The picture painted in broad strokes in your opening paragraph (“Chinese investors ... opening new brokerage accounts at a phenomenal rate of 90,000 a day ... in a country where ... at least 200 million rural people survive on less than US$240 per year”) is certainly reason to pause. It takes the wind out of much of the inflated rhetoric re China Rising. It shows too, that the hope of a “quick buck” is not a peculiarly “Western” phenomenon.

But, inequality is not something invented by the Chinese. And, if they look to the American “model” they’ll find ample proof that “the market” is not for everyone, nor does it try to meet all needs. That is, government management of economic growth is separate from any pressures to equitably distribute the spoils. In the US, for instance, the fabled “Individual Investor” is far from being the norm; and his/her investments are “personal” only insofar as he/she takes the hit when the Retirement Funds screw up. “Individual Investors” are not players; they are pawns of “Institutional” Funds. As the saying goes: “It’s other people’s money.”

This is relevant to current worries re ALL markets, not just Wall Street’s casino. Keep in mind, many of the analysts looking at the larger cracks revealed by the current jitters are looking, NOT at China’s internal inequities, but at Uncle Sam’s. Many of your own readers over the past few days have put their finger squarely on the pulse of this matter.

“healthy skeptic” [Feb 28, 2007] quoted the rule of thumb that a bubble is the inevitable economic by-product of excess income inequities (“when the top 5% controls 80% of the nation's wealth” s/he says; but many would opt for a lower ratio). As a result, investment in small-businesses suffer, and sales of durable goods decline.

And “cynshep” today [March 1, 2007] quotes Rubin on the 75% increase in real GDP per cap 1973-2003 as against the paltry increase of 13% in median hourly compensation in the same years. In those circumstances, ordinary consumers are being squeezed out and ALL (consumer) MARKETS must be negatively affected. Under such circumstances, a reduction of real consumer wealth takes place that is not simply an upward redistribution of wealth. It’s equivalent to a TAX ON WORK, and a brake on initiative.

“cynshep” also quotes the Economist to devastating effect. “'The one truly continuous trend over the past 25 years has been towards greater concentration of income at the very top. ...The figures are startling. According to Emmanuel Saez of the University of California, Berkeley, and Thomas Piketty of the Ecole Normale Supérieure in Paris, the share of aggregate income going to the highest-earning 1% of Americans has doubled from 8% in 1980 to over 16% in 2004. That going to the top tenth of 1% has tripled from 2% in 1980 to 7% today. And that going to the top one-hundredth of 1% - the 14,000 taxpayers at the very top of the income ladder - has quadrupled from 0.65% in 1980 to 2.87% in 2004.”

A Super Tax Break for the Super Rich is what the current Administration has rammed through as a solution to America’s woes. This can only exacerbate the problem. How can wealth be created for the mass of people if they are deliberately squeezed out like this? Would a tax break right across the board at the lower end of the American income pyramid help to solve the Bubble problem?

Maybe not. But it would take the pressure off of Americans at the bottom, (a long overdue move), and might start the healthy and inevitable process of ending the gambler mentality that has overtaken American capitalism.

This "economy" is inherently pathological. It offers no hope. It doesn't reward initiative. It drives people to despair ... or prayer. (A negative "religious" impulse born of desperation).

Once we made goods. Now we make do. Or we make a killing.

Something's gotta give.