Just a day after the Nasdaq Exchange took aim at Chinese companies when it announced stricter regulations for new stock listings, the Trump administration said yesterday that it aims to find ways to crack down on fraudulent Chinese companies that list their shares here in the US.
Officials in the Trump administration say that investors have lost billions of dollars investing in some of the 156 Chinese companies listed on American exchanges. The companies simply aren’t subject to the same rules and regulations that govern companies here in the US.
Chinese companies listed on US exchanges don’t fall under the jurisdiction of the Securities and Exchange Commission, they are only subject to the jurisdiction of the China Securities Regulatory Commission. Naturally, when an issue arises, the Chinese company can ignore any type of legal threat. They don’t have permission to cooperate with investigations by foreign regulators.
As we mentioned in yesterday’s article, this means the Public Company Accounting Oversight Board (PCAOB), which was specifically created to review audits of publicly traded companies, has no ability to enforce any accounting measures or standards on Chinese companies.
Lack of Transparency
In an interview on Fox Business yesterday, Larry Kudlow, director of the National Economic Council, said “We have learned that Chinese companies are not transparent. A lot of these companies, by the way, have already had scandals and cost investors a lot of money.”
Carson Block, founder of Muddy Waters Research, recently put out a scathing report on Chinese education company GSX Techedu. He said that the company is a “near total fraud” and has been inflating revenue numbers. Block has been focusing on what he believes are fraudulent Chinese companies for nearly a decade. The “substantial majority of companies” from mainland China listed on U.S. exchanges go on to “committing some degree of fraud,” said Block. He also called TAL Education a “real business with fake financials” in 2019. Additionally, just last month, the company admitted to inflating sales figures.
Fraud is so rampant with Chinese companies. Many consider a company that makes almost one-third of its revenue through fraud as a real one, Block explained. They “wouldn’t have been able to raise venture capital without the ability and willingness to commit fraud,” he added.
No Way To Discourage
He says with the way the different laws are set up, nothing can discourage a Chinese company from committing fraud.
“The problem here is that if you’re a PRC national, then you have nothing to lose by trying to defraud U.S. investors,” Block said during a recent FOX Business interview. “If it works out well, you’ll make tens, hundreds of millions of dollars. And if it doesn’t work well, you know, there’s nothing they can do to you.”
He says it shouldn’t allow countries that prohibit inspection by auditors to list on U.S. exchanges. They should also have their foreign private-issuer status revoked.
President Trump recently expressed concern about requiring Chinese companies listed in the US to follow US accounting practices. He believes this could cause some Chinese companies to move their listings to either London or Hong Kong.
Block, for his part, welcomes the exodus. He says it is good for the country. This makes it harder for US investors to buy the shares of fraudulent companies if they traded on overseas exchanges.
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Dems Can Only Blame Pelosi For Failure To Secure More Stimulus Money
The next round of stimulus money will unlikely include any major concessions for Democrats. With this, the party has nobody to blame but Nancy Pelosi.
Astonishingly, that opinion comes from David Dayen, the executive editor of The American Prospect. The said magazine stays “dedicated to liberalism and progressivism.”
In a recent article titled “A Leader Without Leading,” Dayen says during the passage of the last stimulus bill in late April, Pelosi – along with Sen. Chuck Shumer – chose to forego adding their wishlist to the bill, believing they would have another shot. That shot, thus far, has never materialized.
“Republicans wanted more money for forgivable loans for small businesses. Democrats had a host of liberal priorities left out of prior legislation that could have been paired with the extension. But Pelosi and her Senate colleague Chuck Schumer chose to go along with the Republican framework, leaving everything else for later.”
“Immediately afterward, Senate Majority Leader Mitch McConnell hit the pause button on future legislation. It felt like the Democrats were played.” said Dayen.
Credits for the Republicans
He also credits the Republicans for knowing exactly what they wanted out of each stimulus bill. The Republicans did so all while Pelosi fumbled away every opportunity.
“When the coronavirus spread and lockdowns buckled the economy, Republicans knew exactly what they wanted—protect large corporations and investors—and pursued it unerringly. Pelosi had no coherent agenda to fall back on. She’d spent the past year advancing complex, multifaceted bills and watching them wither in Mitch McConnell’s legislative graveyard.”
Dayen adds, “H.R. 1, the House’s signature legislation during this Congress, which attempted to nationalize voter registration, establish nonpartisan redistricting commissions, add ethics standards to the Supreme Court, add a voluntary public-financing option for campaigns, require presidents to release tax returns, disclose donors for super PACs, make Election Day a holiday, and about 20 other things in a single bill, is a perfect example of this syndrome. There’s no single narrative to grab onto, just a mélange of advocacy group–approved planks. This left House leadership unprepared as the pandemic began its march.”
Pelosi worked on the earlier stimulus bills. While doing so, she allowed the Republicans, led by Mitch McConnell, to craft the CARES Act. Dayen says this meant that Democrats “just got to tweak McConnell’s work, without altering its tilt toward the powerful.”
Pelosi and the HEROES Act
Dayen’s takedown on Pelosi ends with her “pie-in-the-sky” HEROES Act. Somehow, she even managed to make a mess of her own bill.
“Incredibly in the midst of a crisis, was a Pelosi tendency that had grown over the years: obsessive concern with deficits. Pelosi rolled back student debt relief in the HEROES Act after learning that it would cost $100 billion more than expected. This was a $3.2 trillion messaging bill not designed to become law, yet an additional 3 percent cost was considered unacceptable. Pelosi also declined to add “automatic stabilizers” that would maintain expanded benefits until economic stress dissipated, blaming a Congressional Budget Office scoring quirk that made the cost appear artificially larger.”
“So with over 30 million out of work, the important thing to Pelosi was that her pie-in-the-sky, going-nowhere bill was ‘reasonable,’ based on some ineffable standard of reason…”
“Devotion to deficit hawkery in normal times is unwise policy. It’s downright fatal during an economic crisis, where relief could be yanked away from needy families prematurely simply because of an unwillingness to challenge CBO’s scoring model.”
Many expect lawmakers to vote on the next stimulus bill sometime after July 20. If you hear Democrats complaining about how “unfair” the bill is, just remember who is negotiating for their side.
Why You Should Consider Filing For Social Security At Age 62
Earlier this week we discussed four common regrets that retirees have when they look back at their golden years. One of the most common regrets was filing for Social Security benefits at 62, the earliest possible age. According to the Social Security Administration, about 1 out of 3 people apply for benefits at that age.
The regret is that if they had waited longer to file for their benefits, their monthly check would be much larger. For example, by delaying filing for Social Security until age 70, your monthly benefits can be as much as 75% larger than someone who filed at age 62. That’s because benefits grow by a guaranteed 5% to 8% each year that you delay your claim.
But there are always two sides to a coin. Today we wanted to discuss the benefits of filing for Social Security as soon as possible. With this, you can decide which approach you believe will benefit you the most.
The Case For Filing Social Security Early
The earliest you can file for Social Security benefits is age 62, but each month you file before reaching your full retirement age (FRA) cuts your monthly benefit amount. As an example, if your full retirement age is 67 and you start your claim at age 62, your monthly check will be reduced by approximately 30%.
Despite the reduced monthly benefit that comes with filing early, tens of millions of Americans make that decision every year. And it boils down to one line:
We have no idea what the future holds.
The financial benefits of waiting until age 70 to claim Social Security make complete sense. But we don’t know how long we will live, so we don’t know if the trade-off is worth it. If we knew we would live a long, healthy life until age 100, we would all delay filing until age 70 and reap the maximum reward.
But if you decided to wait until age 70 to claim, and unfortunately passed away before that, you would have foregone all the retirement income from age 62 on.
Waiting to file is a gamble, but so is giving up guaranteed monthly income starting at age 62.
Deciding when to claim your benefits requires serious thought and shouldn’t be a hastily made decision. And we aren’t saying that filing Social Security immediately at 62 or waiting until age 70 is the right choice. Every situation is different. If you are still healthy and working, waiting a few years passed 62 to claim but not all the way to 70 might be a good compromise. You’ll get a larger check than had you claimed right away, and your regular working income can make up for some of the reduced benefit amount since you didn’t wait until age 70.
The most important thing, whether you file at 62 or 70, is to find enjoyment in your golden years.
Mnuchin: Next Stimulus Coming By End of Month, No More Extra Unemployment Money
Treasury Secretary Steve Mnuchin said the next stimulus bill will be much more targeted than previous bills. He also said the goal is to get the next bill approved between July 20 and the end of this month. That time is when Congress will return from their holiday break and before they leave for August recess.
On Broad Stimulus Measures
It appears the White House will not support the type of broad stimulus measures of the previous bills. Instead, it will focus on direct payments to Americans. In an interview with CNBC yesterday, Mnuchin said “we do support another round” of stimulus checks to individuals. This mirrors the $1,200 payments that the government sent out as part of the $2 trillion rescue legislation passed in March.
Mnuchin didn’t mention whether he supported the idea of a $40,000 income cap to receive a check that has been floated by GOP lawmakers. The income cap for the first stimulus check was $75,000. He did say that he spoke with Senate Majority Leader Mitch McConnell. He also mentioned the “level and criteria” for checks would be discussed when lawmakers return to Washington.
Any new stimulus bill would likely not include proposals from the Democrats that include hazard pay for essential workers. It likely won’t include a longer extension of strengthened unemployment benefits, mortgage and rent relief, and support for state and local governments, too.
Mnuchin reiterated that the White House isn’t in favor of more relief money for states and municipalities to make up for lost revenue. Some state and local governments are considering trimming essential services as costs balloon and revenues drop. He said the administration does not want to “bail out” states that were “mismanaged” before the virus hit.
On Unemployment Benefits
Another critical topic the lawmakers will tackle the end of the enhanced unemployment benefits on July 30. They will do so when they return to Washington D.C.
Mnuchin said the White House has no interest in extending the enhanced benefits any further. Instead, he said it wants to change how they pay benefits. He did not give details. However, he did hint that unemployed workers shouldn’t be able to earn more money compared to full-time employees
“You can assume that it will be no more than 100%” of a worker’s usual pay, Mnuchin said. This echoes many Republicans who argue the additional benefits are preventing some from returning to work. These workers do this so that they make more at home than they would at their jobs.
While Mnuchin says the White House isn’t in favor of extending unemployment benefits, it is extending the Paycheck Protection Program that provides loans for small businesses. Earlier this week the Trump administration released a list of companies that received loans from the government. With that, backlash ensued as numerous businesses tied to wealthy individuals were found to have requested funds. Of the $130 billion remaining in the program, Mnuchin said he wants new relief to be “much, much more targeted” than past rounds of funding.
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