The origins of this week's global financial chaos – and the economic storm clouds now darkening over Australia – are best illuminated by a strange sequence of events that may or may not have taken place three months ago. "It's good to trade shares," China's President Xi Jinping reportedly told a journalist, during an inspection tour in Hangzhou. The Shanghai Index "will soon hit 10,000 points!"

Xi was reportedly bantering with a reporter who had jokingly confessed that she had joined the national pre-occupation of "stir frying" shares. At first, when the exchange was circulated by another journalist on her Wechat microblog, with Xi using the same metaphor for flipping over-heated shares, China's army of investors ignored it or dismissed it as fake.

When chaos hit the Chinese sharemarket, the call went out to the US Federal Reserve for help.. Credit:Bloomberg

China's bull market (or "mad cow" market to use literal Chinese) had already worked itself into a frenzy, with the Shanghai Composite Index sitting just shy of 5000 points after doubling in just six months. Why would China's strongman leader bet his reputation by predicting that this mad cow market would quickly double again?

But two days later when the market hit an air-pocket, on May 28, China's hyperactive censors allowed the exchange to go viral across the Chinese cyber sphere and also to be reported by mainstream online news portals. Xi's utterances, apocryphal or otherwise, became known as "The Ten Thousand Points Discussion" and they were given a whole new layer of meaning.