4 ms·

So it's the responsibility of smart investors to bail out dumb investors?

by ruang 8y ago

deleted 8y ago
[deleted]
atr_gz 8y ago
The government, including Li Keqiang, was officially promoting this industry a few years ago. The government also tightly controls the flow of information in China, keeping people from seeing alternate opinions. In addition to that, tight currency controls mean the middle class is starved for worthwhile investments. I don't know whether these people should be bailed out or not (the companies definitely shouldn't be), but I can see why they're upset with the government. It's not really the same situation as in the US.
- ruang 8y ago
  Thanks, that context makes a lot more sense.
- baybal2 8y ago
  >In addition to that, tight currency controls mean the middle class is starved for worthwhile investments. But that is kind also the only reason China is not completely sank in the saving glut. They want to make it appear to people that they have no better alternative to use their money than just spending it right away. This is one of reasons that a thing as bizarre as that bitcoin took off her. In reality, Chicoms have no effective way to stop capital bleed. The learned that the stronger signal they send that "tomorrow it will be harder to get your money out of the country," the more money actually leaves. All kinds of eCurrencies is one side of that, but insane loan schemes is another: the current most popular funds exfiltration scheme is following - a guy loans money to some fund in China, and in exchange gets an interest free or very low interest rate load abroad. The fund then finds more a legal front for "investing abroad" or just bangs money away inside China on pump and dump schemes. It is borderline tragicomic that whatever seemingly makes sense,and made in good faith policies made up by Chinese government end up acting with opposite effect: 1. The 50k USD limit on foreign remittance - actually aggravates capital flight, by sending the signal that domestic capital markets are so bad that government has to resort to such extreme measures. 2. Prohibition on private ownership of major assets (real estate, land, mining licenses, ownership of private business over the revenue limit, sea ad aircraft, and on) - was made to ease saving glut, by making people rent that stuff rather than own, but... you know: an average Chinese citizen save like crazy just to get the 50 year rent. 3. Salt tax - apparently is still being kept to force people buying Iodinised salt, but everybody knows where to buy salt around the state monopoly And on and on and on
  - bobthepanda 8y ago
    The problem is that China's economy is based on keeping the genie in the bottle. The moment they let it out, all hell will break loose, and it'll be 1998 all over again.
- stephengillie 8y ago
  Just how tightly do the people in China's government control the flow of information? This poster says it's reported almost daily by Chinese media. https://news.ycombinator.com/item?id=17744123 https://news.ycombinator.com/item?id=17744123
  - atr_gz 8y ago
    I wasn't trying to say they aren't reporting it now. But the news here pretty much cheerleads for the government. So when the Premier and the former head of the central bank[1] are saying this sector is a good potential investment, CCTV News is going to pass that along uncritically to all these middle or upper-middle class people, who tend to have cash to spare and are used to huge returns like in the real estate market. SCMP has an article about it[2], but they're blocked in the mainland. I looked for the Xinhua article they mentioned but couldn't find it on their English site. I did find this one on Sixth Tone, which is not blocked[3]. It doesn't mention the protests. My guess is you won't see much if any mention of the protests on any mainland news. [1] https://qz.com/1351198/how-p2p-lending-turned-middle-class-chinese-dreamers-into-angry-protesters/ https://qz.com/1351198/how-p2p-lending-turned-middle-class-c... [2] https://m.scmp.com/news/china/economy/article/2159372/china-comes-10-measures-tackle-risks-troubled-p2p-lending-sector https://m.scmp.com/news/china/economy/article/2159372/china-... [3] https://www.sixthtone.com/news/1002653/peer-to-peer-lending-platforms-are-dropping-like-dominoes https://www.sixthtone.com/news/1002653/peer-to-peer-lending-...

So it's the responsibility of smart investors to bail out dumb investors?

by ruang 8y ago

So it's the responsibility of smart investors to bail out dumb investors?

deleted 8y ago

[deleted]

atr_gz 8y ago

The government, including Li Keqiang, was officially promoting this industry a few years ago. The government also tightly controls the flow of information in China, keeping people from seeing alternate opinions. In addition to that, tight currency controls mean the middle class is starved for worthwhile investments. I don't know whether these people should be bailed out or not (the companies definitely shouldn't be), but I can see why they're upset with the government. It's not really the same situation as in the US.

ruang 8y ago
Thanks, that context makes a lot more sense.
baybal2 8y ago
>In addition to that, tight currency controls mean the middle class is starved for worthwhile investments. But that is kind also the only reason China is not completely sank in the saving glut. They want to make it appear to people that they have no better alternative to use their money than just spending it right away. This is one of reasons that a thing as bizarre as that bitcoin took off her. In reality, Chicoms have no effective way to stop capital bleed. The learned that the stronger signal they send that "tomorrow it will be harder to get your money out of the country," the more money actually leaves. All kinds of eCurrencies is one side of that, but insane loan schemes is another: the current most popular funds exfiltration scheme is following - a guy loans money to some fund in China, and in exchange gets an interest free or very low interest rate load abroad. The fund then finds more a legal front for "investing abroad" or just bangs money away inside China on pump and dump schemes. It is borderline tragicomic that whatever seemingly makes sense,and made in good faith policies made up by Chinese government end up acting with opposite effect: 1. The 50k USD limit on foreign remittance - actually aggravates capital flight, by sending the signal that domestic capital markets are so bad that government has to resort to such extreme measures. 2. Prohibition on private ownership of major assets (real estate, land, mining licenses, ownership of private business over the revenue limit, sea ad aircraft, and on) - was made to ease saving glut, by making people rent that stuff rather than own, but... you know: an average Chinese citizen save like crazy just to get the 50 year rent. 3. Salt tax - apparently is still being kept to force people buying Iodinised salt, but everybody knows where to buy salt around the state monopoly And on and on and on
- bobthepanda 8y ago
  The problem is that China's economy is based on keeping the genie in the bottle. The moment they let it out, all hell will break loose, and it'll be 1998 all over again.
stephengillie 8y ago
Just how tightly do the people in China's government control the flow of information? This poster says it's reported almost daily by Chinese media. https://news.ycombinator.com/item?id=17744123 https://news.ycombinator.com/item?id=17744123
- atr_gz 8y ago
  I wasn't trying to say they aren't reporting it now. But the news here pretty much cheerleads for the government. So when the Premier and the former head of the central bank[1] are saying this sector is a good potential investment, CCTV News is going to pass that along uncritically to all these middle or upper-middle class people, who tend to have cash to spare and are used to huge returns like in the real estate market. SCMP has an article about it[2], but they're blocked in the mainland. I looked for the Xinhua article they mentioned but couldn't find it on their English site. I did find this one on Sixth Tone, which is not blocked[3]. It doesn't mention the protests. My guess is you won't see much if any mention of the protests on any mainland news. [1] https://qz.com/1351198/how-p2p-lending-turned-middle-class-chinese-dreamers-into-angry-protesters/ https://qz.com/1351198/how-p2p-lending-turned-middle-class-c... [2] https://m.scmp.com/news/china/economy/article/2159372/china-comes-10-measures-tackle-risks-troubled-p2p-lending-sector https://m.scmp.com/news/china/economy/article/2159372/china-... [3] https://www.sixthtone.com/news/1002653/peer-to-peer-lending-platforms-are-dropping-like-dominoes https://www.sixthtone.com/news/1002653/peer-to-peer-lending-...