Investors Spooked by China
allthingsd.com
allthingsd.com
That said, I think any serious predictions about the global economy right now is silly. Europe could crash (even with more bailouts of Greece, etc.), the USA could crash (not as likely) or China could crash due to social upheaval, etc. Everything could be OK for years, who knows, and the interconnected financial world seems like a study case for chaos theory.
I think the headline and even overall tone are misleading; things are however not always 100% kosher with accounting in China, hell even when they are legal and straight according to regulations they are disturbingly messy for any Western accountant. That being said, big US companies like Groupon commit their irregularities in broad day light and does not seem to shake investors that much.
Business is clearly done differently in china, and there is a lot of protectionism, but that is not unique to China, I am curious why it is called out so much?
I think you have to live here to understand the level of fear around corruption and the lengths to which the government is going in order to stamp it out (not necessarily successfully). This is a country where an executive can get the death sentence for tainted food products. It's happened as recently as this past summer.
> I think you have to live here to understand the level of fear around corruption
I'm quite familiar with the attitudes within china in relation to corruption, and have had friends who have been arrested and "disappeared" for corruption.
I'm pretty sure this is an answer to your earlier question. Humans are corruptible, and thus all countries and governments contain corruption. But the governments that deal with their problems with fiat and secret police are just throwing gasoline on the fire -- i.e., creating an environment of mistrust and fear which only breeds further corruption.
But in general, people also tend to more eagerly report problems in rival groups than in their own. So I think China gets called out more on a primarily US bulletin board just because of the rival relationship that exists. I'd expect the same in reverse on a Chinese bbs.
Justice Department probing Chinese accounting http://www.reuters.com/article/2011/09/30/us-china-usa-accou...
The perception seems to be that unless you know someone and can get inside information, you can't make money.
Instead, average people put their money into real-estate (1) or put it to work in private lending (2). And then there are the pig farmers who speculate in base metals (3). My coworker didn't mention them though.
1: http://blogs.ft.com/beyond-brics/2011/02/03/chinese-property...
2: http://www.reuters.com/article/2011/09/29/china-economy-runa...
3:http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a...
http://en.wikipedia.org/wiki/Sino-Forest_Corporation
Difficult economic times always expose fraud. If the economic situation continues to deteriorates I think we'll see more Sino-Forests.
"It's only when the tide goes out that you learn who's been swimming naked." Warren Buffett
You do realize that that doesn't make sense, right? (The tide going out doesn't change the exposure for people who are swimming.)
When the tide goes out, you do find out which boats are anchored in water that is too shallow, but that doesn't let Buffett be "naughty".