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Why China Matters

After the worst start to a new year on record for stocks, news this morning that China’s exports were not nearly as bad as many feared sent stock markets surging higher for reasons that should be clear in the Voronoi diagram below from

The Rise (and Fall?) of the Chinese Economy

Tyler Cowen of Marginal Revolution fame (a blog that has been around a very long time by one of the few TMTGM-approved economists in the world) takes a look at how the current China came to be and what recent troubles in the Middle Kingdom portend for the future.

The period ahead will surely test China’s “command and control” economy and financial system. So far, they seem to have mucked things up a bit by stoking the 2014-2015 stock market bubble and then ham-handedly propping it up, but, they’re learning.

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China Circuit Breakers in Action

It’s been a pretty rough opening week for financial markets in 2016 with China’s stock market circuit breakers functioning something like this:

At the 3:25 mark comes the portion of the video best representing China’s shortest trading session in history that occurred yesterday.

Happy (Chinese) New Year

They’re still working on their stock market command and control system in China…

Of course, today’s 7 percent drop doesn’t look that bad over the longer term…

From China’s Seven-Minute Selling Frenzy Shows Circuit-Breaker Risks at Bloomberg.

IMF adds Yuan to the SDR

… as detailed by the Wall Street Jounral’s Ken Brown in 60 seconds.

This appears to be much ado about virtually nothing, at least according to Paul Krugman, though Neil Irwin disagrees, comparing the move to the U.S. dollar a century ago.

My take on it is that the Chinese should pat themselves on the back only briefly before getting back to that pesky problem of having the world’s biggest un-popped credit bubble.

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