nasdaq.com / Martin Tillier / September 04, 2015, 11:48:52 AM EDT
I don’t know about you, but I am getting sick of hearing about China. It seems that every time any market moves, stocks, bonds, oil – anything – China is given as the reason. It’s beginning to sound more like an excuse than a reason. I mean, does slower than expected Chinese growth justify oil below levels from the depths of the recession? How does lower manufacturing output in China justify a big drop in Lowes Home Improvement stock ( LOW ), or U.S. utilities?
The one area where the events unfolding in China, however, do have an effect is on Bitcoin, and yet we have heard very little of that from the financial media. In many ways, the type of crisis that China is going through is exactly what Bitcoin was devised to protect against. You have a situation where the normal investments and stores of value for the Chinese people, stocks and gold, are both going through their own recalibration, albeit on different timescales.
Gold has been depressed and deleveraging from its own frothy levels for several years, while the meteoric rise and then collapse of the Chinese stock market has been well-documented. If anything currently in the news justifies use of the now clichéd term “bubble,” it is that market. The problem in many ways for the Chinese is that they have all of the trappings of a free market economy, but none of the substance. The government seems to have deliberately engineered the run up in stocks, but now that the inevitable in free market terms is happening and it is unwinding, their response is to arrest those that they deem responsible.