The reason the market tanked yesterday is China.
China's economy is suddenly starting to look a lot like the U.S. did in 2007, when it became apparent that insurance on bad mortgages wasn't worth the virtual paper it was printed on. Those mortgages were about to blow up in Wall Street's face.
If China sneezes, we may catch cold. If China gets a cold, our economy may take to its bed. If China has full-blown pneumonia, we too may be going back into the economic hospital.
Given the opacity of the Chinese economic and political system, however, it's hard to see clearly how bad this is going to be. That uncertainty may be the worst news of all for the markets.
Premier Li Keqiang held his once-yearly press conference in Beijing Friday morning. Reporters were instructed not to ask the big questions. Then they were warned of a coming wave of bankruptcies. Highlights were translated by Reuters, and made even less sense in English.
If you thought Ben Bernanke was cryptic, try getting it in Mandarin. China is "paying great attention to risks" and debt. We will face "more complicated factors" this year. We need to find "a reasonable equilibrium."
It was the kind of talk that means the ship is either facing waves or is taking on water. All is troubled, but all will be well. Keep calm and carry on, we're doing all we can. If Li Keqiang's intention was to inspire confidence, he failed. If he wanted to say "you were warned" when the economy hits an iceberg, he succeeded.
Speaking of icebergs, one of China's Internet giants, the publicly-traded Tencent (no relation to American rapper 50 Cent) was told to halt the use of its WeChat service as a mobile credit card.
The service was being operated through China CITIC Bank, whose shares were halted after falling 8%.
Worse, according to Foreign Policy, some of the service's most popular accounts, including those of top news outlets, were suddenly deleted.
WeChat's explanations were about as transparent as Li Keqiang's talk on the economy. Was this action taken by the government? Is it the start of a wider political crackdown?