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Whenever stocks go up, two camps of people form: the enthusiastic and the cautious. The Enthusiastic have been capitalizing on Chinas stock bubble for a while now, and at the beginning of the month, the CSI index was up more than 152% year to date (Businessweek, Nov. 26, 2007, p.66). Of course, the cautious have been reading signs in the tea leaves that Chinas stock bubble is about to burst. Bloomberg reported today that the CSI was down 11%. The big worry about Chinas stock bubble is what happens to all those Chinese corporations that have invested their funds in the runaway market? If Chinas stock bubble does pop, how will that impact the clothing and electronics manufacturers who make the inexpensive items that help hold inflation steady in the U.S.? And what about American firms and investment funds that are deep into Chinese markets? What blows here is the possibility that the eventual bursting of Chinas stock bubble may cause the devaluation of U.S. 401(k) plans, and could add more fuel to the non-fire of stagflation.
About this poster:
Posted by:
vwalker
(female, 40-ish)
(Posted 11/21/07)
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China Stock Bubble--About to Burst?
