China’s ‘Black Monday’, as financial pundits have unimaginatively come to refer to it, was an economic cataclysm. Let’s list the reasons:

• The Shanghai Stock Exchange Composite Index has dropped over 40% from its peak in June.
• Global stocks have lost an accumulative $5 trillion since August.
• The Chinese government has scrambled — and ultimately failed — to stem its markets from haemorrhaging any further; for that matter, most experts don’t have much faith in their counterparts to exercise any real control in this crisis.
• China’s economy, the engine for global economic growth but sustained by a property bubble fuelled by a tremendous amount of debt, is looking increasingly shaky, and pundits are split on whether this is merely a short-term correction or the first sign of a long, painful return to Earth for Chinese markets (and prices).

Or as Chicken Little might characteristically proclaim:

“Holy shit you guys,

the sky

is fucking

falling!”

(Author’s Note: I’ve taken liberties to better capture the hysteria.)

Indeed, some financial pundits are already predicting economic nuclear armageddon. Whether it’s short-term volatility or the beginning of something much more serious, the consequences will likely be felt for some time, especially if China’s economic weaknesses exposed by the downturn are deeper than previously realised: liquidity might dry up; risk appetite could go down; allocations may become more conservative. The breadth and duration of these consequences are difficult to fathom, let alone predict.

But one thing almost certainly is true:

In the event of nuclear economic armageddon, unicorns might just return to being an endangered species once more, and the only things left will be cockroaches and early-stage startups.

Why?

You don’t need to look any further than where the money is coming from, and — more importantly — where it disappeared following Black Monday.