Good morning, Quartz readers!
Things have settled down since Monday, when fears of the next global financial crisis churned markets—and stomachs—everywhere. Major North American and European indexes closed just above where they did a week ago. Still, a queasiness lingers in the fact that there’s no good explanation for why the Chinese stock meltdown spread to trading floors across the Western world. After all, they barely flinched when Chinese shares cratered in mid-June, and again in mid-July. And global investors have long known China is slowing; the Aug. 11 yuan revaluation—one supposed trigger of the recent plunge—told us nothing new about that.
So how did Chinese markets—casinos that only dimly reflect China’s economic health—become a source of global contagion?
Derek Scissors, an economist at the American Enterprise Institute, has a few theories. The worst, first: Shanghai has somehow gained new sway over exchange rates and, in turn, equities. But Chinese stock markets never had anything more than indirect influence on such things even in Asia; it’s unclear why this would have changed.
Then there’s what the Chinese stock implosion signaled about the competence of Xi Jinping’s administration. “The ‘new’ Chinese news is that the Chinese leadership doesn’t seem to know what they’re doing—that’s the new information we got,” Scissors says. Though this one has a satisfying feeling of solidity to it, remember: “Saying it now is a completely after-the-fact rationalization,” Scissors says. But as he notes, it at least “makes more sense than the notion that US markets don’t know what’s going on with China’s economy.”
Yet another possibility is that the US and other markets were overvalued and due for a correction—and China’s “Black Monday” happened to trip the wire. —Gwynn Guilford
Five things on Quartz we especially liked
Monsanto’s quest for vegetable domination. The giant of GMO grains has turned its attention to vegetables. Its new broccoli is healthier and more broccoli-y than your ordinary stalk of the stuff, and it’s not even genetically engineered. But Monsanto’s plans to corner the global vegetable market should still concern you, says Deena Shanker.
Inside the massive hack of the IRS. More than 300,000 US taxpayers had their data stolen by an audacious hack earlier this year. Thanks to one of the victims, who happens to know some things about computer security, Keith Collins was able to dissect how the hackers brazenly made off with $50 million in rebates.
Watching the start of the Shia-Sunni war. Bobby Ghosh was 300 yards away when Sunni terrorists blew up one of the holiest Shia shrines, the Imam Ali mosque in Najaf, Iraq. Ghosh, then a correspondent for Time magazine, recounts the carnage he witnessedand how he came to realize—much later—that he had been present for the start of a sectarian conflict that is still raging 12 years on.
How Chinese investing habits are driving species extinct. Driven by government stimulus policies in recent years, Chinese speculators have poured cash into every asset they can find—including the yellow, diaphanous swim bladder of the totoaba, a large Mexican fish. Gwynn Guilford explains how the hunger for returns has nearly wiped out both the totoaba and a species of porpoise that inhabits the same waters.
Parenting, digitally. With email conveniently baked into her life on campus and his life at the office, Kate Groetzinger and her father communicated a lot when she was a university student. She still laughs at him for wanting an immediate reply in February to an email regarding graduation lunch plans for May, and still marvels at the closeness that their electronic exchanges brought to their relationship.
Five things elsewhere that made us smarter
Can this woman persuade humanity to save itself? In November, representatives of 195 countries will meet in Paris to decide what to do about our rapidly warming globe. Costa Rican diplomat Christiana Figueres, profiled by Elizabeth Kolbert in the New Yorker, is tasked with ensuring they reach consensus on firm action. Figueres comes across as deeply empathetic and very optimistic—qualities she’ll draw on again and again in what might be one of the last chances to curb climate change.
A sad state of affairs. Wandering through the data dumps from the hackers who broke into Ashley Madison, a site for arranging extramarital trysts, Annalee Newitz at Gizmodo asks two good questions: How many women were on the platform? And given all the fake profiles, how could you know for sure? As she chips away at the second question, the answer to the first looks increasingly pathetic.
They should have seen it coming. And they did. Officials at the International Monetary Fund knew they were on a flawed course when they bailed out Greece in 2010, and the compromises they made then have continued to haunt them—and much of Europe. Lesley Wroughton, Howard Schneider, and Dina Kyriakidou at Reuters based their reporting on interviews with more than 20 senior IMF officials and an extensive review of IMF board documents.
You say “tomato,” I say “triggering.” American millennials have given rise to a new brand of political correctness, and it’s spreading fast. “This new PC doesn’t seem to be about protecting minorities so much as everyone, everywhere from ever having their feelings hurt,” British journalist Mary Wakefield writes in The Spectator. All that carefulness is getting rather dangerous, though, and not just for those who remain unenlightened.
Tech nerds are smart, but they don’t get politics. The hyper-rationality of executives like Elon Musk falls short when confronted with the tangled spectacle of US politics. David Roberts of Vox explains how the failure to grasp political realities makes it more difficult to solve problems like climate change.
Our best wishes for a relaxing but thought-filled weekend. Please send any news, comments, broccoli stalks and urgent emails about graduation lunch to email@example.com. You can follow us on Twitter here for updates throughout the day.
You’re getting the Europe and Africa edition of the Quartz Daily Brief. We’d also love it if you shared this email with your friends. They can sign up for free here.