Friday, May 10, 2019

Whoppers


Woke up this morning to see that the Shanghai stock index is up 3,1%. Wow!, this must mean that China agreed to the previously negotiated tirade terms ... and Trump held back on the new 25% tariffs. A little further investigation revealed that exactly the opposite happened and the Dow Jones futures indicated a down US market today. So why is the Chinese market up ... and up so much ... and ours might be down?

Dear reader, may I speculate here? I can visualize Xi Jinping turning to a subordinate after hearing that China’s power play didn’t work and Trump upped the tariffs ... and saying (in Mandarin Chinese), “Make the stock market go up.” And so it happened. This bit of psychological warfare is a side benefit of autocratic government control.

Often this type of single-point decision making is seen as an advantage of the Sino-form of capitalism ... whereas such market outcomes in the US are the net result of millions of back-and-forth decisions rolled up into an overall free-market result ... much, much less efficient ... but, far more democratic.

Which is really better? Well, the Chinese form is obviously more efficient ... but when they make a mistake (like the Great Leap Forward), it is usually a whopper ... and I don’t mean a hamburger.

Afterthought: And the million Muslims concentration camps might be at least a Big Mac ...

3 comments:

ChillFin said...

The DJIA turned at noon to recover its losses for the day. Trump must have told the markets to just simply overarchingly go up. My only investment that has gone up today is cannabis. Good ole' American grown weed. Everyone must get stoned.

George W. Potts said...

I don’t think that Trump can move the market up with a command ... like Xi.

ChillFin said...

Oh. I did not know that.