Tuesday, December 29, 2009

The risks you run when trading with commies (GS)

Shocker. A Chinese energy concern is being backed up by the state in its refusal to make good on money owed to Goldman Sachs (GS) subsidiary J. Aron.

Reuters is calling it part "of a long-running dispute over how China deals with derivatives losses."

"How China deals with derivative losses" appears to be simply refusing to pay up, claiming that the contracts are too complicated to understand. I wonder if this works the other way when they're on the money-making side of the equation?

"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.

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