Wolf Richter: What the Heck is Going on in the Global Markets?

[marmar]

What the Heck is Going on in the Global Markets?
by Wolf Richter • August 23, 2015


This wasn’t supposed to happen. The week was already on a crummy downhill path globally, and emerging-market currencies were blowing up, when on Friday in China the Caixin’s Purchasing Manager’s Index hit the worst level since March 2009; manufacturing is sinking deeper into the mire.

So the Shanghai stock index plunged 4.3% for the day, and 11.5% for the week, to 3,508, closing at the same level as the bottom of its July rout.

The entire machinery that the Chinese government and the People’s Bank of China had set in motion to bail out the markets during the July rout, which had worked for a couple of weeks, has now proven to be useless. And the markets, thought to be controllable by fiat or manipulation, suddenly regained a will of their own.

Other Asian stock markets plunged too: Hong Kong’s Hang Seng dropped 1.5% on Friday and 6.6% for the week; it’s 5.1% in the hole for the year. The Nikkei fell 3% on Friday and 5.3% for the week.

.....(snip).....

Have central banks lost their omnipotence?

That despicable, unpredictable force that central banks were thought to have vanquished – markets with a will of their own – ricocheted in its unruly manner around the world.

In Europe and Japan, the central banks are currently engaging in relentless QE programs to inflate stocks, and China is doing a whole lot more, and yet, this debacle! A few more episodes of this – and folks are going to question the omnipotence of central banks, and they’re going to doubt the central banks’ vaunted ability to inflate the markets. If those doubts spread, not even QE can prop up the markets. Omnipotence only works if people believe in it. ...............(more)

http://wolfstreet.com/2015/08/23/what-the-heck-is-going-on-in-the-global-markets-meltdown/

[elleng]

1. They never were omnipotent; they just thought they were and of course the media played it up.

Another example: Hoist on our own petard(s,) LOTS of them.

[ruffburr]

2. No mystery-

The whole economic system is no more than a house of cards , Now the cards are beginning their inevitable collapse, Hang onto your hat it's going to get a might rough.

[Demeter]

3. The Day of Reckoning is at Hand

Why else would Trump be looking for a paying gig?

[StoneCarver]

4. Demeter your are a treasure.

Thank you for posting information so often. It is much appreciated, and it makes me smarter (I think . I had to laugh when I read your post. Peace to you and your family.
Stonecarver

[dixiegrrrrl]

5. Container Freight Rates From Asia To Europe Crash 60% In Three Weeks

Oil price collapses, Baltic Dry Index plunges.

Rates generally deemed profitable for shipping companies on the route are at about $800-$1,000

what really happens next, to both shipping, trade, the global economy and markets? Sadly, unless central planning finally works after 7 years of failing ever upward... this.

http://www.zerohedge.com/news/2015-08-23/global-trade-freefall-container-freight-rates-asia-europe-crash-60-three-weeks