"The China Hustle" Exposes Mega Scam
May 3, 2018
by Mark Hughes
(abridged by henrymakow.com)
'The most important movie of 2018 is one you may not have even heard of. But it's a story that could be directly affecting you, endangering your financial stability and your future. If you have a 401(k) that's lost value, or if you've lost a portion of your pension, there's a chance this picture explains part of the reason why. The film is The China Hustle, and it is a klaxon warning of potentially impending economic disaster
From the producers of the Oscar-nominated Enron: The Smartest Guys In The Room, The China Hustle is directed by Jed Rothstein, director of the Academy Award-nominated documentary Killing in the Name. This isn't an exposÃ© of a foregone scandal, mind you, but rather an ongoing one with major implications for our economy and that of China. Whatever short-term financial gains exist for the businesses, banks, auditors, lawyers, and others involved in perpetuating or benefiting from the practices outlined in the movie, the long-term damage won't be limited to investors who get fleeced, and will instead inevitably implicate and harm entire sectors of both nations' economies while destabilizing trade and banking for years.
HOW THE FRAUD WORKED
Small companies in China were merged with shell companies in the U.S., put on the stock exchanges, and then claim earnings, revenue, business, and so on that's all far in excess of what the company is really doing. If they're making $10 million, they might claim they're making $100 million, for example. The paperwork is falsified, banks and investment firms and others promote the company as a good investment without doing due diligence to make sure it's real and that the numbers add up, and so billions of dollars pour into these companies that are actually worth vastly less -- sometimes almost nothing at all, apparently -- and then the people committing the fraud, the banks and other financial institutions making huge commissions from investments in those fraudulent enterprises, and others walk away with the money while investors are left holding the bag.
This is the gist of titular hustle laid out in the documentary. They provide substantial evidence to back up these accusations -- much of their claims are clearly documented and proven, while others are larger, broader claims about the nature of the system itself and those who should be policing it but don't, and ultimately whatever denials are offered seem to pale in comparison to the simplicity of the explanations and documentation arguing in favor of the documentary's position.
But while the primary fraud accusations are themselves damning and signal a major threat to global trade and economic stability, there is a more sinister and existential threat at the heart of the story. Quite simply, the implication impossible to ignore here is that most of the major institutions -- banks, brokers, regulators, auditors, lawyers, investment firms, and so on -- are perfectly aware of the situation, know the dangers involved, and simply ignore it or actively enable it because it's making everyone filthy stinking rich.
Granted, the idea that our major financial institutions operating at all levels and in all capacities are part of a large systemic, institutionalized corruption is hardly a new concept, and I'm not naive enough to be shocked at revelations of such behavior in our financial system and institutions. But to see so much blatant evidence backing up the notion and explaining just how matter-of-factly everyone goes along with it, and to witness the sheer contempt that regulators and members of Congress have for anyone trying to really expose and stop such frauds, is still infuriating.
It's one thing to talk about people who exploit vulnerabilities in the system and take advantage of it, and quite another thing to talk about the system as full of intentional vulnerabilities to allow exploitation for the enrichment of a few at the expense of the rest of us. Fraud becomes simply a daily part of doing business, and -- as the film notes -- companies literally budget money for payment of fines arising from their participation in the inevitable fraud. Of course, the fines tend to consistently be vastly smaller sums of money than the profits made from the fraud, so there's no real incentive to avoid the fraud and every incentive to engage in it.
With the human factor, accessibility, and good pacing working in its favor, The China Hustle also manages plenty of moments of humor -- albeit sometimes dark humor, due to the subject matter -- as well as wearing its ultimate outrage on its sleeve. It's a scary story, even as it often tends to confirm things we already know or at least suspect about the financial system and those who use it to line their own pockets at the expense of everybody else.
The China Hustle is a briskly paced, easy to understand, humanizing look at what is being called one of the biggest financial frauds in history.
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