Global economy poised for another shake-up (already)?
It would be hard to miss the many headlines concerning the economic collapse that Greece is in the midst of right now and the negative impact it is having on world markets. However, despite Greece's financial misery getting the world's attention, what's happening right now in China may have far greater consequences, writes Ruchir Sharma of The Wall Street Journal. The stock market there is in a free fall, down by more than 25 percent since mid-June, and there's no end in sight. Sharma lays out four telltale signs of a bubble – "prices disconnected from underlying economic fundamentals, high levels of debt for stock purchases, overtrading by retail investors, and exorbitant valuations" – and says that China's stock market is in the rare position of being "at the extreme end on all four."
Moreover, The Wall Street Journal reported today that “[g]lobal growth is set to slow this year to its weakest rate since the financial crisis” based on statements from the International Monetary Fund (“IMF”). In that article, China market deceleration is cited by the IMF as a primary cause for the concern.
Steel and oil are already two key industries that are struggling immensely. If Greece crumbles and China continues down its slide, then other industries are certain to follow that could impact more and more people throughout the world. Not a pleasant outlook, but definitely worth everyone’s attention so they are not caught unaware.