The China syndrome and the election

NY Times:

G.O.P. Candidates Take Aim at China as U.S. Markets Tumble


One candidate, Scott Walker, called on President Obama to cancel a state visit by the Chinese leader, as another candidate, Donald J. Trump, warned that Beijing will “bring us down.”
This seems over wrought to me at this point.  China's markets are suffering from misjudgments by it control freak government.  As I have noted before it is a land that appears to be without valid feasibility studies.  This leads to overbuilding high rise homes and retail locations leading to entire ghost cities of tall uninhabited buildings.  Its stock investors appear to have been over leveraged, buying many of their shares on credit.  In a down turn this tends to accelerate market losses.

This will no doubt effect the Chinese consumers in the long run, but most of Chinese economic gains have been in producing goods for others.  That should not impact US markets that much, and there will be a tendency for investors to seek safety by investing in the US in the long run.  

What should be interesting in the US is how the hedge fund business handles this volatility.  The good ones tend to thrive in that kind of market.

Meanwhile Donald Trump says he anticipated the decline:

Donald Trump Offers Stock Advice Amid Market Turmoil


Donald J. Trump said he possessed the prescience to unload much of his investment portfolio before the stock market took a dive in the past week. For those with less foresight, his advice is hold, don’t sell.
 But I wonder if he still thinks the Chinese have out smarted the US?

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