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China market was bound to slump after rapid expansion

Devaluation of the yuan may have some short-term negative spillovers on the US economy, via the dollar exchange rate, says Yale professor
Tuesday, September 1, 2015 - 05:50
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The Shanghai stock market, which roared to boom levels recently, had indeed become unstable after increasing in value (total capitalisation) by 2 1/2 times over roughly a year, says Prof Hamada.
BT_20150901_HAMADA_1852453.jpg
The Shanghai stock market, which roared to boom levels recently, had indeed become unstable after increasing in value (total capitalisation) by 2 1/2 times over roughly a year, says Prof Hamada (above).

IF the price of a commodity, say milk, rises, demand will decline and (other things being equal) the price should fall back to a level where equilibrium is restored, observes Koichi Hamada in a homely analogy that belies his status as a professor emeritus of economics at Yale University.

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