02 July 2012

Entire Chinese economy rife with fraud

Fascinating article from the always-interesting Steve Keen's Debtwatch.
...The Sino Forest debacle was kicked off with a 19 page report issued by Carson Block of Muddy Water Sino Forest Report. This report didn’t mince words and came out form the start comparing the company to Bernie Madoff’s Ponzi scheme. 
The problem with Sino Forest was that most of the forests the company claimed as assets simply didn’t exist. Rather than being a few isolated cases, these examples signal an epidemic of systemic fraud and corruption that pervades entire Chinese economy... 
What is China’s response to this plague of fraud in Chinese US listed stocks? They intend to make it very difficult for the Big 4 to continue to work in China ‘Big Four’ auditors brace for big changes in China. In the case of Longtop Financial, Deloites, the firms’ auditors have been unable to provide the SEC with any documentation about the collapse for fear of breaking China’s state secrecy laws.
Jim Chanos the famous hedge fund investor who foresaw the subprime crisis described the entire Chinese economy as “1000 times worse than Dubai”.


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