China Joining Greece?

That ain't Paris and definitely, not the Champ de Mars.

Greece is not likely to matter that much to our economy beyond the psychological aspects by itself. I believe that the German, French, Italian, and other EU banks have loaned money to the Greeks; so a small ripple effect will go though Europe, but I doubt that it will have much effect here.

Now China is a bigger problem. I suspect that our country is hoping that they will continue its bond buying program especially since the Social Security IOU's are due. The chaos from a Chinese collapse would likely make all of East Asia uneasy since history shows that when pseudo-socialists run out of money, they polish their jackboots. And then there are the usual and customary economic shock waves that come from the collapse of an economic powerhouse.

On the bright side, there could be good economic news for the US if we use our heads and make it easier to repatriate those lost factories. If not, then the poor in South and Central America might get jobs. Perhaps Africa might get lucky as well.

There are over 350,000 young men in China who have no chance at marriage, thanks to the killing of infant girls. Traditionally, nations on the economic brink with large male surplus go to war.  India, Vietnam and Russia would be major candidates.

Here is an article with an interactive map showing location of 16 of the largest ghost cities. 

http://www.marketplace.org/top...s-trail-ghost-cities

There are several more. Perhaps, many more if the references I've seen mentioned are true.

Before retirees get worked up over Greece and China, they might ought to check their retirement funds for Puerto Rico exposure:

The municipal bond market is anxiously waiting to hear how Puerto Rico’s Governor Alejandro Garcia Padilla plans to pay back billions of dollars in public debt.  Padilla has already said, “the debt is not payable” and at 5 p.m. ET on Monday he will address the commonwealth’s 3.6 million citizens

Between June 30^th and July 3^rd, Puerto Rico has to make close to $2 billion dollars in payments on its debt.  But making those payments will leave the region essentially broke and unable to cover day-to-day expenses or make future debt payments as early as mid-July. Joseph Rosenblum, director of municipal credit research at Alliance Bernstein expects the 5pm speech to be light on details, “there will be more generalities than specifics and then we enter the phase where hard negotiations begin.” 

Puerto Rico has sought help from the US government.  Its constitution requires it to pay back lenders and as a US territory it is prohibited from restructuring debt through bankruptcy the way the city of Detroit did last year.  Rosenblum expects the speech to rattle the US municipal bond market, “we certainly saw Puerto Rico bonds take a hit this morning.  I would expect there will be some impact on the market as a whole in the form of higher borrowing costs.  Spreads might widen but I think it ought to be short term.”  Rosenblum expects investors may be able to find opportunities as the market digests the news from Puerto Rico. 

But the news may be harder to swallow for millions of American investors who are unaware their future is tied to Puerto Rico’s debt.  Fund giant Morningstar says half of all US municipal mutual funds hold debt from Puerto Rico.  That’s down from the 77% that held Puerto Rican debt in 2013.  Millions of American retirees are invested in those muni bond funds which had been considered the least risky and safest of investments. 

Rosenblum says, “it doesn’t matter what kind of fund it is you could have Puerto Rico exposure.” In some cases that debt may be uninsured leaving the muni bond funds and their investors on the hook as Puerto Rico forces a restructuring.'

http://www.foxbusiness.com/mar...o-defaults-on-debts/

Meanwhile, the Chinese government is still forcing cash on major investors, ordering them which stocks to buy, sell or hold.  Talk about a command economy. 

Regulators announced Sunday that they would make more capital available for an entity that will allow for even more margin lending, the practice of borrowing money to buy stocks. Buying on margin is incredibly risky.

Many experts believe the Chinese stock market's surge earlier this year was partly due to average investors taking on debt to invest in stocks.

And when stocks first started to fall last month, many of those investors had to quickly sell their investments to pay back the loans. That fueled an even bigger drop in stock prices.

http://money.cnn.com/2015/07/0...na-greece/index.html

I think we saw this movie in 1929, so we know how the story will end, but everyone had better keep watching the story anyway.

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Yep!  Sounds almost exactly like it. Of course, Hoover raised tariffs thorough the roof and shut down world trade -- great depression.  However, besides the overpriced stocks, China has the ghost cities and the great debt amassed building them.

China is reverting to full on control economy.  Investors with 5 percent or more in stock of a company are forbidden to sell their interest.  Don't know if that applies to foreign holders.  Meanwhile, small investors are losing their shirts and pants. 

Never liked the idea of investing in mainland Chinese stocks for a number of reasons. Mainly, that their accounting is weak and the audits, unless done by a foreign group, not trustworthy,  The Chinese government just added another reason.

Panic has spread to the commodities -- copper down drastically and gold up.  Copper usually goes up during a good economy. Unfortunately, a number of contracts in China are backed with copper inventories, like gold.  Read that high priced investors are buying real estate in their first tier cities -- just when China has a real estate bubble, all over, 

China was attempting to build up their internal consumption market to even out production when exports drop.  To do that,, people must have money -- money they are willing to spend.  Another, goal down the drain.

Chinese opera includes people running to and fro, singing in a high pitched archaic version of Mandarin, banging gongs and a sense of controlled chaos.  Even native Chinese say they go more for the spectacle, than understanding the story.

The last two days, China has cut their currency, the yuan, 1.9 and 1.6 percent against the dollar, in order to make their exports cheaper.  Thus, increasing their trade and decreasing other nations'.  Other countries could devalue their own currencies or, increase tariffs against Chinese imports.  The Great Depression was caused when, to counter a recession, Hoover greatly increased US tariffs, other nations followed suit, and world trade shut down.

Alibaba, was supposed to supplant Amazon, but is suffering from less sales than expected -- buying back stock as it falls in value.  Strap in kiddies, it ain't the Small, Small World ride.  Its going to get bumpy. 

I believe China has been selling off its gold reserves for the past week or three to prop up its economy as well. Our retirement systems will suffer some shock as well; U.S. stocks will crater because the Chinese units of U.S. companies were a large part of the stock market boom. I guess the bad stuff that happens will be 'splained away as "Bush did it!".

Much of the stock market boom is based on the Fed cutting interest rates to near zero -- forcing investors into the market and bidding up the cost of stock well above book value.  JT and others think because their retirement accounts have risen in value it means out economy is booming and Obama is to be praised.  That's the equivalent of those who saw their home values rise and thought they were wealthy, until the bust . 

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The Chinese economy may put off the day of wrecktumming when the Fed raises rates and we might see a small suckers rally if the Fed decides not to raise rates at the next meeting. That will mean reality will just smack us upside the head that much harder when the inevitable happens. Until the knockout blow happens, I suspect we'll suffer a few more jabs from places like Puerto Rico, the Middle East, and probably the rest of the world.