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  • gnss_engr gnss_engr Jun 5, 2007 2:11 AM Flag

    Crashes always occur for ONE reason.

    First the news: Shanghai:,vm&c=

    It's different this time. Look at Hong Kong. Next, Japan, India, Europe and good ol' USA

    Crashes ALWAYS occur because people are permitted to borrow OTHER PEOPLE's MONEY to buy stocks. That's what's happening in China right now. Because there are no margin accounts limited to 50% equity, people instead mortgage their house, apartments, cars to buy stocks. Other people's money, just the same. This is giving rise to a huge bubble, which is busting right now, but the situation will be much worse since real estate will crash as well.

    In addition the Chinese govt kept their currency undervalued by 40%, which produced unwarranted growth. Another bubble.

    Now, back in the USA, PRIVATE EQUITY is given all the loans they want to buy companies and the deal brokers benefit from huge commissions with no liability. These loans will strangle companies who will not be able to reimburse as soon as interest rates go back up or the economy starts going south.

    I'm telling you, in the next few weeks, China will be down at least 40%, which will trigger a world wide 20% correction.

    I suggest you get out, particularly out of AMZN.

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    • Interesting post.

      Why China's stock market suddenly has become so important. Never in history has any one ever worried about Shanghai's fall as much as we are doing now. Last three days of fall has not done any thing to any market in the world, so why now.

      Secondly how did you come up with numbers like 40% and 20%. Do you have a crystal ball.

      • 2 Replies to mestqalander
      • Who care about the casino market in China. It has become entertainment for the Chinese that got nothing else to do.
        I am long EWJ the Japan index and will only add to my position.

      • so true . . . . Shanghai stocks never was important to us in the past.

        This bubble, is being manipulated by Chinese government. It can not be predicted. If they want it up, it will go up tomorrow. If they want it down, it can go down 40% tomorrow as well.

        I still think the wall street crooks who are manipulating AMZN should go to jail . . . . . this stock doesn't even worth half of its value . . . . . . even at half of its value, PE would still be above 75. It's currently over 155. I don't understand why wouldn't Yahoo correct that number to show the REAL PE ratio.

    • Wall St. will spin it that that is good for US stocks because Chinese investors will start buying American sotcks because they are "safer." I bet we will be green on the DOW and grossly overpriced NASDQ all thei while China falls. The people I work with who have thier hard earned money invested int he market, dont' even know CHina is crashing.

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