Saturday August 29, 2015
My father, a New York financier, used to call dubious stocks or bonds, “Chinese paper.” Last week, we saw a blizzard of Chinese paper, both in China and around the world.
As manager of a sizeable investment portfolio (an unwelcome second job from my main work, journalism), I watched last week’s near death experience on world markets with a mixture of cynicism and alarm. First of all, remember when Americans – and particularly Republicans – demonized Mao’s China and endlessly warned about the perils of Communism?
Well, the Chinese seemed to have listened. China ditched Communism and embraced runaway capitalism – or at least a hybrid of 1900 raw capitalism and state socialism. But Chairman Mao was proven right. He warned his people against the evils of “casino capitalism” and money lending.
The near collapse of China’s stock market in recent weeks scared the hell out of the entire world but, at least so far, really has not mattered very much. China’s markets are insulated from the rest of the world. They serve as a way of letting average people share some of China’s growth and as a form of national lottery – call it Beijing bingo.
Western stock markets are also semi-rigged casino games in which the big boys and their ultra high speed computer systems almost always win at the expense of small fry.