Events in China are starting to resemble Bernie Madoff’s Ponzi scheme in which big players enabled the scam by willfully ignoring red flags.
Audible.com just released a new show on Bernie Madoff (Ponzi Supernova, available for free to subscribers) that explains how the world’s biggest financial scam was enabled by banks and hedge funds who were making so much money that they chose to ignore obvious red flags.
Which sounds a lot like today’s China, Inc. Here, for instance, is a sequence of events involving China Huishan Dairy Holdings, an apparently too-big-to-fail chain of dairy farms:
March 21. Huishan Dairy misses payments on some of its loans. The wife of the chairman and largest shareholder (herself an executive in charge of relationships with the company’s bankers) goes missing.
March 23. The local provincial government holds a meeting with the company and its creditor banks to propose…
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