Interview Trending Stories China & Russia in the US economy – do you know where? 9 months ago Brad Johnson Background from paper Money of the different countries. the people and legislators of Iowa need 00:03 to understand that the Iowa Public 00:06 Employees Retirement System and route 00:10 and similar public pension systems 00:12 throughout America are holding a number 00:15 of malevolent Russian and Chinese 00:19 enterprises in their portfolios for 00:22 state employees this has come about 00:24 because the interest is in return on 00:28 investment and the position that Russia 00:31 and China enjoy in the emerging markets 00:33 in the case of China the lead player in 00:35 the emerging markets but that’s no 00:39 excuse for choosing into to having your 00:43 portfolio’s serious egregious human 00:47 rights abusers and country and and 00:51 activities that have contravened the 00:53 vital security interests of the United 00:55 States we have for example in the I 01:00 purse Iowa Public Employees Retirement 01:04 System eight Russian sanctioned 01:08 companies sanctioned by the United 01:09 States that you’re not allowed to do 01:12 business with them by law but you’re 01:14 able to invest in them you’re able to 01:16 fund them you’re able to give them all 01:19 the prestige of being in the world’s 01:21 most voluminous and deepest markets 01:23 something they take to the bank every 01:25 day around the world is the Good 01:27 Housekeeping Seal of Approval far from 01:29 sanctions these are rewards in the case 01:32 of China it’s a much bigger problem by 01:36 orders of magnitude there might be 25 01:38 Russian companies in the US capital 01:41 markets compare that to probably over a 01:43 thousand in the case of China there are 01:46 reports that estimates that as much as 01:50 three trillion dollars of Americans 01:53 savings and investment funds have been 01:57 extracted from the US markets in the 02:01 form of equity and debt offering stocks 02:04 and bonds that they have put in our 02:06 marketplace and move that money into 02:09 China 02:11 or their seemingly unlimited checking 02:14 account to move around the world 02:15 compromising countries capturing nations 02:18 capturing regions and continents like if 02:21 you take Africa in other words the 02:24 malevolent use of those funds the reason 02:26 that there appear can your competitor 02:29 with the United States militarily are 02:31 striving to do so and are trying to do 02:34 the same in the technology field is 02:37 because we’re picking up that tab I mean 02:40 this is the sad truth of the matter the 02:43 US capital markets it’s important to 02:45 remember I have over sixty percent of 02:48 the world’s liquidity all of the capital 02:50 markets of the world’s combined are not 02:53 the size of ours so it’s not as though 02:55 China has some place else to go when the 02:58 21st century rolled around we had all 03:00 the money it’s one of the great 03:01 monopolist monopolies of the United 03:04 States in the sense that we have this 03:06 absolute dominance in this financial 03:08 domain on this planet China knows this 03:12 they’re in desperate need of dollar 03:14 liquidity they are not tapping that 03:17 three trillion in reserves they need 03:19 that there to ward off actual diligence 03:23 being performed by the people that want 03:25 to do business with them so they don’t 03:27 touch that and I can tell you that they 03:30 don’t have all kinds of walking-around 03:32 money that seems to be limitless when 03:36 you look at their activities so the 03:40 state public pension systems are a 03:42 wonderful boon to the Chinese economy to 03:46 its military to its intelligence 03:48 services and to their effort to 03:52 undermine our vital interests to put 03:56 them in a position where they could 03:58 actually defeat the United States and 04:00 put at risk if not destroy all that we 04:02 hold dear the stakes couldn’t be higher 04:05 I mean we’re talking about again trey is 04:08 a dollars not hundreds of billions or 04:09 certainly not tens of billions so when 04:12 we look at each of the public pension 04:14 funds and I don’t mean to single out 04:16 Iowa as having been particularly 04:19 egregious or malfeasant this is true 04:23 of your 49 other state counterparts so 04:26 you have lots of company but the point 04:28 is that you need to look at this because 04:30 there’s been no screening mechanism set 04:33 up in your state or the other states to 04:37 look at the material risks to share 04:40 value in corporate reputation to these 04:42 Chinese and Russian enterprises that are 04:44 associated with human rights and 04:47 national security abuses of this kind 04:49 that’s what puts American investors at 04:51 risk is material risk is this isn’t just 04:55 an ideological conversation I’m having 04:57 it’s a market oriented sensible risk 05:01 related conversation and that is 05:03 something that any fiduciary should care 05:06 about this is not politicizing your 05:09 pension system this is not contracting 05:12 your investable universe 05:13 this isn’t jeopardizing the free flow of 05:16 capital around the world all of the 05:18 arguments that Wall Street wants you to 05:19 believe that’s just not the way this is 05:21 this is about risk and more importantly 05:25 it’s also about callousness I mean for 05:28 example Iowa pers holds hikvision 05:32 Technologies now what do they do for a 05:34 living well one of the things they do is 05:37 if you look at the concentration camps 05:39 in chin John that are holding over a 05:42 million Weaver’s you’re gonna find at 05:44 the top of these walls along with Bob 05:47 wire every few meters are hikvision 05:51 surveillance cameras if you talk about 05:56 facial recognition technology at train 05:59 stations and Tibet rounding Tibetans up 06:02 you’ll find the company as well is this 06:05 something that the people of Iowa had in 06:07 mind with their retirement dollars to 06:11 support concentration camps another of 06:13 your companies is av China 06:16 it’s short for Avik is the whether I 06:19 should say the short form name China 06:21 aviation and technology something like 06:24 that but nevertheless the point is what 06:26 do they do for a living well they make 06:30 the DF 41 ICBM that 06:33 half a half an hour flying time to 06:36 American cities and American families 06:40 you have fighter aircraft I / I mean 06:44 Iowa pers also holds China shipbuilding 06:47 they make nuclear ballistic missile 06:50 submarines they make nuclear aircraft 06:52 carriers for a living now where do we 06:55 think that these kinds of advanced 06:58 weapon systems are going to be directed 07:01 they’re directed at us so this is more 07:05 than just a again a purely financial 07:08 argument but the whole thing can be 07:12 justified I think in market practices 07:15 and what should be SEC regulations that 07:20 are enforced on ensuring the disclosure 07:23 of these material risks at minimum to 07:26 the people of Iowa and for that matter 07:28 to the people of the United States I 07:31 mean how many people do we have on the 07:33 markets today in our country 150 180 07:36 million Americans something of this kind 07:38 you know China is racing to extract and 07:43 or to make us more dependent on their 07:46 stocks and bonds they’re flooding if you 07:48 will our market with dollar denominated 07:51 bonds as well as new equity offerings 07:55 again at the end of the day this is fund 07:58 raising if they were to attract as they 08:01 want to two to three trillion dollars 08:04 more in the next say twenty four thirty 08:07 six months you could have a day where 08:10 Americans wake up a hundred and fifty 08:13 hundred eighty million of us and find 08:16 that 17 percent 22 percent 25 percent of 08:21 our retirement portfolios of our 08:24 investment portfolios are all in Chinese 08:27 securities a number of them bad actors 08:31 now just imagine that day when the China 08:35 Lobby as is famously called has scores 08:40 of millions of Americans joining in the 08:43 because of their vested financial 08:45 interest in opposing future sanctions or 08:49 penalties against China independent of 08:52 the severity of the offense why because 08:55 they’re worried about the damage to the 08:58 value of their investment portfolios do 09:00 we really think that China’s not alert 09:02 to this stealthy effort to make us 09:06 beholden to them do we really believe 09:08 that they won’t use that kind of 09:11 leverage if they have it I mean you see 09:14 the way they they save a rattle about 09:18 withdrawing in one fell swoop they’re 09:20 1.1 trillion dollars in in Treasury 09:25 bills for example of course it wouldn’t 09:28 have that draconian effect as they’d 09:30 like us to believe but nevertheless they 09:33 are all about using whatever leverage 09:35 they have to ensure that they maintain 09:39 unfettered access to dollar liquidity 09:42 and the vast capital markets that we 09:46 have in our country that are again 09:48 second to none and where they have 09:50 nowhere else to go so I would think that 09:54 during this period when presidential 09:57 candidates are rolling through the 09:59 states they should be asked how what was 10:04 their position on the fact that we have 10:07 hundreds if not you know over a thousand 10:10 Chinese companies some of them again bad 10:13 actors by any measures human rights 10:16 abusers national security abusers what 10:22 are we doing about the fact that we’ve 10:24 never screened them out even though they 10:27 represent an asymmetric material risk to 10:30 share value and corporate reputation 10:33 these companies in China don’t disclose 10:38 their financials they’re regarded as 10:40 state secrets how do you performance 10:43 diligence on them they don’t adhere to 10:47 the piece PCAOB audits which all of our 10:51 American corporate counter 10:53 arts have to be part of or subject to if 10:56 they’re going to participate in the u.s. 10:58 capital markets what about the fact that 11:01 China is not complying with dodd-frank 11:03 and sarbanes-oxley u.s. securities laws 11:07 do you think that our companies can get 11:09 away with that think again no way so 11:12 China is receiving preferential 11:14 treatment presidential candidates should 11:16 be asked why this this this conversation 11:21 is more important than the trade 11:25 portfolio 11:26 I know trades getting all the attention 11:28 it’s but it’s the shiny object that 11:30 China wants us concentrating on because 11:32 they can have that conversation and 11:34 whether tariffs all day long all year 11:37 long as they’ve proved they don’t like 11:39 the technology restrictions as we’re 11:42 waking up to the fact that we’re being 11:44 they’re stealing us blind on the 11:46 technology front and they’re using it 11:49 right into their advanced weapons 11:51 systems and other malevolent purposes so 11:54 they don’t like that but the one issue 11:56 that they’re most concerned about I 12:00 would argue that the one that they can 12:03 least afford to ever see the light of 12:05 day is the money is the money and it was 12:11 the same case with the Soviet Union I 12:13 mean why did we really think the Soviet 12:15 Union went down they were bankrupted in 12:18 large part by the Reagan administration 12:20 and that story hasn’t been fully told 12:24 but believe me the Chinese have a 12:27 voracious appetite for America for 12:30 dollars their currency is not 12:32 convertible so I would only say that we 12:36 have to be vigilant and disciplined in 12:39 the way we do business with China just 12:42 as we are in the trade front at least it 12:44 has the Committee on Foreign Investment 12:45 in the United States that’s trying to 12:47 screen and monitor what kind of 12:50 investments they can have that don’t 12:52 compromise our security interest well 12:54 where is that screening mechanism on the 12:56 cap markets non-existent where is the 13:00 intelligence community looking at who is 13:03 coming into our market 13:04 and profiling them to find out who are 13:07 they really what kind of abuses have 13:09 they been involved in what about their 13:12 subsidiaries 13:12 Avik that I was mentioning to you 13:15 earlier has been sanctioned by the 13:17 United States on five previous occasions 13:20 for reasons of proliferation of weapon 13:23 systems as ete is the same China Unicom 13:29 is owned by Iowa pers and they’re 13:33 responsible for telecommunications and 13:37 and air defense communications in the 13:40 South China Sea they’re the only 13:42 internet provider for North Korea is 13:45 that a company that Iowans feel 13:48 comfortable holding in their portfolios 13:50 so there’s a lot of data available here 13:54 I mean there’s stocks there’s bonds 13:56 there’s exchange-traded funds they’re 13:59 ones that you hold actively in the sense 14:01 that you choose those individual stocks 14:03 and they’re ones that appear in index 14:06 funds so we have this information we’re 14:09 happy to share it with you and plan to 14:11 but the people of Iowa need to go to 14:15 their state legislatures and the state 14:18 legislators themselves need to become 14:20 activists on this and maybe put on a 14:24 leading position of caring about this 14:27 issue I mean we have to care about you 14:31 know where our money is going and how 14:33 it’s being used I mean this is just 14:35 rudimentary and yet it’s never seen the 14:39 light of day you’ve never had heard a 14:41 conversation about it I daresay you’ve 14:44 never seen a state legislature debate 14:46 you’ve never seen it on TV you’ve never 14:49 seen it in one interagency meeting in 14:51 Washington you’ve never seen it in one 14:53 congressional hearing and before March 14:55 of this year when we started to to go 14:58 public with our research findings you 15:01 didn’t find it in any article or any 15:03 media outlet so again we’re in new 15:06 territory here but this is the mother 15:09 lode this is the most coveted China 15:12 dream to quote President Xi that they 15:14 have 15:15 is to load us up with their stocks and 15:19 bonds so that we in effect we’re 15:21 beholden to them and at the same time 15:24 they get the kind of vast funding that 15:28 they need to maintain this seemingly 15:31 invincible juggernaut that’s appeared on 15:34 the horizon to challenge us in every 15:38 sphere and to put at risk our primacy in 15:42 the world and to defeat our way of life 15:45 let’s face it I mean this is a 15:47 totalitarian or authoritarian to be sure 15:49 police state and it’s not pretty and 15:52 even on the those that don’t care about 15:56 national security should darn right care 15:58 about human freedom what about the 16:01 surveillance state that’s being funded 16:03 here what about those concentration 16:05 camps so this is on a bipartisan issue 16:08 this is an American issue and I urge you 16:12 all of you to take it seriously and 16:14 those journalists to write about this 16:17 and let’s get these statistics and these 16:19 facts out there because they’re not my 16:22 opinion they’re empirical that’s the 16:25 beauty of Finance they you can write 16:28 them down and there they are and then 16:30 you can just choose what you’re going to 16:32 do and I certainly hope that the 16:34 audience’s that are going to view this 16:36 today will take this seriously and 16:38 understand that we’re in this together Click for entire transcript Continue Reading Previous 14-16 FEBRUARY Mideast Arab language media analysis By Barry WebbNext Brad Johnson on AG Barr and Trump Leave a Reply Cancel replyYour email address will not be published. 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