China may be 7,500 miles from the heartland of the United States, but don't think for one minute the massive economic meltdown shaping up there won't also scald you in the process.
You may have gotten a little burn on Friday, in fact. That's when the United States stock market tumbled to its biggest drop in almost four years – the S&P index dropping 3.2 percent, the Dow Jones Industrial Average shedding 3.12 percent Friday, one day after the indices fell more than 2 percent.
Pundits will try to blame suspicion that the U.S. Federal Reserve will raise interest rates in September on nervous investors, but the markets should have long ago factored that worst kept secret in.
They know a slight increase in fed rates is coming sometime in 2015 or early 2016. They also know the U.S. economy is slowly but surely warming up, with jobs, housing and production still steadying, a positive sign that means U.S. stocks should have a firmer foundation to stand on.
You can thank China, the world's second largest economy, for last week's market rout. China is living in a bubble so much larger than what the U.S. had in 2008 and it may be ready to unwind.
So when it finally and completely bursts those of us far away geographically in Alabama won't be able to escape impact, since the global economy brings us closer together than we may like.
China's latest problems began when the government fueled China's bubble by encouraging its citizenry (and global investors) to falsely prop up its stock markets this past year with unusual and risky measures like propaganda and dipping into housing and banking for support.
courtsey: http://www.al.com/news/index.ssf/2015/08/the_china_meltdown_how_it_coul.html