Another Silicon Valley reckoning is on the horizon. We have seen cyclical events like this before, the 2001 bubble burst being the most recent memorable reckoning. The talk in 2001 was about too much “dumb money.” The coming reckoning, however, is on a massive, unprecedented scale, fueled by the same excess of global capital that has fueled the bubbles in housing markets in attractive locations around the World. The problems with Uber, Travis Kalanick, and the now obvious difficulty of the Uber Board of Directors to exercise meaningful governance should have been the “canary in the coal mine.” CNBC’s reporting on the excessive Silicon Valley “unicorn” valuations and media reports that New Enterprise Associates would divest $1 Billion in startup investments that cannot be made liquid have made the situation blatantly obvious. After a long silence, the Wall Street Journal has finally joined the reporting on the crisis. What more does one need to take to the exit?
From The Globe and Mail: https://www.theglobeandmail.com/news/world/grouse-mountain-acquisition-just-the-start-for-chinese-investment-firm-banker-says/article35699906/ Via The Globe and Mail’s Android app
The truth is that for all of the tough talk from Li Xinping about stopping the massive outflows of capital from China, some of it probably dark money obtained from dubious enterprises and kickbacks, nothing has changed in China or in the Western cities eager to share in the wealth. Rich, Young “Fuerdai” Chinese Are Buying Overseas Properties on Their Smartphones. Millennials acquire real estate in other countries as hedge against a weakening currency, homes for their own children when they study abroad
Despite all of the revelations of the sources and methods of the Vancouver housing bubble over the last two years, the situation remains largely unresolved. Ditto in Toronto. The foreign buyers’ tax has had only a limited effect and has problems. Fueled by dark foreign money housed in anonymous offshore shell companies like those disclosed in the Panama Papers, the money is managed by local financial manipulators at the behest of unidentifiable persons overseas. The foreign buyers continue to enjoy the weakest enforcement jurisdiction in Canada
British Columbia has no limits on political donations, leading critics to say the provincial government has become a lucrative business dominated by special interests. As the premier of British Columbia, Christy Clark is on the public payroll, pulling down a salary of 195,000 Canadian dollars in taxpayer money. But if that were not enough, she also gets an annual stipend of up to 50,000 Canadian dollars — nearly $40,000 — from her party, financed by political contributions. Personal enrichment from the handouts of wealthy donors, some of whom have paid tens of thousands of dollars to meet with her at private party fund-raisers? No conflict of interest here, according to a pair of rulings last year by the province’s conflict-of-interest commissioner — whose son works for Ms. Clark.
How many shell companies exist in Canada? How many legal trusts? Who are the beneficial owners protected by such unnecessary veils of secrecy? No one knows because in most cases there is no legal requirement to disclose actual ownership even to regulators. In fact, more information is required to get a library card than to set up a company in most jurisdictions in Canada. What we do know is that Canada ranks near the bottom among our OECD partners in terms of corporate disclosure requirements to fight money laundering and tax evasion. A recent report from Transparency International detailed the dismal situation and why our country has become a haven for dubious offshore property speculation.
Reading this article today, I am dumbfounded that Anbang managed to get this far in the purchase of B.C. commercial real-estate without red flags going up. This mysterious Chinese company, Anbang Insurance Group has attracted the attention of The New York Times, The Wall Street Journal, Forbes, Fortune Magazine, and government authorities in the United States and other countries. A months-long investigation by the New York Times revealed an extremely opaque structure, empty offices, obscure shareholders, and extensive political connections to the Chinese elite. Anbang has all the earmarks of Chinese money laundering, corruption at the highest levels, and mysterious shell companies. It is a cautionary tale for Canadian authorities fretting over foreign real-estate buyers and skyrocketing real-estate prices.