{"id":6375,"date":"2009-12-04T11:20:19","date_gmt":"2009-12-04T16:20:19","guid":{"rendered":"http:\/\/www.thedisciplinedinvestor.com\/blog\/?p=6375"},"modified":"2016-09-20T05:35:36","modified_gmt":"2016-09-20T09:35:36","slug":"china-is-pissed-u-s-banks-to-blame","status":"publish","type":"post","link":"https:\/\/thedisciplinedinvestor.com\/blog\/2009\/12\/04\/china-is-pissed-u-s-banks-to-blame\/","title":{"rendered":"China is Pissed&#8230;.U.S. Banks to Blame"},"content":{"rendered":"<p>Well, it is getting tough out there. With the admission that auction rate securities were the fault <!--more-->of the brokerage and monies paid to plaintiffs, others are going to join in on the hunt.<a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2009\/12\/chinamad-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-6376 alignright\" title=\"chinamad\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2009\/12\/chinamad-1.jpg\" alt=\"chinamad\" width=\"214\" height=\"120\" \/><\/a><\/p>\n<p>China is already aggravated by our protectionism strategies and by the \u00a0 suggestion that they are involved in currency manipulation. Now they are looking for some payback.<\/p>\n<blockquote><p>Dec. 4 (<a href=\"http:\/\/www.bloomberg.com\">Bloomberg<\/a>) &#8212; A Chinese official said \u201cfraudulent practices\u201d\u009d by some foreign investment banks were partly to blame for more than 11.4 billion yuan ($1.67 billion) of derivatives losses at Chinese state-owned companies last year.<\/p>\n<p>\u201cSome international investment banks were the culprits behind the derivatives Waterloo suffered by Chinese companies,\u201d\u009d Li Wei, vice chairman of the State-owned Assets Supervision and Administration Commission wrote in an article in the Study Times, a newspaper published by the Party School of the Central Committee of China\u2018s Communist Party. The state assets commission oversees companies owned by the central government.<\/p>\n<p>Sixty-eight companies including China Eastern Air Holding Co. and China National Aviation Holding Co. lost money on derivative products sold by banks including Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch &amp; Co. and Citigroup Inc., Li wrote in the Nov. 30 article. He didn\u2018t say which banks may have used fraudulent practices.<\/p>\n<p>Spokespeople at Goldman, Morgan Stanley, Merrill Lynch and Citigroup either declined to comment or weren\u2018t immediately available.<\/p>\n<p>State-owned companies bought contracts linked to the price of oil and interest-rate swap products, Li wrote. The losses of 11.4 billion yuan were as of October last year, he added.<\/p>\n<p>The companies\u2018 pursuit of large profits, the complexity of the derivatives contracts, poor corporate governance and risk management at the companies and a lack of sufficiently trained staff helped aggravate losses, Li wrote.<\/p>\n<p>State-operated enterprises should use derivatives to hedge against losses, lock in future profit and minimize risks, Li said in the newspaper. Companies should be careful not to use derivatives to speculate, he wrote.<\/p><\/blockquote>\n<p>___<\/p>\n<p>Disclosure: <a title=\"Horowitz &amp; Company\" href=\"http:\/\/www.horowitzandcompany.com\">Horowitz &amp; Company<\/a> clients may hold positions of securities mentioned as of the date published.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Well, it is getting tough out there. With the admission that auction rate securities were the fault<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[5,42],"tags":[481,13],"class_list":["post-6375","post","type-post","status-publish","format-standard","hentry","category-economy","category-stocks","tag-economy","tag-rants","et-doesnt-have-format-content","et_post_format-et-post-format-standard"],"acf":[],"_links":{"self":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/6375","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/comments?post=6375"}],"version-history":[{"count":0,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/6375\/revisions"}],"wp:attachment":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/media?parent=6375"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/categories?post=6375"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/tags?post=6375"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}