What’s with all the over-reaction? So a $130 billion was lost in China’s market the other day. It’s not like it was real money. The sympathetic corrections in other global markets were mostly occasions for profit taking by investors and traders nervous about eight months of good times. All those flashing lights and bells and whistles… those just mean we’re in a casino.
There are other explanations. But we’re not buying the theory that China’s crash indicates real concern about the sustainability of its boom. The China boom is happening in the real world. The China stock market boom is largely fictitious.
So is the whole current global asset boom model in jeopardy? No. There are three pillars to the global asset boom, Japan’s easy money, America’s free- spending ways, and China’s appetite for raw materials in order to make things. If this were a celebrity marriage (with a bride and two grooms, or two brides and a groom, or three brides, or three grooms) what would we call it… Chimerican? Americhinan? Or how about… Japanica!
Japanica it is, the new name for the wobbly, triumvirate/mascot for the global super asset bubble. And for the record, since we’re sure history is paying attention to every word we write, our bet is that this asset bubble has miles and miles to go before it sleeps. The unification of global stock exchanges looms in the not-too-distant future. This will facilitate even more rapid global capital flows… and bring even more investment products on-line for surplus savers, be they in Australia, China, or Amer… er… Japan.
Seriously, you can see where all this is headed, a super asset boom. And there’s a simple reason for it. The Boomer’s (or Japanese and Chinese savers) are not ready to leave the gambling table just yet. You, see, they can’t. They don’t have enough money to cash out their blue chips and call it a day. They are still making up for the tech wreck, and still wary of the durability of home price appreciation (and the liquidity in the housing market, which, at least in America, is dropping like a stone.)
Markets and Money