No, I do not think that the strike by taxi drivers in China was the reason for the global stock market slide on Thursday. That is among the list of interesting news items that I had read in the FT on Thursday and wanted to blog about. With the world focused on the political mess in the US and in Europe, the tail risk comes from China.
The stock market slide was not a big surprise. It is a belated recognition of the risks that have been steadily piling up in global economics and politics. Policymakers have long ago run out of costless or cost-effective options. Their failure to recognise that has brought us to this pass. If they continue to display an obdurate refusal to recognise that, the costs of any ‘asset price rescue effort’ would be catastrophically destabilising. They have to let prices find their natural level and accept that the post-WW II growth model is now past its SELL BY date.
Read the following (pl. note that subscription may be required in some cases to read the full article):
Cyberattacks penetrate military secrets and designs’ by Joseph Menn in Las Vegas – This is going to be far more critical than many are willing to contemplate. This would raise or is already rising geo-political tensions.
Industrial groups ring alarm bells – the Global Economic Cycle looks exhausted. That is in the nature of things in a post-credit bust world. We cannot say that we were not adequately warned.
US cuts are more slippery than they seem by Robin Harding – I tend to agree. The ‘debt ceiling’ agreement is recipe for greater and not less polarization.
Deal or no deal, a US downgrade is justified by Carmen and Vincent Reinhart – well, amen to that.
The coming crises of governments by Robert Barro – Although the article header refers to ‘governments’, the story is more about the US than about governments. Robert Barro strikes a less extreme ideological posture in this piece.
The daddy of ‘em all – Saudi Arabia plans World’s tallest tower – the only thought that comes to my mind is ‘What for?’