2008 saw the US stock market crash after excessive risk taking caused the crash of market-backed mortgage securities. That led to a serious economic depression which the US is only now climbing out of. According to Marketwatch, for several years, market levels and interest rates in the United States were at ultralow levels and they are now being normalized. In other parts of the globe, those policies are being relaxed.
According to Marketwatch, China has been at the center of market-related anxiety since its market plummeted in August. Global currency, stock, and commodities markets have all fallen since the start of the new year, according to a Bloomberg article. Combined with a yuan that’s been devalued, it all adds to concern about China’s economy. The economy is making a shift from manufacturing toward consumption and services. That shift, according to George Soros, is tantamount to a crisis.
Billionaire George Soros predicts on Bloomberg warns us that 2016 will lead to a market disaster like 2008. He believes that China’s struggle to find a new growth and development model will affect the rest of the world. The challenges China is facing are reminiscent of the challenges the USA faced in 2008. China has tried to stimulate the economy by cutting interest rates and pumping money into the economy, but the economy remains weak.
Everything has been affected. Oil prices remain low and are dropping to the lowest levels seen since the early 2000s. Both the US and London had the worst opening day since 2008. Trading plummeted fast, tripping the circuit breaker installed on the Chinese trading system. The Chinese said that they would uninstall the economic circuit breaker. George Soros sees parallels between the economic conditions now and those that set up the 2008 global succession. An Economist article points out that the question is mostly whether 2008 is the right parallel; a similar situation happened in 1998 as well, but Western countries managed to recover. However, developing countries are a lot more important now than they were then. Whether the situation is more like 1998 or 2008, China is facing economic difficulties. Time will tell how much that affects the rest of the world and whether George Soros is right.