This Scholar Says the Government Should Buy Stocks When They Plunge

Last week, my Bloomberg colleague Moxy Ying in Hong Kong wrote a fascinating QuickTake headlined, “When Stocks Crash, China Turns to its ‘National Team.’” She explained that government-related entities in China, known informally as the national team, step in to buy shares of mainland-based companies on a large scale to stop market routs. “Worry not, Chinese stockholders, the ‘national team’ is here to (try to) save the day,” she wrote.

Economist Roger E.A. Farmer thinks other nations need to emulate China, and even go beyond it. He’s been banging this drum for years, as I have written in previous stories. Now, he thinks it’s bound to happen. After I emailed him Moxy Ying’s story, he wrote back, “Asset price stabilization policies are coming to a central bank near you. It’s just a question of when.”