The financial media is inventing new and interesting ways to talk about the China stock bubble that, almost unanimously, they think is going to get even bigger (perhaps much bigger) before it meets its pin. In this Bloomberg report, they equate the one-year rise in stock market “value” – $6.5 trillion dollars – to circling the earth 250 times with $100 bills.
It is clearly the newbie investors in China that are driving share prices higher (see this illuminating AP story for more evidence of that), but the financial media isn’t helping either. To wit, the Bloomberg story casually refers to the $6.5 trillion change as “value creation” (i.e., “The figure, $6.5 trillion, sums up the value created in just 12 months of trading on Chinese stock exchanges…”) and this serves to legitimize the gains.
Isn’t there a better phrase than “value creation” when referring to mature asset bubbles?