The financial markets are melting down. Here's why.
A couple of months ago, the Shanghai bourse began the Mother of all Corrections. Within a few weeks, it had lost 30% of its value.
This first go-round of market mayhem was greeted with pretty much of a yawn in Europe and the US. This was especially so after the government in Beijing stepped in to prop up the markets.
However, that propping up failed to calm the markets. Beijing decided to let the market work, and the sell-off commenced again.
Now, though, there is the added component of a fear of a major Chinese slow-down in its broader economy. To paraphrase that old saw: When China sneezes, the world catches a cold.
The fear of a significant downturn in the Chinese economy is spooking markets all over the world like a bump in the night spooks wild horses. Without knowing exactly what's coming down the pike out of China, markets are in a panic.
This has nothing to do with the fundamentals of the US or European economy. This is not due to the job-killing Affordable Care Act. You can't "blame Obama" for this. Unless you think President Obama should have somehow fixed China's export-driven economy to make it more balanced with domestic demand. China is the world's factory. There's a spanner in the works, and that's being felt all around the world.
So, fix a cup of tea, turn on the news, and wait. Unlike in 2008/2009, there really isn't anything we can do this time.