Mysterious stockpiles of aluminum
For the past year, the Wall Street Journal has been trying to figure out why 1 million tons of aluminum were sitting outside a factor in Mexico.
The answer, it seems, is about tariffs, taxes and money laundering.
The gist of the story is that a Chinese aluminum magnate moved the aluminum to the Chinese factory, through a complex series of disguised transactions, to Mexico where he hoped to disguise it as Mexican to avoid US tariffs. When it was discovered he moved it to Vietnam, where it's stored now.
An email from his former lawyer said the plan was to sell it and retire in Switzerland.
The WSJ has the story. Aside from detailing the incredible scale of the fraud, it shows how far billionaires will go to protect their wealth and to move money offshore.
We write about economic data and transaction that are on the surface but huge parts of the global economy are invisible. And if people are will to go to such lengths to transport and disguise a million tons of aluminum; you can imagine what they're doing with easier-to-move assets.
Also, the only reason the scheme worked is because of lax lending standards from Chinese state-affiliated companies. And that helps to explain why they're tightening up. Finally, it helps to explain the massive over-production of some metals in China. This is an old story but the jumps in stockpiles this year suggest it's a system-wide problem.
