The John Batchelor Show

Tuesday 3 August 2021

Air Date: 
August 03, 2021



9-915   Vicki Barker @CBSNews.  Boris Johnson saves summer vacation?
Boris Johnson saves summer vacation? Vicki Barker @CBSNews

915-930    Craig Singleton @FDD.  Last of the Confucius Institutes.
Last of the Confucius Institutes. Craig Singleton @FDD

930-1000   @RichardAEpstein.  Our regulatory agencies and their abduction by “interests.”  
Our regulatory agencies and their abduction by “interests.”  @RichardAEpstein
Theory of Regulatory Capture* by the Regulated. Richard A Epstein, Tisch Professor of Law NYU Bedford Senior Fellow; Hoover Institution; senior lecturer, University of Chicago Law School.   @RichardAEpstein
* Regulatory agencies come to be acquired by the interests they regulate and not by the public interest. 
An autarchic supervisory agency is a monitoring agency that is self employed from other branches or arms of the government.


10-1030    @HenryIMiller   The Provincetown SuperSpreader
Part 1.   The Provincetown SuperSpreader.  @HenryIMiller
Part 2.    @HenryIMiller   Swiss Cheese Virus Defense
Swiss Cheese Virus Defense. @HenryIMiller

1030-1100 Ryan Avent @TheEconomist.  BRICS FALL DOWN.  
BRICS FALL DOWN.  Ryan Avent @TheEconomist


1100-1130 Mary Kissel  @Mary Kissel
 Xi vs 12-year-olds.  Mary Kissel  @Mary Kissel

1130-1145   @Josh Rogin.  Much more of what we don’t know about origins.
Much more of what we don’t know about origins. @Josh Rogin.

1145-1200   Katrina vanden Heuvel @TheNation.  Lawless.
Lawless.  Katrina vanden Heuvel @TheNation.


12-100 AM   Joseph Sternberg,  @josephsternberg, @WSJOpinion

1.  Joseph Sternberg,  @josephsternberg, @WSJOpinion
How China Played American Investors
Shares tumbled this week as investors wondered what they really own when they buy Chinese stocks.
..  ..  ..
How China Played American Investors
Shares tumbled this week as investors wondered what they really own when they buy Chinese stocks.
By Joseph C. Sternberg / July 29, 2021 
       Wall Street this week received a shock lesson in “capitalism with Chinese characteristics,” as Beijing’s preferred market setup is often described. The shares of many Chinese companies listed in New York and other foreign markets plummeted because it turns out that model never involved much actual capitalism.
Ostensibly the thing that set markets reeling was a raft of new regulations for China’s burgeoning . . . online tutoring market? It sounds ridiculous that a new restriction on for-profit extra instruction on Saturdays could have triggered a massive selloff that reduced the share prices of some of China’s largest tech companies by about 15% on average. These education regulations are bad for China’s middle class and its economy on the merits. But surely they don’t warrant such a pronounced market response.
       Sure enough, the full explanation for the selloff turned out to have a lot do with the most obscure of the new rules: a demand that the listed tutoring companies “rectify” their shareholding structures.
       Uh-oh. Beijing has in mind something called the variable-interest entity, or VIE. Many big-name Chinese companies that have sold shares in foreign markets (including Hong Kong) over the past two decades have done so only quasi-legally at best. Beijing prohibits foreign ownership of large sections of the Chinese economy, and especially the most profitable parts involving digital technology and data. The workaround was to create an offshore holding company or VIE. The Chinese operating company would bind itself contractually to remit its profits to the offshore entity, which could then sell shares to foreign investors.
       Any investor with a stomach strong enough to read a Chinese listing prospectus will be familiar with the risks, which always boil down to four key points: The Western investor doesn’t own anything, since ownership of the VIE does not translate into a claim on the assets of the operating Chinese company. The Western investor can make no demands on the management of the Chinese company because absent an equity stake there is no mechanism by which to influence or change management. In the event of a dispute, no one can guarantee a Chinese court would enforce the contracts binding the operating Chinese company to the VIE that Western shareholders do own. 
       Oh, and Beijing could decide at a stroke that it no longer is willing to tolerate this obvious thumbing of noses at black-letter prohibitions on foreign ownership. Which is exactly what the Chinese government said last weekend when its new rules for online-tutoring companies prohibited the firms from listing abroad using the VIE method.  . .
2.  Boris Johnson and summer.  Joseph Sternberg,  @josephsternberg, @WSJOpinion
3.  Fed and Inflation.  Joseph Sternberg,  @josephsternberg, @WSJOpinion
Is China the Black Swan of August?
4.  London parks, London offices.  Joseph Sternberg,  @josephsternberg, @WSJOpinion