China Market Plunges, Dow Follows. Now What?

Events on opposite sides of the globe triggered panic in world financial markets. “The fact that the Chinese market was at the center of the action is a new phenomenon,” writes Azam Ahmed in “The Chicago Tribune.” A clampdown on corruption, speculation and purchasing stock with borrowed funds prompted fears about the government forcibly restraining growth and caused the first sell-off in China. Then, economic reports about low orders for durable goods along with a reported computer glitch caused another plunge in the US. China as world’s big exporter and the US as the world’s big buyer are inextricably linked – and investors worry that a slowdown in either nation will quickly spread to the other. Rampant growth with minimal protections in China combined with record debt in the US prods investors on either side of the Pacific to wonder about the long-term prospects of either economy. – YaleGlobal