China Adopts an Unusual Approach to Fighting a Stock Market Crash

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Hum de hum hum. Greece is in trouble. Puerto Rico too. And don’t forget China:

Chinese shares plunged Thursday, even as Beijing grasps for solutions to stem the selling, including relaxing rules on the use of borrowed funds to invest in stocks….The Shanghai Composite closed down 3.5% while the smaller Shenzhen market was down 5.6%. The ChiNext board, composed of small-cap stocks, sank 4%. Even after losing nearly a quarter of its value from a mid-June high, China’s main stock market has almost doubled in value over the past year.

….In a rare move late Wednesday, Chinese regulators set in motion draft proposals to ease restrictions on margin lending earlier than scheduled….Regulators’ sudden shift in attitude about margin trading comes after vocal warnings about its risks in recent months. In April, regulators took various steps to rein in the practice, which had allowed investors to borrow several times their investment money.

Inscrutable, those Chinese. Their stock market is crashing so they’re promoting an increase in margin trading. That’s sort of like lighting a tree on fire when it gets dark outside and all your flashlights are dead. It’ll work. For a while. But it’s really not considered best practice.

Then again, maybe there’s something I don’t understand here. All I know is that panicky measures to halt a panic don’t usually work. And the Chinese stock market still has a long way to fall. I sure hope they figure something out.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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