Revealed: How China asked Fed for its stock crash play book

[unhappycamper]

http://atimes.com/2016/03/revealed-how-china-asked-fed-for-its-stock-crash-play-book/

Revealed: How China asked Fed for its stock crash play book
By AT Editor on March 21, 2016
(From Reuters)

Confronted with a plunge in its stock markets last year, China’s central bank swiftly reached out to the U.S. Federal Reserve, asking it to share its play book for dealing with Wall Street’s “Black Monday” crash of 1987.

The request came in a July 27 email from a People’s Bank of China official with a subject line: “Your urgent assistance is greatly appreciated!”

In a message to a senior Fed staffer, the PBOC’s New York-based chief representative for the Americas, Song Xiangyan, pointed to the day’s 8.5% drop in Chinese stocks and said “my Governor would like to draw from your good experience.”

It is not known whether the PBOC had contacted the Fed to deal with previous incidents of market turmoil. The Chinese central bank and the Fed had no comment when reached by Reuters.

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Those of us who have 401K (Wall $treet Ca$ino) retirement accounts should plan on losing another shitload of money when/if the Chinese economy melts down.

[Ghost Dog]

1. That is interesting.

China's political system, apart from the corruption, does tend to position competent & pragmatic technicians in positions of responsibility.

[DetlefK]

3. "Apart from corruption" ... Problem is: Corruption is almost everywhere over there.

http://www.truth-out.org/news/item/31478-china-s-communist-capitalist-ecological-apocalypse



It's the usual problem of countries lacking democratic oversight: It's really hard to get rid of incompetent and criminal people, which fosters even more corruption.

[Ghost Dog]

5. Indeed. And I see they are very aware of it.

Goes waaay back. Deeply entrenched in the culture.

Edit to add: That would be one reason why, from listening to some Spanish businesspeople I know, some Spanish businesses are doing quite well selling into Chinese markets).

[DetlefK]

2. It won't be the kind of "meltdown" you know, because 90% of China's economy is state-owned.

China's problem is that it must provide all citizens with well-paying jobs. (Several political reasons.)

If China's economy doesn't provide these jobs with demand for products, China's government forces the demand and subsidizes the production of those products.

Problems:
1. Subsidizing those un-needed jobs (e.g. construction) and those un-needed products (e.g. steel-products) has become too costly for China.
2. The massive industrial growth has caused major (in some regions critical) environmental damage.



China has reduced it's target for economic growth for the new 5-year-plan, obviously in an attempt to slowly phase out the surplus workers and surplus products and wean its economy slowly off the subsidies and bring economic growth back to a normal level.

[unhappycamper]

4. When foreign 'stuff' causes causes my 401K to decline I notice it.

And I don't like it.