Macroscope | China’s Belt and Road may be the closest the world has to a stimulus plan that can kick some vigour back into the global economy
- There is nothing for global stock markets to be bullish now, from corporate earnings to the US-China trade war, to Brexit and the next US trade war on Japan
- China’s Belt and Road Initiative may be the only hope for a global economic stimulus
They seem to keep coming, these stock market mini-meltdowns, and flash crashes, or whatever you like to call them.
The most recent was just over a week ago, when markets from Wall Street to Tokyo plunged briefly, eliciting headlines that a crash was at hand, followed by equally unthinking assurances that all is well.
These “corrections” seem to be occurring more often, since the market slump at the end of last year. They are probably best seen as “blue screen” moments of the kind computers sometimes suffer from: signal that the screen itself or some other vital component of the system is about to crash.
It is true that sudden market plunges could be due to the complexity of modern trading systems such as high-frequency trading, where computers transact a large number of orders in fractions of a second. Also, market makers or “jobbers” who balance supply and demand for stocks are becoming fewer nowadays.
But if stock markets are like casinos, as suggested by the economist John Maynard Keynes, there has to be an underlying game from which they take their cue. That game is the economy within which markets operate.