China’s epic stock-market drops over the past week give the impression that Beijing may have given up on trying to prop up the market or is at least retreating to defend a lower level. The question is, what will the government do with all that stock that it already has bought? Unlike the U.S. bailouts of 2008 and 2009, China is in the unenviable position of having bought near the market’s top, not at the bottom. Getting a TARP-like profit from its investments seems unlikely with the market so far below where much of the buying took place. If the gang of bailout entities known as the “national team” —banks, brokers, pension funds and government agencies—is stepping aside, it seems likely their holdings will drop even further in value. The Shanghai Composite Index traded in a 2000-to-2400 range during the three years before the bubble formed. Falling to that […]