As the news of the China stock market drop of some 10% went out to the world from the BBC night before last, by the time of the USA morning news, the NYSE, et al, had tumbled. Great consternation descended into all the news organizations. Since they stopped--all together too briefly--talking about Anna Nicole Smith, their new pitbullism came as a relief. All day and all night, the talking heads talked--and talked--and talked.
Only this morning, some 36 hours or so later, did the critical news slip out about the Chinese stock market.
That news is that the Chinese stock market is 100% government controlled. The Red Chinese government runs the thing. In fact, the sum total that all foreigners can invest is $10 million.
So, when the Red Chinese government hinted that it was about to establish capital gains taxes and to replace some high up functionary, the highly speculative Chinese stock market flatulated and eructated, at the same time. Knees jerked all over the globe.
"Government" and "free market" do not belong in the same sentence, except as mutual negations, as oxymorons. If there is a market, it is not free, not when rumors that the controlling brute is going to flex its muscles can blow down this house of cards.
"Government" through the Federal Reserve System got into the USA economy big time in the 1920s and caused severe overheating, without directly controlling the NYSE. The Great Depression resulted.
Now, what might happen to the Chinese stock market and economy if some commie thug high in the Red Chinese government decides to manipulate the world?