Posted by: bklunk | February 28, 2007

When Black Tuesday Comes

 

China’s Markets take a Plunge « Chinese International Affairs

Source: http://www.nytimes.com/2007/02/28/business/28stox.web.html?_r=1&hp&oref=slogin

After experiencing a nonstop soar in markets, and a record high on Monday, China’s markets plunged today. Stocks retreated dramatically. Analysts found no real concrete answer as to why this was so. The plunge of Chinese markets affected the markets of the rest of the world. European and the United States markets also retreated a bit. despite the drop, many remain optimistic about China’s markets. They hope that they will get back on track in the next couple of days.

The main point to extract from here as markets become highly interconnected, they also become highly volatile. So volatile that every market may be hurt by a retreat in a single market. International politics must then be extended to incorporate global laws that will help prevent another great depression or at least provide compensation to losers.

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Responses

  1. I think that it is very interesting that the United States and the rest of the world were affected by the economic “crash” in China. This is truly evidence that globalization is real and that countries are linked together but more than just people and media, but also most importantly by the world economy. I don’t know if world-wide laws can be made to regulate the economic activty of the entire globe. The first reason is because of the issue of sovereigty and state intependence. Certain laws could make states less independent and more dependent on the world for economic stability and progression. Secondly, we certainly do not know how many countries would truly obey such laws which regulate economic activity. The truth is that countries will do almost whatever it takes to ensure economic development and stability, including the United States and the EU nations. However, the UN and other such organizations can influence a countriy’s economic policy towards global sensitivy and awareness.

  2. I meant to say:

    In my view, global diplomacy must incorporate greater economic standards to incorporate some form of global economic organization that may help prevent another great depression or at least provide compensation to those that lose from it. You’re right, it may be the UN. Especially since it is the strongest international entity that organizes global diplomacy the best by maintaining international peace and security, developing relations among nations, and cooperating to solve international economic, social, cultural and humanitarian problems. In short, it provides the forum for negotiation and harmonizing the actions of nations in attaining their goals.

    While it may be difficult for states to cooperate on global diplomacy collaboration, it can be done. Despite the fact that states have no higher authority to answer to, the UN has the potential to become just this.

    Under the command of Secretary General Annan, the UN improved relations with the private sector, mainly with companies that are transnational.

    “The UN and its agencies have struck hundreds of agreements with private firms for joint development projects and other initiatives. Most significantly, the Secretary General has proposed a “Global Compact” between corporations and the UN. Hundreds of companies have signed on, but many NGOs say the UN is compromising its integrity and providing a public relations cover for corporate malefactors.

    Source: http://www.globalpolicy.org/reform/indxbiz.htm

    NGOs also pursue their advocacy goals through diverse means including networking, lobbying, conferences, use of the mass media, involvement in elections, and protests. While corruption will always be present in every society, that does not mean that solidarity among states cannot be achieved. In my view, the UN should continue to organize global economic diplomacy. By negotiating with transnational companies to regulate their economic policy, they may also be reaching countries’ economic policy since globalization permits world transnational actors to highly influence a state’s diplomacy as well. Through such means, the UN may be building solidarity among states for the purpose of eradicating global poverty and fostering economic and social development for the advancement of international law.

    Thus, there is a way for cooperation among states to become less difficult when organizing global diplomacy.

  3. I find it very possible and real that when China’s stockmarket dropped, it had a ripple effect on many other countries as well. Every country that has economic or trading ties with China would in fact feel the ripple of the drop in the market. China is a country in which a lot of trading with multi-national corporations goes on everyday.
    I would have to agree with stating that there needs to be some form of standards which would protect markets from completely crashing and affecting everyone who deals with them. Then it would probably help prevent another great depression or other large scale result of market crashes.
    But I just do not seeing it in the near future that everyone would come to an agreement that there will be an organization or group that would set these standards or rules because everyone is on a different playing field when you are dealing with trans-national companies and organizations. And to get them all to come up with a consensus of rules, just does not seem plausable. But I like the idea though

  4. As said in the first post, I agree to a certain point, in that many of these well-established countries are affected due to the Chinese crash…and that most countries will do anything to stabilize their economy for a growing future.

  5. […] China’s markets take a plunge-my reply to a comment […]


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