February 27, 2007
Wall Street laid a pretty big egg today (though not as big as in 1987 or 1929), losing 416 points; see Washington Post. Apparently the sell-off was triggered by a financial panic in China. James Waterton had a pessismistic assessment of China's economic prospects about a year ago, and his fears may be coming to pass. Hat tip to Instapundit. I've had a very hard time trying to explain to students that China has a burgeoning capitalist economy that is, nevertheless, subject to a Communist dictatorship. It is a fatal contradiction, and we may pay the price one of these days. Or perhaps the Chinese leaders will see the light as Gorbachev did, and there will be miraculous transition toward a more open political system as happened in the old Soviet Bloc after 1989.