SURE, THAT SOUNDS PROMISING: China Hopes to Defy History of Market Bailouts.

China’s stock market has had a spot of trouble lately. Perhaps you’ve heard? You may also know that the Chinese government has intervened heavily to try to prevent a financial panic. And yet, as the Wall Street Journal notes today, the stock market remains well off its peak.

Whether Beijing’s policy has “worked” is somewhat subjective; if you think that financial panic was imminent, then maybe it has. But even if you think that the government’s policies have prevented a disaster, you still have to ask whether they can actually sustain a recovery.

Organized support of the market is not a new idea, and history suggests that sometimes it does work. J.P. Morgan famously assembled a group of financiers (with some government help) to prevent the market from collapsing during the Panic of 1907, and this does seem to have staved off some panic. Similarly, the Hong Kong government seems to have made some difference in the Asian market crisis of the late 1990s. The Fed organized interventions in cases like Long Term Capital Management that I think can legitimately be said to have stopped some sort of widespread panic.

And yet, even these examples — the ones that “worked” — aren’t exactly a shining testimony to the power of intervention in the stock markets. The Hang Seng had fallen by two-thirds by the time the government managed to stem the decline. The U.S. market that Morgan and friends “saved” fell more than 40 percent from its peak before stabilizing.

And then there are the interventions that really, really didn’t work. The U.S. tried organized support of the stock market again during the Great Depression, and the ultimate result was that, as John Kenneth Galbraith would later write, “Support, organized or otherwise, could not contend with the overwhelming, pathological desire to sell.” The Japanese government tried to save the Nikkei, and it eventually bottomed out at around 60 percent off its peak (though it would continue to plumb further bottoms as the “lost decade” stretched over more than 20 years).

Yeah, Obama’s “stimulus” didn’t do much either.