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Small Chinese Company Tells Goldman To Take A Hike, Refuses To Pay $80 Million In Derivative Losses

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posted on Dec, 29 2009 @ 12:54 PM
Small Chinese Company Tells Goldman To Take A Hike, Refuses To Pay $80 Million In Derivative Losses

It appears that even after thoroughly dominating the US legislative, judicial and executive branches, the long tentacles of the squid have been no better than the Mongolian hordes at overcoming the Chinese Wall (which is ironic seeking how easy it is to ignore the same construct internally between the firm's prop and flow traders...and yes, we will be posting our response to Goldman shortly, we have not forgotten). In the meantime, half a world away, a small Chinese power generator, Shenzhen Nanshan Power, is blatantly refusing to honor contracts with Goldman Subsidiary J. Aron for $80 million in derivative losses, and it appears that China itself has decided to stand behind the small company.



Shenzhen Nanshan Power (000037.SZ) (200037.SZ) said in a statement that it received several notices from J. Aron & Company, a trading subsidiary of Goldman Sachs (GS.N), for at least $79.96 million as compensation for terminating oil option contracts. "We will not accept the demand by J. Aron for all the losses and related interests," said Nanshan, in line with the stance it took last December. "We will try our best to negotiate with J. Aron and resolve the dispute peacefully...but the possibility of using a lawsuit can not be ruled out when talks fail," it added. "J. Aron told us in one notice that if we do not pay the money, they will reserve the right to launch a lawsuit and will not send us any further notice." The State Assets Supervision and Administration Commission said in September that it would back state-owned companies in any legal action against the foreign banks that sold them oil derivatives, which resulted in losses when oil prices dived late last year. [ID:nPEK14474] A Beijing-based Goldman Sachs corporate communication official declined to comment.

posted on Dec, 29 2009 @ 01:00 PM
Is this the first step towards a complete and utter derivative crash for the U.S?
What country/company will be next in line to tell TPTB to "go f#$k themselves"?

IMO, this could mark the straw that broke the camel's back....What a wonderful 2010 we have to look forward to.

[edit on 29-12-2009 by OnTheFelt]

[edit on 29-12-2009 by OnTheFelt]

posted on Dec, 29 2009 @ 01:08 PM
It does look as though the house of cards wall street built is starting to crumble. A law suite at this point would seem useless,what does GS expect to get?

posted on Dec, 29 2009 @ 01:11 PM
The biggest question in this situation could be 'What will TPTB do for revenge?'
when they begin to realize that their ancient plans for world domination looked better on paper than in real life.

posted on Dec, 29 2009 @ 01:26 PM
reply to post by daddyroo45

Exactly! A law suit against a Chinese company who's actions are supported by it's on Chinese government. Is that supposed to be funny? What would the US say, "hey pay us our money, or will stop letting you lend us money."

Now this is what you call truly having somebody by the balls.

posted on Dec, 29 2009 @ 01:28 PM
They can claim it was "unfair" and that the derivatives market is a lie made up to bilk people out of their money.....because it is.

The question I have is

"Why are they in the derivatives market if they know it is wrong ?"

The answer......Greed.

They are no better than the people that they owe 80,000,000 too because they tried to get in on the dirty money themselves.

posted on Dec, 29 2009 @ 01:39 PM
Good lord, jsut as obama said, we cannot treat money like monopoly money* he shuod have spoken to wall street and the big bnaks* not us citizens... i can totaly see a taxpayer bailoout coming now for goldman, just as frannie got unlimited bailouts for 3 years*
is china usig this to destroy our economy? maybe goldman and the FED are? i mean how careless can one get? this is almsot very much like, committing horrific murder, and walking away scott free!

posted on Dec, 29 2009 @ 02:23 PM
Well, I say we tell the chinese and every other country who doesn't want to pay us back to go jump off a bridge for all the money we owe them.

posted on Dec, 29 2009 @ 04:58 PM
reply to post by kingoftheworld

You can actually choose to do that. It's called defaulting.

posted on Dec, 29 2009 @ 05:21 PM
At least it's 80 million less we owe china

I personally would not shed too many tears if we veered away from trade with china. I get tired if having to buy everything twice!

posted on Dec, 29 2009 @ 06:59 PM
Stand back and digest all this for a few moments...

US banks went bust over derivatives of all types, tanking the US economy,

that China supports with the world's largest credit card - to us.

IF the US threatens nonpayment of our credit, they can collect by reevaluated their currency

and crashing ours, and at the same time they can tell us to go F@#$ off

when our delirious bankers try to collect on their sham scheme losses.

What can the US do? Threaten war? with China now well into a MASSIVE

military buildup for the last 10 years???

Nope. But, in an eerie 'titoresque' prophetic way, should we try

to reneg our obligations to repay their debt - ie., we just tell

China to shove their credit card bill to the US up their ass - i have

this sinking feeling military tensions could get to the point of....

Preemptive strike nuclear war.

After all, American assets would be worthless on the world stage after

our currency goes belly up. A successful first strike would eliminate a

devastating response from our missiles. Bet the Russians would launch

at the US too at the same time.

POP goes the American greed weasel and a whole lotta lives.

All too predictable. BTW, preemptive strikes are expected in the middle

of the night...

edited for horrible spelling...

[edit on 12/29/2009 by drphilxr]

posted on Dec, 29 2009 @ 08:38 PM
reply to post by drphilxr

The sad thing is what you said has a ring of truth to it. A few well placed neutron bombs would clear the way for Chineese colonization in North America. That would be one way to collect the collateral we have put up against the national debt.
Private property stands for the public debt....we are sooo screwed!!!

posted on Dec, 30 2009 @ 02:35 AM
In reality we really do not need China if it came down to it and they need us buying their cheap plastic much more than we need them to step in and purchase our 5 year bonds etc.

Japan/Canada/Mutual Funds/Hedge Fund/Pension Funds would all do the job most likely.

Also we have to remember DERIVATIVES ARE HIGHLY LEVERED in most cases. So when we are throwing these numbers around you have to realize its mostly a facade.

For instance I can control $100,000 with $2000 (give or take) on the OTC FOREX Market. Does it mean I am liable for all $100,000? Hell no, just the $2000 margin + hypothetical additional losses.

P.S. You can never outrun GS, they will catch you

[edit on 30-12-2009 by GreenBicMan]

posted on Dec, 30 2009 @ 03:39 AM
US banks went bust over derivatives of all types,
The derivatives market is a scam.

There are more derivatives out there then the worlds GDP.

They must be brought under control before we have a bigger global meltdown.

The banks lost trillions of peoples retirements and investments playing the derivatives market and the people lost this money without knowing what the banks were doing with there money.

posted on Dec, 30 2009 @ 04:44 AM
reply to post by badgerprints

"Why are they in the derivatives market if they know it is wrong ?"

Not really..

I mean, I thought so too until I watched a Bloomberg documentary with several European small town leaders. Not cities.. small towns, people with little to no political power. Usually when a town/city has money surplusing from revenues, it invests in various "safe" investments... USUALLY .. this would be a State or Federal Bond. Sometimes Corporate bonds and or Preferred Stocks. However, since 1999 .. corporations and brokers like Goldman, AIG etc have gone out hooking government and businesses of alllll shapes types and sizes and selling them products that NO ONE understood.. Basically what it came down to was a corporate sales guy held up pretty graphs and charts and said "your money will be safe with us!" .. Seeing as they didn't know what else to do with their money (bond market interest rates have blown since 1999) they trusted the mega banks.

And it worked...

They got good returns, so they often reinvested profits and further surplus revenue into these crazy whatchacallits.

The results was not only did corporations go bust.. like AIG, that sold the products.. but those that bought them did as well. Hedge funds, mutual funds, State Pension funds, small towns from California to Italy, and yes.. little Chinese companies.. they all lost untold billions..

No, I honest to God, do not believe 95% of the leaders and investors knew what they were getting into .. the product was sooo crazy, so insane, so twisted and tied up with so much else that no one could even identify what it was they were investing in .. hell, even to this day WE HAVE NO IDEA who owns what when it comes to the derivative markets..

posted on Dec, 30 2009 @ 05:34 PM

Originally posted by GreenBicMan
Also we have to remember DERIVATIVES ARE HIGHLY LEVERED in most cases. So when we are throwing these numbers around you have to realize its mostly a facade.

For instance I can control $100,000 with $2000 (give or take) on the OTC FOREX Market. Does it mean I am liable for all $100,000? Hell no, just the $2000 margin + hypothetical additional losses.

We're talking about unregulated OTC derivatives like CDS's issued on $100 million notional ABS , MBS , CDO , SIV @ a cost of 1%/year ($1 million). Derivatives payouts are based on the notional amount of the underlying , not the current market amount. Pure speculation dominates this market where neither buyers..nor..sellers are required to hold an actual interest in the reference entity.

Imagine you live in a high-fire zone in a mountainous area of Southern Calif. Playing the odds , thousands of institutional speculators in NYC..London..Paris..Rome purchase fire insurance policies on your home from a US company named AIG.

That summer , the house burns to the ground.

Rampant speculation created condition of global systemic risk. Deemed Too Big To Fail , the US gubmn't is "forced" to make good on AIG's insurance payouts.

Similar to fire insurance , CDS's are designed to transfer risk. In the case of AIG I guess we could say they performed perfectly...transferring risk from the insurance American taxpayer.

Now imagine that one of those speculators was Goldman Sachs. One evening while you were out for dinner , a stealthy GS agent set fire to the overgrowth surrounding your home....

Banks Bundled Bad Debt, Bet Against It and Won

Goldman was not the only firm that peddled these complex securities — known as synthetic collateralized debt obligations, or C.D.O.’s — and then made financial bets against them, called selling short in Wall Street parlance. Others that created similar securities and then bet they would fail, according to Wall Street traders, include Deutsche Bank and Morgan Stanley, as well as smaller firms like Tricadia Inc., an investment company whose parent firm was overseen by Lewis A. Sachs, who this year became a special counselor to Treasury Secretary Timothy F. Geithner.

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