banksters and corporate kingpins will make their bank and offshore it, and the bubbles will be blown and popped until it collapses in revolution and/or war.

Bread and circuses reign, along with new structures of Aristocracy and oppression.

The 'isms are dead as is:  the Magna Carta, sound money, and the rule-of-law.

Communism, Democracy, Socialism, Facism, and Capitalism?  All dead.

Alive as a morphed five-headed hydra fed by human lust and greed.

All hail the central bank debt serfdom kleptoligarchies!

scatha's picture

None of it except for feudalism and fascism in imperial context ever happened in real world. There were just meaningless words for which people fought and needlessly died for.

An interesting take on what do we know about ideas of socialism and capitalism as they were actually implemented I found at:

https://contrarianopinion.wordpress.com/2015/01/06/pools-and-propaganda-...

 

 

 

 

 

Why.Not.'s picture

But, but, BRICS! AIIB!! Nooooooooooo....

all-priced-in's picture

So this is what it takes to become the world's reserve currency.

 

/s/

ukspreads's picture

occasional dead cat bounce

Hang Seng 1000+ points in 90 minutes.. is more than a bounce

disabledvet's picture

(While rowing the Exxon Valdez)

"HOLD THE PEG BOYZ!

HOLD THAT DOLLAR PEGGGGGGGGG!!!!!!!....

Ward cleaver's picture

Of course, it's now against the law to sell so it should go to infinity. At the end of the day what is it all worth?

daveO's picture

Still below 200 day. Don't get too excited, unless you want to short it. Oh wait.

Moccasin's picture

Chinese Central planners, they have learned from the best, the US Federal Reserve.

LetThemEatRand's picture

Confucius say:  "Our greatest glory is not in never falling, but in rising every time we fall."  Really, he said that.  Chinese for "buy the rucking dip."

 

disabledvet's picture

Yeah, well...."say hello to the Piraña of Wall Street" too...

Buy the time Confucious open mouth no meat on bone...

fromthinair's picture

zerohedge, how many economies are not centrally planned these days?

ali-ali-al-qomfri's picture

I wonder how Banana Cart Investments Ltd. is doing?????

M.B. Drapier's picture

Am I missing something, or did the SHCOMP just get seasonally adjusted? I'm sitting in the cheap seats watching the chart on the Bloomberg website, and I'm sure I saw it open below yesterday and go down. Now it's apparently been rocketing since the open?

Yen Cross's picture

 This has got to be one of the most asinine article headlines I've ever seen. Leave it to Bloomturd to spin a turd into a diamond.

 JFC, only 1/2 of the Chinese market was open.

 

China's Stocks Cap Biggest Gain Since 2009 as Volatility Surges Bloomberg - Jul 9, 2015
Wilcox1's picture

Why would they do that to their people?

Apostate2's picture

It's not about the people it is about the Party under Mr Xi keeping his position and the party, under his control,in control.

MrNoItAll's picture

The Chinese government's moves to prevent flat out collapse reek of desperation and authoratarianism.  They don't even play it sly and tricksy like our fearless leaders in the US government do.  You would have thought that they would feel the need to come up with some lame excuses (bad software shutting down the exchanges -- that always works).  But no.  They just dictate the law and follow it up with threats.  That's their style and they aren't shy about it.  Sell now?  Make my day.  Your parents pay for the bullet that executes you later. 

roddy6667's picture

I live in China and I red Tyler's over-the-top doom-and-gloom the-sky-is-falling column every day. There is a total disconnect between how he depicts things here and the reality of it. I wonder who pulls his strings?

Look at this 14 year chart of the Shanghai Composite Index. Where is the "collapse'? Where is the "meltdown"?Don't you feel silly now?

http://finance.yahoo.com/echarts?s=000001.SS+Interactive#{%22range%22:%22max%22,%22allowChartStacking%22:true}

In 2007-2008 the market dropped over 4000 points and was a cause of moderate consternation. There  was no collapse or meltdown. Life went on. Some foolish investors who put all their savings into the bubble lost it all.

BFD.

Don't believe the captive American press. They write what their handlers tell them to write.

 

 

 

Bazza McKenzie's picture

Perhaps you need to share your wisdom with the authorities rapidfire series of panicked actions indicate they believe there is a problem.

I'm pretty sure they live in China also.

roddy6667's picture

They are discouraging agitators from disrupting the market to make billions on short selling. "Panicked" decisions? Maybe in the American press. No panic here. If the market dropped to 2000 and took a year to reach 3000, it would be about right. Everybody here knows it's a bubble and the party ahs to come to an end.

Element's picture

No one knows it's a bubble?!  Or knows it is a bubble?!  So do nothing?  Do you really believe that?  If you don't realize a profit, you will realize a loss, hence profit-taking selling. You invest to make a profit, after all.  But you're suggesting people don't?  That they should stay in the market and watch their major profit-making opportunity dissolve, and risk realizing a complete loss of capital, via BK? 

Is that your investing 'logic'?

You're not some sort of fucking Communist are you?  :D

What you are saying is that Chinese people are really too dumb to understand the basics of a market. I'm sorry, but the Chinese people I know are very market savvy and I have no problem accepting that the most experienced and educated of them will definitely have seen the bust coming and got out. And getting out is exactly the correct and logical thing to do, in such a farcical and obvious market speculative bubble, full of gambling mums and dads.

But what I can discern is that you did not have all of your money sunk into those markets, for if you had you would not still be talking such vacant nonsense about it and recommending people get back in under conditions of extreme whiplash.  ;-)  

Nor would you be pretending that 2008-09 was nothing, as your govt injected far more per-cent GDP of debt growth into propping China's economy, than the US govt injected into USA economy. If that stock collapse was nothing, why then did they have to prop up the economy as well?

And why have Beijing had to do massive economic stimulus AGAIN, and AGAIN, since then? ... hmm???

 

wadda bullshitter

 

Turin Turambar's picture

LOL. Thanks for the laugh. 1400 stocks suspended, evil short sellers threatened with jail time, et. al... Nothing out of the norm here. Nothing to see. Move along. Want some steam fried rice? SMH

dreadnaught's picture

they didnt do all this stuff in 2008 when Chinas market collapsed. this time its personal

honestann's picture

There is an almost unresistable tendency to exaggerate on the part of all prognosticators.  Yes, "disaster sells" (in this case, disaster gets more clicks).

However ZH tends to exaggerate fairly equally.  If the same happened in the USSA or EU, I'm quite certain ZH stories would be very similar.

So who/what is likely "pulling his strings" is mostly just a desire to "capture attention".  It is up to you, and everyone else, to look at the quantities involved, and make your own judgements.

That "central planning" is an increasing disaster everywhere is not an exaggeration.

Apostate2's picture

So, Roddy667 you live in China.You are an anonymous poster claiming thus. Tyler is all doom and gloom, an astute observation but you lost it not only in argumentation but your line of attack.

If, indeed, you live in China. you do not read or understand the language. This process or event is not captive to to American press. It is internal.

The Chinese press, to turn you on your head to quote: "write whatever their handlers tell them to write'.

QED