I’ve been asked to discuss something that I don’t know much about, the Chinese stock market. So here goes:
1. Stock crashes are often predictions of bad times ahead. Sometimes they are correct (the US in 1929, 2008) and sometimes they are incorrect (1987). We know from 1987 that stock crashes don’t actually cause economic problems. Roosters don’t cause dawn. Chinese stocks are still much higher than a year ago, and the Chinese people won’t decide to stop working just because stocks crash. Indeed they may work even harder.