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  • bitwise (edited 3 years ago)
    +4

    According to the other link that's been posted (article is here: http://www.vox.com/2015/7/7/8910293/china-stock-market-crash), the crash happened as a result of several rounds of increasing restrictions on "trading on margin"; using borrowed money to ride the stock market. Apparently the restrictions were so well-enforced that it actually chopped growth off at the knees, and the market fell into free-fall.

    I'm not saying that regulation is bad (it's not), but they clearly went overboard in an attempt to curb their bubble-like growth, and ended up causing the same kind of market contraction they were trying to prevent. Of course, I would assume it's likely that the bust would've been far more dramatic if they had let the bubble find its natural end.

    • Pockets69
      +3

      So this happened due too much or too strict regulation, but reading what you said it would end up happening anyway, so what should have been done to avoid it?

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