China

Forget Greece. The real story remains the share destruction in China. The media is fixated on the 140% rise relative to the wipeout. The calming spin is its just a rebalancing of price to the real economy. Don't believe it. As we warned weeks ago, this is a culture that does not understand price discovery. Share trading is gambling not capital ownership. The developed world's meddling in markets that fall set a poor precedent for others. The Chinese government's prop up attempts are viewed internally as "What you do when things go down."

Its going to get worse.

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