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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: c.hinton who wrote (261062)	4/9/2008 8:25:07 PM
From: Sun Tzu	Respond to of 281500

Do the Chinese know about Mississippi Bubble and John Law? With the demand for company shares being high, the government and John Law set out to buy back the whole 1.6 billion livres government debt for shares in the company. The plan was successful and in 1720 the whole government debt was acquired by the company, before the company's market capitalization began to collapse during 1720 and 1721. Compare this with the debt acquisition by The South Sea Company of England that acquired 80% of the 50 million pound government debt during 1720. The South Sea Company reached a highest share price of 1,000 pounds in August 1720, a few months later than the Compagnie des Indes. As the creditors bought shares in the company with their Bonds and debt papers, the whole government debt became property of the company (debt-for-equity transaction). And the company became property of the former creditors, but effectively controlled by the government. Primarily the government paid an annual 3% interest to the company, which amounted to 48 million livres. Through these transactions the French government had successfully unloaded their whole gigantic debt of 1,000% the annual budget (perhaps 200% - 400% of GDP) and was basically debt free. ...and in other news: HONG KONG (MarketWatch) -- China banking and securities regulators signed an agreement with their U.S. counterparts Monday that will help to lay the groundwork to enable Chinese investors to buy and sell U.S. stocks and mutual funds. The agreement signed between the Securities and Exchange Commission and the China Banking Regulatory Commission marks a further expansion of QDII -- the qualified domestic institutional investor program...