“It’s a correction not a collapse of the stock market. I think the explanation needs to be found in the very strong US dollar which through the linking into the commodities and emerging markets has led to basically another disappointment to world growth. Leading to this was also China’s coming on board with opening up their borders in terms of foreign exchange, making a small devaluation which became more of a catalyst than the actual reason of this sell off,” said Jakobsen in an interview with Sputnik.
Jakobsen went on to say how the current world markets are addicted to stimulus packages. “McKenzie consultancy agency recently released a debt report that shows the staggering amount of debt that has been created since the financial crisis; it adds up to $57 trillion. The bad boy here is the world.”
As long as your economies grow more than the prices you pay for the loans you have available, it is a relatively smaller pain to the economy. But what is happening right now is the opposite.
Following Monday’s global market slump a French minister called China's slowdown a threat to the recovering global economy. France's economy minister Emmanuel Macron said this during a conference in Berlin calling for immediate action to bolster the Eurozone.
Regarding Macron’s statement Jakobsen said, “It is unrelated and it just shows how inefficient and little politicians understand. I mean, China has been slowing down for the past six years, where was mister Macron with all the comments then? Secondly, it is not China’s responsibility to create growth in Europe it is Europe’s responsibility.”
He stressed that Europe needs to wake up. France needs to wake up and realize that one cannot ultimately keep playing the same song that has been playing for the past twenty years because it is no longer a hit,” said Jakobsen.
“It is important to change the mentality. Everyone should be thinking about how to become a part of the wave that is productive, how to become a part of real projects that help becoming more dynamic and educated instead of putting blame on some citizens who live across the world.”
Earlier, Shanghai’s dramatic slump sparked a panic sell-off on the global market in what was dubbed China’s “Black Monday”. The Dow Jones faced a historic 1,000-point fall for the first time in history.
The Paris stock market plunged by over seven percent in mid-afternoon trading with several other European markets following in its wake.