Riots in Russia

OR WERE THERE?

Investors rely on news about companies, politics and economics to make informed investment decisions; it is therefore essential to obtain accurate news.

An easy way to seek truth in reporting is to compare stories from several different sources.  By “several different sources,” I don’t mean several news sources from the US, which all use the same news wires to get their information.  I mean getting news from the West’s traditional enemies as well as its allies, since the truth is usually found somewhere in the middle.

On December 7th, 2011, several US news stations carried footage of anti-government protests in Russia.

Some stations showed Russian protesters marching with flags.  Another station showed protesters waving flags and burning red flares.  Yet, Fox News had amazing clips showing protesters throwing Molotov cocktails, lighting bonfires, smashing windows, and fighting with police in riot gear.

The reason that Fox News had such exciting footage is because although they were describing protests in Moscow, they were actually showing footage of riots in Athens Greece!

Russian news agency Pravda - itself not known for the quality of its reporting - noted that the Moscow protests “appeared to be too boring and ordinary for Fox News producers.  They wanted some action, which was obviously missing in the video reports from Moscow.”

Pravda later drolly added that “it is quite possible that American and European TV viewers will soon have a chance to see drunken Cossacks riding bears, playing balalaikas and terrorizing peaceful demonstrators in the streets of Russian cities somewhere in Egypt.”

Awesome!

When the truth is boring, why not just make it up?

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Note: The original Fox News link to this broadcast (Protester's Express Outrage Over Russian Elections) has been taken down.

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"There's absolutely no truth in this malicious rumor that I starting running mad cow disease stories simply because Angus Black, the great British beef baron, lost ten thousand pounds against me in a game of poker and refused to pay up.”

“Elliot Carver,” evil news baron in the James Bond film, Tomorrow Never Dies

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The Sick Man of Asia II

Back in June of this year, I wrote about the proliferation of US-listed Chinese firms with shady characteristics (The Sick Man of Asia).  At the time, many of these companies appeared to be great bargains, so I hope the article saved many Frost Report readers from suffering unnecessary losses!

Those of us who have been investing for a while remember the good old days of Enron-style accounting fraud – with stories of ambitious CEOs resigning to spend time with their families, CFOs quitting because of “health issues,” and of course the famous mobile shredding trucks.

I have pasted below a letter from the Chairman of Advanced Battery Technologies (ABAT), a company whose stock has plummeted more than 70% this year after failing to comply with Nasdaq listing requirements (such as providing banking and accounting information).

I should mention that this letter is for illustrative purposes only.  ABAT could very well be a respectable, well-run company with no major problems – though I’m personally not putting investment dollars on that conviction!

I invite you to read the Chairman's letter and make your own conclusions:

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NEW YORK, Nov 28, 2011 (GlobeNewswire via COMTEX) -- Zhiguo Fu, Chairman of Advanced Battery Technologies, Inc. /quotes/zigman/7539795/quotes/nls/abat ABAT -99.80% , today issued the following letter to the shareholders of ABAT:

"Fellow Shareholders:

"Since March 2011 ABAT has been afflicted by the concerted actions of a group of short sellers. After establishing short positions on our shares, they published a series of articles making allegations of misconduct by ABAT's management that were fabrications and distortions. The result was a great loss of value to the majority of ABAT's shareholders, which was compounded when the class action bar filed lawsuits against us based again on the same sophistic allegations. Unfortunately, NASDAQ chose to abet this conduct by initiating an investigation based on the short seller allegations. When NASDAQ inquired regarding the allegations, we provided complete detailed rebuttals, and NASDAQ has not made further inquiry regarding any of the short seller allegations.

"At the end of the summer, however, as stories circulated regarding collusion between a small number of Chinese companies and their bankers, NASDAQ decided that, solely because we are Chinese, we should be required to provide an extraordinary level of confirmation from our banks. Despite the lack of any evidence of wrong-doing on our part, NASDAQ insisted that we approach our banks, inform them that our U.S. regulators consider them untrustworthy, and ask them to permit our auditors to "look over their shoulders," as it were, while they prepare bank confirmations. Initially NASDAQ insisted that this degrading procedure be conducted at the highest level of the bank. After we obtained written refusals from each of our banks, NASDAQ agreed to have the process carried out at our local bank branches.

"Unfortunately, on the same day that NASDAQ made this concession, our Chief Financial Officer, who had headed our accounting and finance operations since we formed the company in 2002, resigned. The pressure brought by the short sellers, class actions and regulators caused her to decide she should devote her time to ailing members of her family. Her resignation was immediately followed by that of our Controller. I myself have had to seek medical assistance for the effects on my health of this assault on our integrity and our efforts at being good U.S. corporate citizens. And so we have been unable to satisfy NASDAQ's demands.

"Since coming to the U.S. in 2004, ABAT and I have consistently complied with all U.S. laws and regulations. We have worked with great enthusiasm to try to reward our shareholders for their loyalty to our company. Today, unfortunately, I have lost confidence in the integrity of the U.S. capital markets, as I see how the reckless actions of a few persons have negated all of our good efforts.

"But I remain committed to our shareholders. I believe that their faith in our company should be rewarded. So I write this letter to promise our shareholders that in the coming months I will take the actions that I believe are necessary to reward the loyalty of our shareholders."

Zhiguo Fu

This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Advanced Battery Technologies, Inc.

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Regular readers of The Frost Report know that the Chinese meltdown party has just begun.  Guilty or not, there will be many more press releases like the above in the days and months to come.

Be wary.

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"Only when the tide goes out do you discover who's been swimming naked."

Warren Buffett

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S&P Notices Something Wrong with Europe

An exclusive interview with fictitious Standard and Poor's representative Hank Terwilliger.

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In a stunning move today, Standard and Poor's put almost every Eurozone country on alert for a credit downgrade, prompted by a "belief that systemic stresses in the Eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the Eurozone as a whole."

Standard and Poor's representative Hank Terwilliger explains what led to this decision.

"I was walking down Wall Street," says Hank, "and I heard all these people talking about Europe and about some kind of credit crisis over there.  Then I saw stories about it on the front pages of newspapers as I was walking to the convenience store.  I thought, 'what happened?  How could we have missed this?'   I immediately went back to the office and told my boss we should downgrade Europe."

Hank's superiors didn't believe his wild story at first, but after Hank showed them endless Internet stories about it from the previous weeks, they became convinced.  "My boss looked at me and said, 'F**k it.  We downgraded the banks last week.  Let's just downgrade the whole damn continent!'  So we did."

"Our job at Standard and Poor's" explains Hank, "is to tell you what you already think, and make a big deal of it."  After a moment's hesitation, he added, "And we don't even have to be right."

Hank clearly loves the power and prestige his useless job wields.

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"The agency's decision is uncontroversial."

Robert Preston, BBC, regarding Standard and Poor's downgrade alert for Europe.

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