On a long list of historically reliable metrics, the present global asset bubble is in the top 3 most extreme financial episodes of the past 100 years, surpassing 1929, 2000 and 2007. There is no question that we will be talking and writing about the mental and financial errors made during this manic period for many decades to come. Every bubble begins with an erroneous belief in a ‘new normal’ force that will not allow asset prices to go down. A belief in insatiable demand from China was a key catalyst behind the 2007 bubble peak. Belief in the supreme powers of central planners has been the catalyst behind the latest “QE” or central bank bubble peak. The train wreck unfolding in China is revealing just how foolish and misplaced these belief systems have been. And the revelation is spreading.
Discussing whether a Chinese market crash is ahead, with Ruchir Sharma, Morgan Stanley Investment Management. Here is a direct video link.