China & Russia in the US economy – do you know where?

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

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