In 2008, stock markets around the globe declined very dramatically. The rapid and severe decline in markets around the globe led to serious losses of investors all over the world. There were many investors that lost millions of dollars in the crash. Additionally, the economic decline caused the housing bubble to burst. This led to drastic declines in home values, and it put many people “underwater”, owing more on their homes than their homes were worth. There were also many millions of people that were put out of work, due to the recession. Luckily, recent years have seen somewhat of a rebound in all of these things. Unemployment has gone down, the housing market is recovering, and stocks seem to be going back up again. Unfortunately, it appears that recovery might be very short lived. George Soros notices that there is still a danger of yet another economic catastrophe.
China went from being a country with a slow economy to one of the world’s biggest manufacturing nations in the world. Now, they appear to be losing their industrial backbone that made them such a powerful economy. Instead, China’s once powerful industrial sector looks like it’s on the decline. This decline seems like it could be the end of China’s growth. The economy of China seems to be more strongly consumerist oriented than industrial these days. However, the consumer economy of China lacks the size and strength that the industrial sector used to have.
There is some evidence of China’s weaker economy. The yuan is no longer increasing in value. Instead, the Chinese government was forced to lower the value of the yuan. This is very clearly a response to a weaker Chinese economy.
It may seem that a decline of the Chinese economy would only affect the Chinese. However, this simply isn’t the case. China has been a big player in the world economic system. Their economy taking a negative turn would put a strain on the entire world economic system. In fact, a crash of China’s economy could create a 2008-style crash throughout the world. It could mean numerous people being put out of work throughout the western world, in addition to the eastern world.
Economists and investors like George Soros make use of indexes to determine how unstable the economy is. These measurements are referred to as volatility indexes. One well known volatility index in the United States, the VIX, is showing more instability these days. This scale took an 13 percent swing upward. Another United States scale of instability also has risen, albeit by a smaller amount of less than six percent. In the eastern world, there is a scale of market volatility that is showing potentially dire changes in the economy. In Japan, a volatility scale has risen by 43 percent. This kind of sudden change warrants close attention and a high degree of caution.