"Carson Block on Short Selling in the Time of Coronavirus"

The question of urban density vs. sprawl and the thinking of this entire generation of urban planners is going to be an area of extraordinary opportunity over the next decade or two.

From Worth:

The famed short seller caught up with Worth to discuss the coronavirus pandemic, short selling in times of market crisis—and human nature.

Short seller Carson Block catapulted to fame almost a decade ago for exposing alleged frauds in publicly traded Chinese companies, like the well-known case of Sino-Forest Corp.

Block’s route to short selling was a circuitous one. He was born in New York City, grew up in New Jersey, got a law degree in Chicago then moved to China, where he worked as a lawyer before starting the country’s first self-storage company until real estate prices took off, making the venture uneconomical. That endeavor also gave him insight into the Chinese economy, eventually leading him to launch his short-oriented research firm, Muddy Waters, in 2010. The name comes from an old Chinese proverb that roughly translated says, “muddy waters make it easy to catch fish.”

While Block started out investigating alleged fraud in China, he has branched out to Europe, Canada and the U.S. in recent years. In 2015, he launched his first hedge fund, followed by another one in 2016. He had been planning to move his company from the San Francisco Bay area to New York City over this coming summer—but now is not sure.

The coronavirus crisis has made him wonder whether cities will be as popular places to live as they have been in recent years, or whether people will want to take mass transit again. (He’s looking to talk to an expert on the Spanish flu of 1918 for insights on that.)

Block is also wondering whether anything will change, particularly in China, which gave birth to the new scourge. A skeptic, he’s somewhat doubtful.

Worth recently caught up with Block, who is working from his Sonoma County home, to talk about China’s role in the coronavirus pandemic, short selling in times of market crisis—and human nature.

Q: You became known for short selling research in 2010, when you were uncovering fraud from Chinese companies like Sino-Forest. I’m curious what you thought when you first heard about the coronavirus in China?
A: I have been saying [for] many years, semi-facetiously, that if there’s ever a plague that wipes out much of humanity, it will have originated in China. And I was thinking squarely about wildlife markets. It’s this unhealthy, literally and figuratively, obsession the Chinese have for eating these exotic foods. And it’s obvious from when SARS started in 2002 that nothing changed.

The SARS virus also started in these wildlife markets. Why hasn’t the Chinese government taken action to shut them down or better regulate them?
I think the Chinese government is happy to placate. The reason why the government looks the other way on these wildlife markets is this is how a not insignificant number of people in China earn their scratch, particularly when you go on a province by province level. They did not have the political will coming out of SARS to make any changes to really crack down on wildlife markets.

Is this a common attitude from the government?
It’s the same thing with counterfeiting. They understand that the counterfeiting industry causes problems internationally. But that’s a way of making a living for a lot of people. It just happens again and again and again, just like you have people in China who think it’s acceptable and a good idea to cut infant formula with melamine so that they can make a little bit more money.

How do you think this changes our view of China going forward?
This gets into questions about where logic meets human capacity for wiping our memories clean of uncomfortable facts. Let’s talk about the first wave of outing these Chinese frauds. After those were exposed, by 2012, a lot of investors felt China was uninvestable. But by 2014, Alibaba was ready to IPO, and everybody lined up around the block to get their allocation in the IPO. And nobody wanted to remember or care about the problems with these China listings....

....MUCH MORE

Speaking of urban planners, a couple of my favorite headlines from the twenty-teens:
"Gadabout Urbanist Richard Florida Has a New Book..."

"It advises cities on what to do about problems that result from advice he gave them in his previous books..."

I take it the writer is not a fan....
And:
Longtime Urban Planner Leaving Bay Area for Sydney, Says: Well that didn't work 
Truth be told he didn't say "Well that didn't work." What he said was, and I kid you not, "Something has gone terribly wrong."
Oh.