Halfway through the year and in the week ending 22nd August 2015 there has been the worst week on the Stock Exchange yet. A drop of over 8% over the total week is a hefty drop by anyone’s standards.
In the past month there have been large drops in Chinese stock markets which the Chinese government has propped up, even daring to suggest that certain companies whose price had fallen the lowest were buying back their own shares. However this last week’s drop in share prices cannot simply be explained that it is because it is the holiday season, people aren’t buying because they are on holiday, and so on. This is a much more serious symptom of an already overstretched gambling system that has simply run out of steam.
The USA is simply bankrupt beyond being bankrupt. The European Union is being dragged down financially because of a lack of demand for its goods caused by Germany’s intransigence that everyone should be as financially efficient as they are, notwithstanding other countries have their own problems, sanctions against Russia that were ordered by the USA in 2014 as part of trying to get both the Ukranian president, President Putin of Russia, Presidents Hollande & Merkel to agree a ceasefire. That’s without the drama of the Greek Crisis whose embers still burn bright.
In the past few years we have witnessed a situation where clever capitalists have decided that if they pay the lowest price to have goods manufactured, shipped all over the globe and delivered to so-called “wealthy” Westerners, profits will still abound ad infinitum. However what has happened is that as wages/salaries have declined, so has the spending power of individuals, meaning there is less money to be made as profit. This is an ever decreasing circle that has only one place to go …. down.
The bottom has been reached, the banks of last resort and printing fake money are about to turn off the taps and raise interest rates in the next few months and it will be interesting to see how things turn out then.