The new year is off to a wonderful start. China is struggling to find balance, it has devalued, and small and medium sized companies are often in default on their shadow bank loans. The volatility of the stock market is much less important than what it signals, which is the government is not able to find the right tools to revive the economy without much more difficulty. As a result of the corruption crackdown many things at banks and at government offices are ground to a halt, as most do not know how to function without the normal graft and payoffs. The typical loan officer got paid 10% of the loan amount personally so he was incented loan the maximum. Officials got 10% of the deal or cash to approve development, so approvals of even dumb deals were given. The government was trying to employ the maximum number of people, and to build the country's industry and infrastructure, so all sorts of projects needing government or state bank funding got funded. The result is much got built and over leveraged that never should have happened, and China now is similar to the US in 2008. This is going to take years to sort out and probably one or two more devaluations. Result is oil stays low, commodities stay low, and many countries that supply China remain in worse and worse trouble. To try to protect the currency, China has clamped down on capital flight and has made it much harder to move capital out. However, in good Chinese tradition, for a 10% payment it is possible to do. That is a lot of extra cost for investors to carry and possibly will mean they will want higher returns from investing here. It will also mean less cash comes out than might have. Because the Chinese economy is much more troubled now, and cash is tight, there will be a lot fewer tourists coming from China. China will disrupt the world economy for several more years.

The Middle East is spiraling completely out of control now that Obama has completely disassociated himself from our allies and is seemingly solely focused on the disastrous and insane nuke deal. By doing nothing about the Iran missile tests and launches, he has told Iran and N Korea, go do whatever you want, I will not do anything. Result, the Saudis and the other Arabs and Israel know for sure they need to protect themselves and ignore Obama, which only serves to exacerbate the risk of all out Sunni, Shia war. Assad and Russia now know Assad is not going anywhere and Egypt has partnered with Russia since it knows it will get nothing useful form Obama. Bottom line, the region is on the brink of all out war and the chance of that is now higher than ever since the old days of Israel vs the Arabs.