The China Hustle *** ½ /
*****
Directed by: Jed Rothstein.
Written by: Jed Rothstein.
It
never ceases to surprise me the number of way people can came up with to
legally scam the system – to find loopholes, and end run arounds to get by
legislation and regulation, to allow people to make a lot of money on the stock
market, knowingly selling crap, and then get to walk away with the money once
everything is all over. The China Hustle is the latest documentary that shows
one of these scams – something that happened AFTER the 2008 financial crisis.
If you could no longer sell junk mortgages to consumers, then what can you
sell? Apparently, junk Chinese companies.
The
movie does a very good job of showing how – step-by-step – this process
happened. Legally, Chinese companies should be able to be listed on the
American Stock Exchange – but what they did was use what is called Reverse
Mergers – basically, Chinese companies took over pretty much defunct American
companies – that were listed on the stock exchange – and essentially, they got
to be listed there as well – with almost no regulatory oversight. They then
started talking up their businesses – China after all is a huge market, and
there is a lot of money to be made. If you had questions, they had financial
statements – audited by firms with names you know and trust (they don’t really
tell you that those statements were audited by the Chinese branch of those
firms, which operated independently). If American lawmakers or the SEC wanted
to look deeper into those records – wanted to get the backup, good luck. They
cannot force China to give them anything. Still, these companies ended up
making a lot of money in the stock market, very quickly – and when they went to
shit (as they were designed to), it wasn’t those who ran those companies that
lost money – they kept what they made – but American investors.
Like
The Big Short, the “heroes” of this story (and even they insist they are heroes
– or even good guys) are people who ended up short selling the stock –
essentially betting on them to fail. A few people decided that these companies
looked too good to be true, and actually looked into them (sending Chinese
people – at great risk to themselves) to monitor the companies, and realizing
there was no way that they could be making the amount of money they were saying
they were. When they realizing they were too good to be true, they started
short selling – and that, along with the reports, made some of these companies
collapse.
One
of the producers of the film is Alex Gibney – who has specialized in these
types of docs over the years – stretching back to Enron: The Smartest Guys in
the Room, right up until his Netflix series Dirty Money. The director of the
film, Jed Rothstein, has clearly been taking lessons from Gibney on how to
structure, pace and present his documentary – and pretty much nails GIbney’s
style. He doesn’t quite get the outrage that Gibney can sometimes show, or
cross the line into preachiness that Gibney has a tendency to do at times – but
that often is one of the weaker aspects of Gibney’s films. The counter argument
to those in though is that without it, the film feels both more lightweight,
and more hopeless (it shows one short seller try to get his message to congress
– who uniformly, does not care).
The
China Hustle is a quick moving doc – in and out in less than 90 minutes, and gives
you a good overview of a scam, how it happened, and why they got away with it.
It’s not as good as the best Gibney films – or come close to something like
Charles Ferguson’s Inside Job – but it’s another doc in a long line showing how
the system is gamed.
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