Amusement from bemusement

If the idea was to provide comic relief to FT readers from the nerve-wracking start to the year in financial markets, then this edit is an unqualified success.

This is the comment I wrote below the ‘FT View’ on China:

You wrote:

“The real narrative behind China’s financial market ructions is likely to be less Machiavellian and more dismal.”

You are setting up your own strawman to knock it down. Financial market ructions are not Machiavellian. They are consistent with Chinese economic fundamentals. China’s stocks are still the most expensive.

China’s policy actions have been – at least since the unfathomable stoking of a stock market bubble in August 2014 – less Machiavellian but more risible.

Depreciating its currency in the light of a dismal domestic economic situation is par for the course. That is what China is doing. It is not Machiavellian. That is what all the Western governments have been trying to do since 2008 at least.

What was not right was to present it as a ‘market responsive mechanism’ and claim membership in SDR, etc.

The response of the Western world and the IMF in particular in swallowing this drivel, hook line and sinker, has been the most bizarrely inept example of Western policy leadership or the lack, thereof.

Whether it is Islamic terrorism or the unilateral actions of China, Western nations have been prepared to bury their heads in the sand, deny the problem and then look for each nation’s own interests in the resulting ruin. That is the problem.

As for China stoking demand, as your Edit suggests, China has neither the government debt or the fiscal deficit cushion to do so. Its only defence is the currency with consequences for its short-term external debt and other Emerging Markets.

But, then FT Edit writers do not have to worry about taking responsibility for the consequences of their suggestions when its own Government and that of other Western governments have not bothered to evaluate the global consequences of their China policies.

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