To quote Keynes:
The market can stay irrational longer than you can stay solvent.
The market can stay irrational longer than you can stay solvent.
Before an econ degree I thought it could all be understood the way we understand, say, a chemical reaction, or some process with rules, laws and order.
But afteran econ degree the thing I realized is that money and economics, it's all about people. Money and debt has no intrinsic value (especially in 2017)--it's just promises and credits people made to each other.
But people are prone to irrationality, cheating, and frankly, their own bullshit. The global financial system in 2017 has not done everything it can to minimize this, either. If anything, they take advantage of it where it profits them.
(Actually asking, I know they've been loosening their financial walls but am not sure what the current controls are)
Chinese equities are something else entirely, closer to a derivative class. And hard to trade in directly (not that I have tried or would ever try -- I'm in index funds).
And the truth is, the banking system is less liquid, and the equities market much smaller, than developed economies. Oh, also, short-selling is illegal, I believe.
So no, there aren't any natural, market-driven checks on this stuff.