China is not a sideshow; it's the radioactive core of the entire global bubble.

[marmar]

By David Stockman, David Stockman’s Contra Corner:


Bubblevision’s Scott Wapner nearly split a neck vessel today denouncing the US stock market sell-off. It was completely unwarranted, he thundered, because China don’t have nothin’ to do with anything.

Why, insisted CNBC’s best dressed pom-pom boy, China’s stock market has never been correlated with its economy, and, anyhow, its economy doesn’t matter all that much to the S&P 500 because China accounts for only 14% of global GDP.

Besides that, China’s stock market is exactly like what Yogi Berra said about his favorite restaurant: It’s so crowded, nobody goes there anymore!

That is, according to the talking heads Chinese household’s don’t go to the bourses, either. Few of them own stock and equities account for only 20% of household wealth compared to upwards of 65% in the US.

.....(snip).....

Here’s the thing. Between the 2007 pre-crisis peak and 2014, the estimated world GDP expanded from $53 trillion to about $69 trillion. But fully 33% of that $17 trillion gain was directly accounted for by China; and far more than half of the total is actually attributable when the multiplier effect on resource suppliers like Australia, Brazil and Canada is accounted for, and when the pull effect on intermediate component suppliers like south Korea, Malaysia, Japan and Taiwan is added to the brew.

That’s not 14%. The collapse of red capitalism in China is exporting gale force deflation to the global economy, meaning that the already evident rollover of world trade is just beginning its descent. .............(more)

http://wolfstreet.com/2015/07/28/wall-street-still-didnt-get-the-memo-chinas-done/

[MisterP]

1. outsourcing AND derivatives? what could go wrong!