In response to an FT article by Martin Wolf on 25th August 2015, entitled 'Why worries about China make sense'
"I am neither intelligent enough to understand the behaviour of “Mr Market” — the manic-depressive dreamt up by investment guru, Benjamin Graham — nor foolish enough to believe I do. But he has surely been in a depressive phase"
Mr Market as a manic depressive?
Perhaps Mr Market is Randle McMurphy in 'One flew over the cuckoos nest'...an expressive, non-conformist chap branded as rather 'dangerous' by the 'authorities'...trapped in an asylum run by a group of mad academics who insist on him becoming a nice compliant sort of chap...QE is administered, I'm sorry that should say 'drugs', in order to achieve this compliance...and these drugs are administered daily by the Central Bankers...I'm sorry, Nurse Ratchet and her team of well dressed and very smiley control freaks...sorry nurses.
It doesn't end well for Mr Market does it...although maybe it does...I seem to remember that Randle's big pal, the Chief, gets the last laugh at the end of the movie by breaking out of the asylum and running away to reclaim his freedom. You can't keep Mr Market down for ever...not even with QE.
Right now we don't have markets, we have asylums run by Central Bankers who issue medicine that is making the patient sick. Savings glut? There is no 'savings glut'. There is a massive pile of debt - over $15 trillion of 'securities' purchased by central banks with 'money' that has never seen an ounce of productivity in its life - 'credit' waved into existence by clueless and increasingly terrified central bankers who think that the cart will somehow pull the horse in the magical land called 'aggregate demand'.
This $15 trillion is then supplemented by tens of trillions more casino chips issued in the repo market, the majority of which ends up in inflated asset prices, misallocated projects that Mr Market would laugh at if he were not taking the medication, some of which has ended up building ghost cities in China, which now desperately need someone who can afford to live there and buy stuff. Meanwhile in the west the majority of the population are fed up with buying more stuff they don't need with money they don't have...selfish little free thinking blighters that they are.
China is not the problem, it's a symptom; the first big domino to fall. The panic is setting in because of its size. More drugs won't help anyone get better, but flick over to another of today's articles entitled 'Larry Summers and Ray Dalio flag return of quantitative easing' and you will discover, not to your surprise I'm sure, that 'more drugs' are exactly what Dr Summers is urging Nurse Ratchet to administer.
The lunatics are running the asylum.