Comments from Oliver Blanchard on China:

  • A collapse of growth in China .... there is just no evidence of such a collapse
  • At most there is suggestive evidence of a mild slowdown, and even that is far from certain

On oil:

  • Traditionally, it was taken for granted that a decrease in the price of oil was good news for oil importing countries such as the United States. Consumers, with more money to spend, would increase consumption, and increase output. Energy using firms, with lower cost of production, would increase investment
  • We learned in the last year that, in the short run, the adverse effect on investment on energy producing firms could come quickly and temporarily slow down the effect, but this surely does not undo the general conclusion
  • Yet the headlines are now about low oil prices leading to low stock prices

Blanchard unconvinced on the oil or China story explaining the fall in stocks and concludes:

  • Maybe we should not believe the market commentaries
  • Maybe what we are seeing is a delayed reaction to the slowdown in the world economy, a slowdown that has now gone on for a few years
  • ... I think the explanation is largely elsewhere. I believe that to a large extent, herding is at play. If other investors sell, it must be because they know something you do not know. Thus, you should sell, and you do, and so down go stock prices. Why now? Perhaps because we have entered a period of higher uncertainty

There is more at the article. Well worth a read.

You might disagree with his conclusions. I found most value in the questions he asks and his lack of certainty.

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Blanchard is Senior Fellow at the Peterson Institute for International Economics

Was chief economist at the International Monetary Fund from September 1, 2008 to October 2015