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China's Ponzi Schemes and Poway, California

Cincinnatus Redux Wrote: Aug 12, 2012 4:16 AM
Orange County, California's gamble on derivatives ultimately led to its bankruptcy. Poway's desperate financing deal is far worse and should be prohibited. Governments, especially small municipalities, should limit themselves to traditional financing. Times may desperate in the Golden State, but this is nuts.
Jonathan6 Wrote: Aug 12, 2012 8:39 AM
Poway trades on the reputation of the school district.

I live in SD (former Poway resident, even), and I know there is an arrogance from folks living in that city born from sending their kids to those schools.

I can imagine the school district played on the council's/resident's arrogance and got this gamble allowed.

Surprising, though, because Poway is pretty solidly red (or at least used to be when I lived there 15 years ago), and pretty affluent. Definitely upper-middle class... not generally the types that are duped by silly financial schemes. Wait, what?

Well, I guess these are the same folks who thought real estate increasing in value at 25%/qtr was going to last forever.
Cincinnatus Redux Wrote: Aug 12, 2012 11:54 AM
And I used to live in the OC, including sending my kids to the now discredited Capistrano Unified School District with its financial mess. Budgets are about choices and these short term gimmicks always backfire and will hurt the kids they profess to help. Good finance, like good education, depends on sound fundamentals, not gimmicks.

Top Chinese banks are involved in Ponzi financing of investment deals, offering interest rates over 7% to depositors, to finance real estate projects gone bust and other projects whose assets are not even disclosed.

Banks label these schemes "Wealth Management Products" (WMPs) but any individuls foolish enough to invest in them are going to lose money, perhaps all of it.

Reuters explains in a special report China's answer to subprime bets: the "Golden Elephant"