Greece is Small Potatoes

Well, everyone seems to be so captivated with little old Greece that no one seems to have noticed a slightly bigger problem - China.  Let's compare.  Greece at the end of 2013 (and it has vastly slid downhill since) captured .30% of the world GDP.  China, just a tad more at 15.4%.  For you math whizzes in the audience, that puts China GDP at over 50 times that of Greece.  One might surmise from this that problems in China may mean a bit more to us here in the U.S. than problems in Greece.  Long term, problems in Greece could be the first domino in festering issues in the EU rearing their ugly head and that is the true danger there and eventually here as well, but for the immediate future, the second largest economy in the world deserves more focus.

And as I was thinking about China not getting the attention it deserves just yesterday, I saw two articles today on the very same point, including this one by Lance Roberts, who I like to follow in Seeking Alpha:

http://seekingalpha.com/article/3296315-chart-of-the-day-is-china-sending-a-warning?ifp=0&app=1

If you did not notice, China is officially in a bear market and, despite some strong government intervention this weekend in terms of a reduced rate and reserve requirements, it is still struggling this week.  It lost 5% yesterday and as I write is down at the start of Thursday, complete with a whole lot of volatility.

I will not drone on about all the problems China is facing, but suffice it to say it does not have a booming economy right now to save the day, so things are quite likely to get a whole lot worse before they get better.  Simply couple that with EU problems and a less than stellar economy in the U.S. to support its highly overvalued market and you get the picture.

Update 7.2.15

Over four hours of trading left for Friday in China and the Shanghai market is down another 5% already, bringing the total drop to more than 27% and counting.  Lots of bubbles around and China is the porcupine in the room.

Update 7.3.15

And here is Zero Hedge noting much of the same.  He gives nice specifics on government attempts to stop the slide, including suspending some short sellers, i.e. the only ones making money in China, and launching an investigation into suspicious and possibly illegal market manipulation - like everything was above board and not suspicious at all during the markets meteoric rise.  And I hope he is right in believing brokerages will not utilize the new margin lending process that allows investors to use their house as collateral.  They are letting investors now use their house to support margin buying - seriously!!?

http://www.zerohedge.com/news/2015-07-03/chinese-stocks-plummet-despite-government-threats-shorts-europe-lower-us-closed

And to put it in perspective, David Stockman notes that the Chinese stock market in the past three weeks has lost in value 10 times the entire GDP of Greece.  Referendum that.

http://davidstockmanscontracorner.com/chinese-stocks-just-lost-10-times-greeces-gdp/