Directed by Jed Rothstein
As the stock market began to tank in 2008, a group of would-be heroes appeared on the horizon: some very exciting, new Chinese companies that looked like excellent investments. Well, why not? The theoretically Communist country is the largest market in the world, and one seemingly drunk on capitalism.
But many of these apparently successful companies were barely making anything. And they never even intended to make anything except money from hoodwinked investors. Many an honest person lost their nest egg in this government-approved scam.
Before I go on, I should confess that I know almost nothing about the stock market or investing. My eyes go glassy when the subject comes up. I put my modest investments in mutual funds, and I never read the quarterly report on what companies I’ve unwittingly invested in. But I largely followed The China Hustle, and my eyes never went glassy.
Jed Rothstein’s new documentary, The China Hustle, has the clean look, clear definitions, and penetrating interview style of Alex Gibney’s Enron: The Smartest Guys in the Room. That shouldn’t be surprising. Gibney produced the film, along with Frank Marshall.
The primary interview subjects all run small-time investment companies. They jumped into the China scheme early on, and jumped out fast. Early in the film, some American stockholders visit a factory they’ve invested in. They discover an old, run-down factory not making anything in the middle of nowhere. Similar events happen elsewhere.
How do these con artists get away with this sort of behavior? It’s easy. The Chinese government is in on the scam. There’s no risk in setting up a fake company and blowing up its worth, but there’s considerable risk in unmasking these shenanigans. One Chinese national who worked with the American investors spent two years in prison for uncovering scams.
And not surprisingly, the US government isn’t too concerned, either.
The main interview subjects actually profited on the scam by selling short – basically betting that a seemingly-successful company will tank. Filmmaker Rothstein uses simple animation to explain how this works.
Of course, the film also includes interviews with victims. An older couple lost most of what they needed for their retirement. And others weren’t happy as being treated as either charlatans or fools. Former General Wesley Clark, now CEO of Enverra, moves into tantrum mode on camera, insists that he was not to be in the movie, and storms off. I guess he’s not used to people not following his orders.
According to this documentary, China is robbing us blind, and our government doesn’t have a problem with that. It may be an exaggeration. But if it isn’t…