Credit derivatives and computerized trading billowed the largest financial bubble in the history of the world between 2005 and 2015. But investing or productive use of capital this is not. The bursting of this bubble is also the largest and most global in human history–equal and opposite in the other direction. What extreme leverage giveth, it also taketh away. See: The world’s most extreme speculative mania is unraveling in China.
From the Dutch tulip craze of 1637 to America’s dot-com bubble at the turn of the century, history is littered with speculative frenzies that ended badly for investors.
But rarely has a mania escalated so rapidly, and spurred such fevered trading, as the great China commodities boom of 2016. Over the span of just two wild months, daily turnover on the nation’s futures markets has jumped by the equivalent of $183 billion, outpacing the headiest days of last year’s Chinese stock bubble and making volumes on the Nasdaq exchange in 2000 look tame.
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