Picture this: the market plunged 9 percent in around 30 minutes of hectic trading. Regulators raced to contain the damage, that was estimated in the trillions. Later, the plunge was repeated with a market collapse of 6.5 percent as 1,100 points were wiped in about five minutes. Trading was halted multiple times and circuit breakers were praised for preventing a full-on market crash of epic proportions.
It just goes to show that this is an untrustworthy, poorly developed market that has to be managed externally by imposing trading halts.
Hang on, there's just one problem with this assumption. The 9 percent plunge happened on May 6, 2010. It was the infamous Flash Crash on the New York Stock Exchange. The second 6.5 percent fall was the August 24, 2015 flash crash, also on the NYSE.
And rather than signaling the end of the financial world as we know it, markets simply shrugged their collective shoulders and moved on.
But analysts seem to apply a different yardstick to the China market and are using this week's Shanghai Composite flash crash to highlight what they see as China's economic disaster.