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Beijing struggles to defuse anger over China's P2P lending crisis

reuters.com

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Re: Beijing struggles to defuse anger over China's P2P lending crisis

#21

Post by rb808 »

21 wrote: post #14

In the last 5 years retail Chinese investors had massive losses in bitcoin, gold, the local stock market, bitcoin again, now P2P. Is it fair to say that they rush from one investment fad to the next, typically buying the top? This is how it looks from far away, can someone with local knowledge comment? http://static.atimes.com/uploads/2015/07/retail-investors.jp...

Its fascinating to think about the knowledge of investors in China. How should people know how to invest sensibly if none of their parents or grand parents ever were able to own any such assets (because of poverty and communism)

Combined with Chinese people all saving too much and not spending on consumption - there is a huge pool of money just floating around going into every possible asset.

Its a bad combination that has to end badly sooner or later. (I've been saying this for 15 years but proved wrong every year).

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#22

Post by MichaelMoser123 »

21 wrote: post #14

In the last 5 years retail Chinese investors had massive losses in bitcoin, gold, the local stock market, bitcoin again, now P2P. Is it fair to say that they rush from one investment fad to the next, typically buying the top? This is how it looks from far away, can someone with local knowledge comment? http://static.atimes.com/uploads/2015/07/retail-investors.jp...

How did they get losses in bitcoin, given that the cryptocurrency had only been rising? Is that due to regulation?

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#23

Post by maxxxxx »

koboll wrote: post #16
bilbo0s wrote: post #12

Earlier quoted context omitted.

I don't know if the structural issue was people believing the US government would bail them out. The issue was probably more that we actually bailed them out. I can't really blame rich and powerful bankers for thinking we were gonna do something that we normally do for them. Stop bailing them out, and they'll stop believing they're gonna be bailed out.

If we're in a position where the options are a bailout or the catastrophic collapse of the world economy, we've already failed. This is why regulation is necessary.

"bailout or the catastrophic collapse of the world "

In 2008 this is what the bankers told us but are these really the only options? I have my doubts.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#24

Post by SuoDuanDao »

21 wrote: post #14

In the last 5 years retail Chinese investors had massive losses in bitcoin, gold, the local stock market, bitcoin again, now P2P. Is it fair to say that they rush from one investment fad to the next, typically buying the top? This is how it looks from far away, can someone with local knowledge comment? http://static.atimes.com/uploads/2015/07/retail-investors.jp...

I remember a significant anecdote about Chinese assumptions when a Chinese-Canadian I was dating explained she always goes to busy restaurants on the assumption that a lot of customers means they have good food. The western bias is towards being the first to discover an unknown restaurant with great food that just hasn't had time to build a reputation, but that's not how a typical Chinese person would approach the restaurant problem.

Abstracting that decision-making style to retail investing in a country with a bias towards savings, and the nature of Chinese equity markets makes a lot of sense.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#25

Post by SuoDuanDao »

maxxxxx wrote: post #23
koboll wrote: post #16

Earlier quoted context omitted.

If we're in a position where the options are a bailout or the catastrophic collapse of the world economy, we've already failed. This is why regulation is necessary.

"bailout or the catastrophic collapse of the world " In 2008 this is what the bankers told us but are these really the only options? I have my doubts.

That must be what they told Washington at the time, and what's more Washington obviously bought it.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#26

Post by atr_gz »

stephengillie wrote: post #17
atr_gz wrote: post #6

Earlier quoted context omitted.

The government, including Li Keqiang, was officially promoting this industry a few years ago. The government also tightly controls the flow of information in China, keeping people from seeing alternate opinions. In addition to that, tight currency controls mean the middle class is starved for worthwhile investments. I don't know whether these people should be bailed out or not (the companies definitely shouldn't be),…

Just how tightly do the people in China's government control the flow of information? This poster says it's reported almost daily by Chinese media. https://news.ycombinator.com/item?id=17744123

I wasn't trying to say they aren't reporting it now. But the news here pretty much cheerleads for the government. So when the Premier and the former head of the central bank[1] are saying this sector is a good potential investment, CCTV News is going to pass that along uncritically to all these middle or upper-middle class people, who tend to have cash to spare and are used to huge returns like in the real estate market.

SCMP has an article about it[2], but they're blocked in the mainland. I looked for the Xinhua article they mentioned but couldn't find it on their English site. I did find this one on Sixth Tone, which is not blocked[3]. It doesn't mention the protests. My guess is you won't see much if any mention of the protests on any mainland news.

[1] https://qz.com/1351198/how-p2p-lending-turned-middle-class-c...

[2] https://m.scmp.com/news/china/economy/article/2159372/china-...

[3] https://www.sixthtone.com/news/1002653/peer-to-peer-lending-...

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#27

Post by stephengillie »

baybal2 wrote: post #20
seanmcdirmid wrote: post #18

Earlier quoted context omitted.

They’ve done well on real estate. The government would never let the real estate sector crash, the bubble must be maintained at all costs, or at least the landing must be soft. Well, thats the hope anyways. I think that sector will crash eventually, but they’ve kept it going for so long.

Well, there was a number of bank/property broker runs around the country, in second tier cities and below. The party is far from being almighty. There was a huge number of other things that people were betting CCP will not let crash at all costs, but which nevertheless crashed: from currency, to stock market, to rural lending cooperatives (google that, it think their crash had impacted close to 1 in 3 or 4 people,) a…

Please don't use racist terms to describe Chinese people who believe in Communism.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#28

Post by maxxxxx »

SuoDuanDao wrote: post #25
maxxxxx wrote: post #23

Earlier quoted context omitted.

"bailout or the catastrophic collapse of the world " In 2008 this is what the bankers told us but are these really the only options? I have my doubts.

That must be what they told Washington at the time, and what's more Washington obviously bought it.

I still remember how all the people who made decisions or got hired in Washington during that time had an investment banking background, ideally Goldman Sachs. It was infuriating.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#29

Post by stephengillie »

rb808 wrote: post #21
21 wrote: post #14

In the last 5 years retail Chinese investors had massive losses in bitcoin, gold, the local stock market, bitcoin again, now P2P. Is it fair to say that they rush from one investment fad to the next, typically buying the top? This is how it looks from far away, can someone with local knowledge comment? http://static.atimes.com/uploads/2015/07/retail-investors.jp...

Its fascinating to think about the knowledge of investors in China. How should people know how to invest sensibly if none of their parents or grand parents ever were able to own any such assets (because of poverty and communism) Combined with Chinese people all saving too much and not spending on consumption - there is a huge pool of money just floating around going into every possible asset. Its a bad combination th…

> How should people know how to invest sensibly if none of their parents or grand parents ever were able to own any such assets (because of poverty ...)

Many study Finance for this education. At least in America, Europe, Africa, Japan, Korea, etc.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#30

Post by sremani »

SuoDuanDao wrote: post #24
21 wrote: post #14

In the last 5 years retail Chinese investors had massive losses in bitcoin, gold, the local stock market, bitcoin again, now P2P. Is it fair to say that they rush from one investment fad to the next, typically buying the top? This is how it looks from far away, can someone with local knowledge comment? http://static.atimes.com/uploads/2015/07/retail-investors.jp...

I remember a significant anecdote about Chinese assumptions when a Chinese-Canadian I was dating explained she always goes to busy restaurants on the assumption that a lot of customers means they have good food. The western bias is towards being the first to discover an unknown restaurant with great food that just hasn't had time to build a reputation, but that's not how a typical Chinese person would approach the re…

>> always goes to busy restaurants on the assumption that a lot of customers means they have good food.

It is actually good heuristic, I would just modify it ever slightly.. lot of customers means that they will not serve "stale" or yesterday's food.

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