4 ms·

Based on China constantly handicapping their capital markets with boneheaded decisions. Their stock market is a wreck sending a lot of their best companies abro

Based on China constantly handicapping their capital markets with boneheaded decisions. Their stock market is a wreck sending a lot of their best companies abroad in search of capital.

AnthonyMouse 2y ago
That seems more like a case of "authoritarianism is bad" than "finance people are good".
- missedthecue 2y ago
  It can happen in democracies too. I can think of a few specific ones off the top of my head.
  - AnthonyMouse 2y ago
    Democracy isn't incompatible with authoritarianism. Absent strong checks and balances, they tend to be entirely too compatible.
chii 2y ago
> sending a lot of their best companies abroad in search of capital. which is fine, because china's method is one where they (the CCP) retains ultimate control despite foreign financing - https://www.investopedia.com/terms/v/variable-interest-entity.asp https://www.investopedia.com/terms/v/variable-interest-entit... basically, this legal entity has not been 100% "legal" and undisputed in the chinese legal system - it's vague, and deliberately left so. It allows the CCP any reason to crackdown on any company's foreign ownership (by simply declaring this VIE structure illegal and void). The CCP has two goals with this method (queue conspiracy music here). The first is to ensure state control all the time, even if the CCP isn't financially invested in said company. The second, and imho, a bit more insidious, is to prevent the local capital markets from developing too maturely. The reason the CCP don't want the citizenry to have easy and low cost access to capital markets, is to prevent wealth from being built up by ordinary citizens in large numbers (like how it is in the west). Wealth is power, and the CCP don't want power to spread out to ordinary citizens, except as rising economic prosperity (ala, good jobs, cheap access to goods/services etc). It's the reason why they crushed the real estate property sector when they did. It is why stock markets are very difficult to invest in for ordinary citizens.
- maxglute 2y ago
  >CCP don't want the citizenry to have easy and low cost access to capital markets It's more like like PRC is still a developing country with substantial amount of poor people and little social safety/welfare net. CCP doesn't want people, especially the poor, who mostly skew old, had/has absolutely retarded financial literacy except savings, to investment (gamble) their nest egg. Trading in the 2000s when stock market was bananas. Mass speculation / herd mentality / scams. Government had to intervene so folks didn't lose their shit with no fall back. Stockmarket is easy to invest in for ordinary citizens, IMO that's why it's being controlled / profitability (and losses) mitigaged. Reality is if you have mostly retail (individual) investors vs institutional, and individuals = a billion superstious traders is recipe for market volatility, which is net bad. People think professional financiers are the answer, but IMO that's just goign to self select for financiers who knows how to play to the masses.
  - chii 2y ago
    > investment (gamble) their nest egg. investment, done according to well known economic theories (such as market index investing), is not like gambling. People who do gamble (like wallstreetbets style) might lose, but i don't believe most people, if they're allowed a bit of education, will do that. The degenerate gamblers will always gamble anyway. > Stockmarket is easy to invest in for ordinary citizens try investing in foreign companies/indices - you will find that ordinary citizens cannot easily do it. They'd have to do it via a HK broker, or have sufficent capital to have a private banker. There's also a lot of capital flow restrictions (that i'm not too privy to, but it's there). Sure it might be easy to invest in the chinese shanghai index as a chinese citizen, but that's too concentrated and is akin to gambling.
    - maxglute 2y ago
      >if they're allowed a bit of education PRC had like 3-10% tertiary education in 90s-00s. IMO the masses are not going to absorb a bit of education. They'll still speculate, bandwagon etc if there's money to be made. It's not so much degenerate gambling as degenerate heresay malinvestment not thinking they're gambling when they actually are. A shares in the 00s was basically a casino, but investors thought they could beat the house because latest XYZ tip. % of educated in society much higher now, but problem is uneducated still around and retiring, i.e. potentially even worse casino reopens. >investing in foreign companies/indices No this is definitely controlled out of capital flight concerns. Since the cohorot who would benefit from this are the top quantile, whose capita CCP definitely wants to control.

Based on China constantly handicapping their capital markets with boneheaded decisions. Their stock market is a wreck sending a lot of their best companies abroad in search of capital.

AnthonyMouse 2y ago

That seems more like a case of "authoritarianism is bad" than "finance people are good".

missedthecue 2y ago
It can happen in democracies too. I can think of a few specific ones off the top of my head.
- AnthonyMouse 2y ago
  Democracy isn't incompatible with authoritarianism. Absent strong checks and balances, they tend to be entirely too compatible.

chii 2y ago

> sending a lot of their best companies abroad in search of capital. which is fine, because china's method is one where they (the CCP) retains ultimate control despite foreign financing - https://www.investopedia.com/terms/v/variable-interest-entity.asp https://www.investopedia.com/terms/v/variable-interest-entit... basically, this legal entity has not been 100% "legal" and undisputed in the chinese legal system - it's vague, and deliberately left so. It allows the CCP any reason to crackdown on any company's foreign ownership (by simply declaring this VIE structure illegal and void). The CCP has two goals with this method (queue conspiracy music here). The first is to ensure state control all the time, even if the CCP isn't financially invested in said company. The second, and imho, a bit more insidious, is to prevent the local capital markets from developing too maturely. The reason the CCP don't want the citizenry to have easy and low cost access to capital markets, is to prevent wealth from being built up by ordinary citizens in large numbers (like how it is in the west). Wealth is power, and the CCP don't want power to spread out to ordinary citizens, except as rising economic prosperity (ala, good jobs, cheap access to goods/services etc). It's the reason why they crushed the real estate property sector when they did. It is why stock markets are very difficult to invest in for ordinary citizens.

maxglute 2y ago
>CCP don't want the citizenry to have easy and low cost access to capital markets It's more like like PRC is still a developing country with substantial amount of poor people and little social safety/welfare net. CCP doesn't want people, especially the poor, who mostly skew old, had/has absolutely retarded financial literacy except savings, to investment (gamble) their nest egg. Trading in the 2000s when stock market was bananas. Mass speculation / herd mentality / scams. Government had to intervene so folks didn't lose their shit with no fall back. Stockmarket is easy to invest in for ordinary citizens, IMO that's why it's being controlled / profitability (and losses) mitigaged. Reality is if you have mostly retail (individual) investors vs institutional, and individuals = a billion superstious traders is recipe for market volatility, which is net bad. People think professional financiers are the answer, but IMO that's just goign to self select for financiers who knows how to play to the masses.
- chii 2y ago
  > investment (gamble) their nest egg. investment, done according to well known economic theories (such as market index investing), is not like gambling. People who do gamble (like wallstreetbets style) might lose, but i don't believe most people, if they're allowed a bit of education, will do that. The degenerate gamblers will always gamble anyway. > Stockmarket is easy to invest in for ordinary citizens try investing in foreign companies/indices - you will find that ordinary citizens cannot easily do it. They'd have to do it via a HK broker, or have sufficent capital to have a private banker. There's also a lot of capital flow restrictions (that i'm not too privy to, but it's there). Sure it might be easy to invest in the chinese shanghai index as a chinese citizen, but that's too concentrated and is akin to gambling.
  - maxglute 2y ago
    >if they're allowed a bit of education PRC had like 3-10% tertiary education in 90s-00s. IMO the masses are not going to absorb a bit of education. They'll still speculate, bandwagon etc if there's money to be made. It's not so much degenerate gambling as degenerate heresay malinvestment not thinking they're gambling when they actually are. A shares in the 00s was basically a casino, but investors thought they could beat the house because latest XYZ tip. % of educated in society much higher now, but problem is uneducated still around and retiring, i.e. potentially even worse casino reopens. >investing in foreign companies/indices No this is definitely controlled out of capital flight concerns. Since the cohorot who would benefit from this are the top quantile, whose capita CCP definitely wants to control.