The China Hustle Page #7

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this wasn't about

just uncovering frauds anymore.

It was about right and wrong.

His friend had gone to jail,

and millions of people

were being ripped off.

He wanted government action,

even if it meant

putting himself

and the other shorts

out of business.

So he hired a lobbyist and came

up with a plan to try

and make Congress

pay attention.

Both Toomey and Casey, are

on the Senate Finance Committee.

- Mm-hmm.

- So what I was asking for is

a Senate Finance hearing.

You're, you're talking

to staffers who bounce

from meeting to meeting

to meeting to meeting to meeting.

So I think a lot of people don't

even know, this really happened.

Anyone I talked to,

anyone even involved

in the stock market,

doesn't even know.

A lot of people don't know.

So here's the frustrating part.

It was the first meeting

that we had with Toomey's staff.

Um, he, he actually suggested,

after an hour and a half,

- a letter-writing campaign.

- Right.

Number one, you know,

welcome to 2016.

Um,

but I guess those still work.

Two, I spent an hour explaining

to him,

that nobody knows

they're being ripped off.

How do I get people

to write a letter

about what they don't know

is happening?

If we give up, you know what

happens out of Washington? Nothing.

You have to be at the hearing.

You have to consider yourself an expert.

That's why we're going

to Washington,

That's where we're trying

to effect change.

- It's a very frustrating thing.

- Mm-hmm.

And I just...

don't want to hear how

the world works anymore.

Dan had a plan.

There was a Senate hearing on

whether or not the Chinese economy

poses a strategic danger

to our economy.

He'd use it as an opportunity to

meet with his senator Toomey.

And get him to listen

to his concerns.

Would you vote for him

at this point?

- How'd I vote?

- Oh, right, right.

I'm sorry, I'm sorry.

I'm having a casual conversation

with you and I forget.

Well, let me just say this,

I won't vote

for the motherf***er.

I think that there are

a great many people

that it's their job

to give a sh*t.

If you're going to run

for office on the idea

that you're there to protect

citizens' interests...

The rights of citizens,

then you should do your job.

Thank you, sir.

Or let somebody else do it,

that will do it.

Today, the Committee

will hear testimony

on the Chinese economy

and the risk it may pose

to the United States.

Some believe

that China's economic stimulus,

following the 2008

financial crisis,

has left the financial system

with an unusually high

percentage of bad debts.

China's not transitioned, uh,

to a market economy.

It's not lived up

to the commitments it made

when it joined

the World Trade Organization.

Chinese government props

up its state-owned enterprises,

also called SOEs,

and designated private firms,

while limiting market access

for U.S.

and other foreign firms.

Dan had hoped

that Senator Toomey

would address some of the

questions he'd raised with his staff.

But he left the hearing early.

And it went downhill

from there.

I'm not sure that I see this

as something that we really need

to be too worried about.

What we do need

to be worried about more,

is the continuation

of the imbalances in China

and what that might imply...

How fast is

the Chinese economy growing?

I don't know exactly.

We don't have reliable figures.

You know, I pretty much agree

that China's not growing

at 6.7 percent.

It's rather growing at something, uh,

like 4 percent.

So, if the Chinese

credit bubble pops,

whether it's sooner or later,

dragging the Chinese economy

down with it,

what kinds of vulnerabilities

might we see?

I don't see the impact as being

through direct exposure

- of United States companies...

- So, so you're not worried

about the exposure

through derivatives

that, for example,

put our banks,

deeply engaged on the question

of commodity prices

or other financial

transactions more direct?

Not through China itself...

I'm Dan David.

I believe Tom gave you my book there.

- Oh, yes.

- Yeah.

I'll believe you'll find that--

"The China Hustle."

That's right. That's right.

If you, uh, read that

and you're interested,

I'd love to talk

to you about it.

Okay.

So, couple of hundred billion in fraud,

and it continues.

It's not over.

It goes on every day.

- Great.

- Yeah, any one of them.

Very cursory and...

- Okay.

- ...dismissive and generic.

- Anecdotal.

- The only thing I heard

at the end

was Shelby saying, uh,

you know, we got

to face reality.

- That was it.

- Okay, the reality is,

- they're gonna do nothing about it.

- Right.

The biggest, eh, you know,

you can guarantee losing

- by not doing anything.

- That's right.

Uh, why did you come down

to Washington?

I was hoping

to move the ball forward,

advocating for investors' rights,

to... show up and see

what's actually done

at a committee hearing.

What happened at the hearing?

Not much.

I think

that what Dan's doing to try

to get Congress to take action,

is a good thing.

Do I think that's the way

to solve the problem? No.

I don't think so.

The entire staff of

the SEC hasn't busted,

more than one or two

of these frauds.

A handful of short sellers

have busted,

forty or fifty of these frauds.

Coach, you need one?

- Yeah, I guess so.

- Is he still living out in France?

Excuse me, ladies,

can I get you anything?

Soda, water, beer?

Pop, can you get Sean a beer?

No, he can help himself.

He's a big guy.

Uh-huh.

- Geo Investing.

- G-O?

G-E-O.

I'll bet against them.

And I'll write a report,

and I'll publish it.

And I'll say they're a fraud

and I'm short.

But when they do go to zero,

I win, but you all lose.

We're losing our ass.

Started out good.

We didn't get any...

This is the skim that comes

out of everybody's account.

It's pennies from everyone...

that adds up

to hundreds of billions.

So you're campaigning

to get something to happen.

So that I won't

make money anymore.

- You're a good man, Danny.

- Yeah.

I always thought

you were like that.

No, you didn't.

And I'm not. I'm not. I'm not.

It just...

just doesn't sit well,

that's all.

Explain to me again,

why you make money and we don't.

You bet against them.

That's short them.

Okay.

Graduating with a 1.6...

- I'm kidding. I'm kidding.

- There's two things there.

One, I had no idea

I actually graduated.

Carol read something

about something going on

in China right now,

where they've discovered

what they think to be aliens.

Wasn't it deep down,

they found 'em?

Well, that would be

a new wrinkle.

Well, that would make what I've been

doing the last three years a waste.

Nothin'.

- Thousands of years ago.

- Yeah.

Yup, I think he might not

come home in one piece.

At the end of the day,

investors counting on the SEC

to save them from their own lack

of due diligence, or greed,

are kidding themselves.

We have more opportunity in

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