Thursday was rough for financial markets, especially here in the U.S., and it looks like the damage is continuing elsewhere in the world today. As I write this, Asian and European markets are down, with China getting hit particularly hard, and U.S. markets are off slightly. 

Will the Fed start to raise rates in September?

Economists and market watchers have been debating that question for months, concluding that September was a pretty safe bet. That got boring, though, so we took a couple of opportunities—the weak inflation report this week, the Chinese yuan devaluation, yesterday’s release of the July Fed minutes—to reopen the debate.

The great financial crisis of 2008 was, of course, ultimately a financial crisis, but the proximate cause was housing. As of the mid-2000s, you may remember, the general consensus was that housing prices couldn’t go down nationally because, well, it had never happened before. 

The news today is that the Shanghai Stock Exchange closed down another 6.5 percent, despite substantial support from the Chinese government. Given the market’s earlier declines and China’s surprise currency devaluation, the latest plunge suggests more trouble ahead.

Building on the previous week’s good news, the economic statistics released last week showed continued improvement.

I got an e-mail from a reader the other day that really bothered me. A former investigative journalist worried about where the world was heading, she sent me a list of concerns, backed up with citations from more or less reputable sources.

The concerns themselves were nothing unusual—the U.S. debt and deficit, America’s position in the world, the status of the dollar. What struck me was the writer’s absolute conviction that the entire financial/economic system is broken.

Over the past month, we saw a market recovery that seemed like it would lead to new highs, a pullback on Greece and China, another recovery, then another pullback, and then a bounce up followed by another pullback on the Chinese devaluation.

What’s going on here?

The shocks from the Chinese yuan devaluation continue to echo around the world.

Today, the currency had its second-worst day (after yesterday) since the modern Chinese foreign exchange system launched in 1994, falling a further 1.6 percent against the dollar. Markets were down around the world, and U.S. interest rates dropped substantially.

Some mornings I wake up and wonder what I should blog about. Not today. Looking at my phone in bed to scan the headlines, I couldn’t believe the news—China had devalued its currency! This is a big deal in the financial world.

Last week was a good one for the economy. The data released met expectations and, in many cases, substantially exceeded them. Overall, accelerating growth seems likely in the second half of the year, and first-half growth may turn out better than the initial reports suggested.