Maybe this is just a correction. Maybe this is the beginning of another bust. There is a wealth of opinions, but no one really knows. China is difficult to analyze, possibly even for the Chinese government. There are signs of slowing yet positive growth (~7%), but there are also indications that exports are down (~8.3%); in which case, China may experience regional recessions. The US is more transparent, but even the Fed is acting somewhat uncertain as the expected inflation hasn’t arrived, which is usually the response to so much money being added to the economy. US wages also haven’t risen. And yet, the Fed would like to raise rates so they have more maneuvering room if further corrections are necessary; but a raise in rates could stall any growth. Many oil dependent countries are in recession. Greece is not the only debt driven country. There are signs of deflation throughout the rest of Europe. Many of these may be temporary, but the fear is that China’s and the US’ stumbles may be the last two economies that had been propping up an unsustainable market. In the meantime, markets don’t like worry, and the markets drop.
(Click on the graph for the link.)