Why You Don’t Need to Panic over the China Crisis

By BankBazaar | September 10, 2015

Stockmarket 3

Markets tumbling. Economies stumbling. Governments bumbling.

This is the stuff doomsday scenarios are made of.

Not quite the catastrophic global devastation depicted in the Jake Gyllenhaal-starrer ‘The Day After Tomorrow’. Or the Bruce Willis-starrer ‘Armageddon’.

But still, cataclysmic all the same.

For starters, China, the workshop of the world, is having a severe bout of the flu. Its economy is quaking for the first time in eons. While consumer inflation is heating up, producer prices are dipping like BBQ sauce. Not long before consumer inflation catches the sneeze and puts the Chinese economy into a tailspin. Read the inflation versus deflation story as it unfolds.

As if this were not enough, global spender US is having a cash crunch. Literally.

That the US is a major consumer of credit and practically lives on plastic is well known. What may not be apparent is that the cash needed to feed this credit is running out. Read what Bill Bonner, a millionaire and founder of Agora Inc. (which has accurately predicted many economic disasters in the past), has to say about this. America’s plastic seems to be melting big-time.

With two major economies teetering on the brink of a slide, it’s no surprise that other economies are feeling the heat. Especially Asian economies. Caught between the flu and the cash that blew away, they seem to be going blue in the face.

But, hang on a sec.

All’s not lost.

A forest fire devastates whole acres of land, only to see green offshoots after the land’s been cleansed of weeds. As much as that is the circle of life, it is a cycle of economy too. Things eventually turn around.

So, don’t freak out (just yet). Don’t feed the frenzy by cutting consumption or spending. Spend, but spend on things you need, not want.

Also, economic downturns are one of the best times to invest. So, if you’ve been looking to invest in stocks, property or mutual funds, this is the time!

To start mobilizing funds for your investment, that is. It may take some time for the downturn to hit us (if it does, that is) but consider preparing for an investment.

If you plan to take a loan, go ahead, but take it for good investments rather than for discretionary spending.

In any case, remember that India is somewhat insulated from recessions around the globe and the current crisis may in fact be an opportunity, although there remain some concerns in taking advantage of this opportunity.

So if you’ve been reaching for the panic button, ease up! And let this one play itself out!


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