Chinese stock market crash; has the bubble finally burst?

[DontSayBanana]

consoles like the Xbox and the Playstation.  The gaming potential of PCs are limited because many developpers want to cater to these markets by offering a unique experience across the board.  Dragon Age Inquisition comes to mind.  Many portions of the game had to be disabled because the older consoles could not cope with it.  And we will see the same thing with DA4 when it comes out as the current gen console will be antiquated compared to a modern PC.

Agreed. When I bought my XBox 360 a year or so after its launch it had notably better hardware than my PC which was a big incentive for me to buy it at the time (and a few games that at the time weren't scheduled to come out on PC). I was happy with my 360 for several years (including the Guitar Hero phase, obviously).

I already regret buying the PS4. Games like GTA5 or Alien Isolation look better on my 3 year old computer (though to be fair I replaced the graphics card last year, going from 660 to 770), and most games I'm interested in come out for PC, anyways, with the exception of a handful sports games and Sony exclusives.

I see why developers still like to publish for consoles - they're pretty easy to use and maintain for the average couch gamer, and piracy is less of a concern.

This came up with the Arkham Knight PC port debacle- one of the problems with the consoles is that for more consistent playback purposes, most content (games or video) for consoles is still frame-locked to 30 frames per second, which is okay for a movie with slowed-down special effects, but terrible for video games requiring near-single-frame reaction times.

Some people complain about the 4K versus 1080p limitations, but I kind of treat them the same way I treat the people complaining about lossless versus 320kbps MP3 quality- biologically, it's extremely unlikely that one can actually make the differentiation, but people investing in perceived high-end hardware will convince themselves that they're losing out by not having the highest spec possible.  So far, all the controlled experiments have come down on the side of technology having outpaced the granularity of human perception.

[The Minsky Moment]

According to the Economist, from the year 2000 to the present, the ratio of house prices to income in China has fallen by more than half.

[MadImmortalMan]

According to the Economist, from the year 2000 to the present, the ratio of house prices to income in China has fallen by more than half.

You are an evil, evil man.

[The Minsky Moment]

I was very surprised to see that.  Either the Economist has goofed badly, or -- more likely - the facts are not entirely in accord with the conventional narrative of a massive Chinese RE bubble.

[Admiral Yi]

They would be in accord with a narrative of a frenzied RE bubble who's growth ratet peaked long ago and diversion of investment funds into the equity market.

[DontSayBanana]

I was very surprised to see that.  Either the Economist has goofed badly, or -- more likely - the facts are not entirely in accord with the conventional narrative of a massive Chinese RE bubble.

Or, most likely, option 3- pricing in China can't be accurately gauged because the Chinese government interferes too heavily in pricing for it to be an accurate indicator of market forces.

[The Minsky Moment]

They would be in accord with a narrative of a frenzied RE bubble who's growth ratet peaked long ago and diversion of investment funds into the equity market.

I.e. an RE bubble that subsided.

[The Minsky Moment]

I was very surprised to see that.  Either the Economist has goofed badly, or -- more likely - the facts are not entirely in accord with the conventional narrative of a massive Chinese RE bubble.

Or, most likely, option 3- pricing in China can't be accurately gauged because the Chinese government interferes too heavily in pricing for it to be an accurate indicator of market forces.

How does the PRC government interfere in sales of residential RE in a manner that distorts prices?
As compared to say RE markets in the US and Europe which are also not 100% free of policy distortion.

[Razgovory]

I was very surprised to see that.  Either the Economist has goofed badly, or -- more likely - the facts are not entirely in accord with the conventional narrative of a massive Chinese RE bubble.

Or, most likely, option 3- pricing in China can't be accurately gauged because the Chinese government interferes too heavily in pricing for it to be an accurate indicator of market forces.

How does the PRC government interfere in sales of residential RE in a manner that distorts prices?
As compared to say RE markets in the US and Europe which are also not 100% free of policy distortion.

Magic.  Haven't you heard of Feng Shui?  It's the ancient Chinese art of real estate market distortion.

[Eddie Teach]

Magic.  Haven't you heard of Feng Shui?  It's the ancient Chinese art of real estate market distortion.

There's not a real estate bubble, just a lot of houses built on dragons that haven't been discovered yet.

[jimmy olsen]

Read it a weep, tons of embeded links within.

All of this was completely predictable.
http://www.slate.com/blogs/moneybox/2016/01/04/markets_are_panicking_about_china_again.html

Welcome Back to the Office. China's Stock Market Crashed Again.

By Jordan Weissmann

Meet the new year, same as the old year. Financial markets are off to a rocky start in 2016 thanks to turbulence—where else?—in China, where stocks had to halt trading for the day after a 7 percent drop, sparking a worldwide sell-off. In the U.S., the trusty Dow Jones is down more than 400 points.


The selling in China seems to have started thanks to a combination of disappointing manufacturing data and a falling currency. Some investors may also be trying to unload their holdings before a ban on selling by large shareholders expires on Friday. China's government slammed those restrictions in place to try to halt the country's massive stock market declines that spooked the world over the summer. Once it's lifted, we should expect a lot of pent-up selling.

And that may speak to Monday's big theme (insofar as there is one): unintended consequences. By attempting to calm its markets a few months ago, China seems to have created new kinds of chaos. On Monday, for instance, the country debuted its new "circuit breaker" system, which pauses trading for 15 minutes once the benchmark CSI300 index drops 5 percent and cuts it off for the day after a 7 percent decline. The idea is to give panicking investors time to think and stop herd-driven selling; the U.S. has somewhat similar safeguards in place although here trading halts when the S&P 500 drops more than 20 percent in a day. But a lot of people seem to think China's new system exacerbated Monday's declines, as anxious traders tried to sell their positions before the circuit breakers kicked in.

As CNBC notes, it may just be that China's 5 percent and 7 percent thresholds are too small given how erratic stock prices are there. But either way, it's another example of the Chinese government's ineptitude at market tinkering. I'm guessing the blooper reel will continue well into the new year.

[MadImmortalMan]

I've been considering shorting Shenzhen again.

[jimmy olsen]

Down another 7% yesterday


https://www.washingtonpost.com/news/wonk/wp/2016/01/07/whats-really-important-about-chinas-stock-market-disaster-and-whats-not/

What's really important about China's stock market disaster, and what's not

By Matt O'Brien January 7 at 11:25 AM    
(Reuters)

You can only defy financial gravity for so long. At some point, what went up for no reason must come down for a very good one, no matter what the government does to try to keep it aloft.

Which is to say that it was another disastrous day for Chinese stocks. On the plus side, though, it was a short one. Indeed, China's market was only open for 14 minutes on Thursday before it fell the maximum 7 percent it's allowed to in a single session. It's the second time that's happened this week, enough to erase almost all its gains since the summer.

Now, on the one hand, it's kind of silly to ask why China's stock market bubble is bursting. That's what a bubble, which is by definition unsustainable, does. They stop. But, on the other, it's still worth thinking about what it is that's set off this latest sell-off. And the answer, it turns out, is simple. It's everything. It's an economy that seems to be slowing down more than Beijing wants, and rules that perversely seem to have made the panic worse. What does that mean exactly?

Well, here are the three biggest problems.

1. Is China slowing down or is it slowing down? China was never going to keep growing at double-digit rates — there just aren't as many people to move from the farms to the factories as before — but the question is whether it can do so at, say, 7 percent instead. That's the government's official target, and it's looking like it might miss it.

Now, this isn't just a matter of China's economic stats being unreliable enough that economists think "7 percent" growth might be the new 5 percent growth. It's that the rest of its numbers, particularly manufacturing, show that it's not in great shape. Well, that and the fact that the government seems to believe this too. It devalued its currency back in August and has continued to do so — its latest move to devalue Wednesday night was its biggest one since that first one — which looks suspiciously like it's trying to prop up growth by boosting exports.

That's not the kind of country that people want to invest in. Think about it like this: If Beijing knows more about its economy than anybody else, what does it tell you that it thinks its economy needs more stimulus? It says that China is not only slowing down due to its graying workforce, but also because its slowly deflating credit bubble has it as close as it will get to a recession. That's admittedly still pretty far away, but there's a real risk it could have a "hard landing" where it doesn't grow fast enough to keep unemployment down.


2. Beijing's plan to calm the market down has backfired. China's markets are dominated by mom-and-pop traders who are prone to fits of fear, greed and even more fear, sometimes all within the space of an hour. So it's not unusual for stocks to be up 3 percent one minute, down 2 percent the next, and then finish the day up 4 percent. That'd actually be a pretty tame day by Shanghai's standard.

The authorities, though, have had enough of this kind of extreme volatility — at least on the way down — and have circuit breakers in place this past week. The way it works is that the market takes a 15-minute break if it's ever down 5 percent on the day, at which point trading resumes — unless stocks fall an additional 2 percent. Then the market closes for the day. What's the problem? Well, anytime stocks start getting close to that first level, say down 4 percent, people race to sell anything they might want to out of fear that they won't be able to if they wait a little longer. That, of course, sends stocks down to the 5 percent threshold, which then gives them 15 minutes to figure out how to sell everything else before the next circuit breaker.




In other words, the rush to beat the circuit breakers made the market more likely to hit them. It's no surprise, then, that just four days after putting them in place, the government announced this morning it is getting rid of them now.

3. The government won't let big shareholders sell their stock, after all. Beijing tried to stop the last sell-off by saying corporate bigwigs couldn't unload their shares for six months. That was, well, six months ago. You can probably see where this is going. People were afraid that, once the lockup ended, everybody else would try to sell big blocks of stock all at once, so they tried to sell their own blocks of stock first. The result was what they feared — a crash. So the government did what it always does. It told big shareholders that they still had to hold on to their stock, at least most of it. All they're allowed to do is sell 1 percent of their shares over the next three months — and that's provided that they give 15 days advance notice.

Voilà, today's problem has become tomorrow's.

***

A little perspective is important, though. China's stock market is still small enough that what happens in it doesn't really matter for its economy. Sure, it might turn into a few bad days for our markets, but just that. The far, far bigger story is whether China's actual economy keeps growing fast or keeps slowing down. So it's only insofar as Beijing's bungled stock market rescue tells us something about their managerial competence, or lack thereof, that it tells us something important.

China's stock market crash doesn't really matter for its economy, but its government's response to it might. That's because policymakers who have made this many mistakes with their markets might make ones with their economy too — and that's what matters. Not just for their own standard of living, but for everyone else who has come to depend on China's economy — and its demand for raw materials of every kind.

It turns out that socialism with Chinese characteristics is just capitalism where markets get punished for giving the "wrong" answer. There's been a lot of punishment in China and will be for awhile.

[mongers]

The Chinese have announced the 'circuit breakers' won't be enabled tomorrow.

Truly we live in 'interesting times'.

Up 3% on the open 1/2 hour ago, then down, now back up.


edit:
could well be down again by the time I finish this edit.

[jimmy olsen]

This kind of news is not going to help market stability

$7.6 billion ponzi scheme
http://mobile.nytimes.com/2016/02/02/business/dealbook/ezubao-china-fraud.html?_r=0&referer=https://news.google.com/