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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

#31

Post by guessthejuice »

MichaelMoser123 wrote: post #22
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?

BTC was trading at nearly $20K just a few months ago. Now it is trading at $6K. How is going from $20K to $6K "only been rising"?

A lot of people are underwater when it comes to bitcoin.

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

#32

Post by finebalance »

sremani wrote: post #30
SuoDuanDao wrote: post #24

Earlier quoted context omitted.

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.

That's actually a very useful heuristic because, unlike perhaps in the US, in many parts of the world food standards even in higher quality restaurants are rather lax.

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

#33

Post by Larrikin »

finebalance wrote: post #32
sremani wrote: post #30

Earlier quoted context omitted.

>> 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.

That's actually a very useful heuristic because, unlike perhaps in the US, in many parts of the world food standards even in higher quality restaurants are rather lax.

Even in the US I learned the hard way about eating lunch early. Chipotle is perfectly fine with serving old steak from yesterday if you're one of the first customers of the day.

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

#34

Post by vkou »

tonyedgecombe wrote: post #19
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.

The more they artificially sustain that market the harder the crash will be. It will be painful but I still hope something like that would create democratic reforms.

The markets in the US, following 2008, were artificially sustained, too. How hard will they crash?

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

#35

Post by vkou »

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.

It's probably true in hindsight.

However, when a bailout happens, what also needs to happen is nationalization. Quite obviously, that did not happen.

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

#36

Post by udontgetbtc »

guessthejuice wrote: post #31
MichaelMoser123 wrote: post #22

Earlier quoted context omitted.

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

BTC was trading at nearly $20K just a few months ago. Now it is trading at $6K. How is going from $20K to $6K "only been rising"? A lot of people are underwater when it comes to bitcoin.

I mean, lets be real... bitcoin traded at 20k for about 5 minutes. The extreme spike in price was over a 2 week period. The 6k figure is roughly where bitcoin was trading in October 2017 - after a year long runup from ~$500. Anyone who bought just 10 months ago still had better returns than the stock market over the same period.

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

#37

Post by mistermann »

maxxxxx wrote: post #28
SuoDuanDao wrote: post #25

Earlier quoted context omitted.

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.

But "no one broke the law", so it's all good.

Until it happens again.

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

#38

Post by [deleted] »

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…

[deleted]

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

#39

Post by Sangermaine »

sremani wrote: post #30
SuoDuanDao wrote: post #24

Earlier quoted context omitted.

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.

>It is actually good heuristic

No it's not. It assumes there's a correlation between quality and customers, or at least that quality is a prime cause of customers. But there's no reason to think that's the case. In fact, it's more likely that location is the prime factor: the restaurants in Times Square in NYC are very busy, but they are by no means the best in the city or even particularly good. They just have great locations in the heart of the tourist zone.

I remember reading something by Tyler Cowen where, with regards to NYC restaurants, he advised trying the ones on the streets and not on the avenues, because the streets get less foot traffic and so have to be better to draw people in. I've found this generally to be true living here.

After location, the second most important element is probably hype/fame. The hot restaurant of the moment isn't the best restaurant of the moment, it's the one that has managed to capture people's attention, which could be for a variety of reasons ranging from a celebrity chef to some new gimmick.

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

#40

Post by _ptgt »

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…

This is getting downvoted (perhaps due to the rough tone) but there's a lot of truth to it. It's part of a larger phenomenon that isn't limited to investing as well. I think a lot of inexperienced outside observers of China from developed countries tend to miss that while some parts of China now have many of the trappings of developed nations, the rapid pace with which China has evolved means that they lack a lot of the knowledge that developed countries have about how to effectively manage/use these trappings.

Take driving for example. Cars are everywhere in Chinese streets these days, but most of them appeared in the last 10 years. Imagine being in a city where everyone is a new driver, and nobody's parents ever drove and thus couldn't teach them to drive. The same goes investment as well, and in many other areas.

This isn't to say that there aren't a lot of smart Chinese who read stuff on the internet/learned in school/figured it out on their own (there are), but the aggregate cultural knowledge level in a lot of things people in developed countries take for granted is often noticeably more undeveloped in China. They'll no doubt grow out of it with time though (and hopefully without any significant catastrophes).

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