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Pawning and banking in China

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On the same day that The Maui News reported that China opened bidding for the first five private banks in the country, online news source Quartz reported on the  boom in pawn shops there.

China is considered the birthplace of the pawn business, maybe 3,000 years ago, but the Communists suppressed pawnbrokers and today there are only about 7,000 pawnshops, half as many as in the United States.

Do I look like a teddy bear?

Do I look like a teddy bear?

But as Quartz reporter Nona Tepper explains, an American pawn shop is about as different from a Chinese pawn shop as a teddy bear from a panda bear.

While our Maui pawn shop, like most of the 13,000 others in the Unitd States, deals in gold chains and TVs and lends a couple hundred dollars or less to most customers, in China pawnshops deal in astronomically priced apartments and serve to finance business. That’s because China’s state-run banking sector is famously dysfunctional.

At Huaxia, apartments are the most commonly pawned item, luxury vehicles the second, and jade, expensive stones and watches make a close third. Compared to America, where individuals pawning jewelry and electronics worth about $150 are brokers’ most common customers, Huaxia looks more like a luxury department store gleaming with Cartier and rare jade statues.

Huaxiz upscale Peking pawn shop (from Quartz news story)

Huaxia upscale Peking pawn shop
(from Quartz news story)

Tepper then goes into some commentary on China’s “shadow banking” business. In the absence of established markets for commercial paper or most of the other numerous sources of business capital in the western world, especially short-term capital, businesses raise money on personal assets – largely residential real estate that is widely viewed (from outside China, anyway) as a bubble.

Should the long-expected crash in apartments come, the effects on China’s businesses would likely be disastrous.

American small business owners occasionally pawn Rolexes to meet a payroll, but this is not a way of life like it has become for China’s small (and not so small) businesses.

“There’s certain risks in regards to the shadow banking industry,” said Ismael Pili, head of financial analytics Asia at Macquarie Group. “1) It’s not well regulated, 2) There’s still opacity with regards to what’s going on and 3) It’s become a sizable portion of the economy.”

So the spirit of unregulated borrowing and lending continues. Today, shadow lending is the fastest-growing part of China’s financial sector, and JP Morgan Chase estimated that it accounted for 69% of China’s GDP—or 36 trillion yuan ($5.9 trillion)—in 2012.

Do we have too much aloha?

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The short answer is no. But a story at the National Pawnbrokers Association website got us to thinking about our experiences with reality television.

We have been approached four times by producers, and have done a “sizzle,” which is a short, hot pitch to be shopped around. Well, we are still sitting at the counter of Schraft’s, sipping on a malted and waiting to be discovered.

Our little Maui pawn shop is not alone.

Nancy Cejudo, the woman owner of Ben’s Pawn (yeah, Ben; she bought the business from a man), also had a look-see with a producer and, like Kamaaina Loan, was left waiting at the altar.

In an interview for the NPA blog, she declared the producer (also a woman) told her:

 “She’s just too nice.”

Not the worst kind of rejection note, but a rejection all the same.

The producer told her:

 

“Reality TV will continue to be exactly what it is. Some shows will be more compassionate than others.”

Probablky the best way to get picked would be to act like Jerry Springer and throw chairs, but we don’t plan on doing that. Farewell fame. It was nice to meet ya.

Just as well, maybe. The other day, we were looking at a reality TV fan site (www.tv.com) and reading the fan (if that’s the right word) comments on Hardcore Pawn. Now, we know the Hardcore Pawn folks and they are as nice as could be. All the nastiness on the tube is an act.

Some watchers don’t get it, which, we guess, the producers and advertisers count on. Anyhow, if this is what it would mean to get on the tube, maybe we’ll pass:

Ashley u r the worst person on the planet you rank right next to Satan that’s how evil you r

Next to Satan? Man, that’s harsh. The rest of the comments are just about as cruel. And, they don’t speak very well for the schools the Hardcore Pawn audience went to.

Greet each customer with a smile

Greet each customer with a smile

Redeeming a pawn the hard way

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So last week, we noticed a story from Nampa, Idaho, about police catching a burglar cutting through the roof of a local pawn shop. Nothing that unusual.

But now we find that he was a carefully focused burglar.  According to Kotaku website, he just wanted his Xbox back. If he didn’t have the money to redeem it, he could always have extended the loan, which no doubt would have been cheaper than what he’s going to pay now.

Why he was armed with an AR-15 is yet unexplained.

 

More teevee pawn

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Why not us?

As you may know, Kamaaina Loan shot some trial scenes for a pawn shop reality show. You may even have helped us by bringing in your strange items. While not entirely dead, that one hasn’t been picked up by a producer yet.

Yet another pawn reality show debuted over the holidays, called Game of Pawns, shot in Branson, Missouri.

What caught our attention was not the new wrinkle — it’s a combination of a pawn reality show and a game show —  but its location in a tourist mecca.

With the notable exception of Hard Core Pawn set in Detroit, it seems most of the leading pawn reality shows are in tourist towns — Las Vegas, Beverly Hills, now Branson. What more touristy place to have another than Maui?

We’re ready for our screen test, Mr. DeMille.

On the other hand, according to this other story about the big dog among pawn shows, Pawn Stars, being a pawn star brings with it its own problems:

“Their life has completely changed because of this show,” Mason said. “They used to be just guys working in a pawn shop – now they’re celebrities.”

Now, when they’re taping the show, they have restrictions on who can come in, because they’d never be able to get anything done otherwise. But the extras you see in the background are picked out of the actual crowd.

So if you go, you could be in the background on the show, but they’ll make you sign a waiver and instruct you not to walk around staring into the camera.

 

A look inside the gold price mechanism

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Revelations that London banks manipulated the LIBOR interest rate — misbehavior for which they have been fined billions by regulators — has prompted a closer look at the ways other financial markets are manipulated, including gold, one of the biggest — $20 trillion (trillion with a T) according to Bloomberg News.

It appears that the term “London fix” may be as problematic for gold as for LIBOR (which is a base interest rate that has spillover effects on rates you and I pay, for adjustable rate mortgages or credit cards, and much else).

Should it prove that the five banks — at least two of them already proven to be corrupt — that fix the London rate have also been gaming the gold price, that might not have a great deal of impact on our Maui pawn shop. We buy and sell gold based on the New York spot price, which is updated every 15 seconds during the business day; but we do not change our benchmark so often. Besides, our prices are flexible within a few dollars or so (out of, at this writing 1,245 dollars), so we are not playing in the same league as the arbitrageurs who may (or may not, who knows yet?) be fiddling the gold market.

As the story explains, the mischief seems to come in very short-term (minutes long) bets on futures prices. Pawn shops deal in physical gold, whose value is necessarily somewhat decoupled from the vagaries of the futures market. Nevertheless, suspicions that crooks are loose in the marketplace cannot be welcome. Crooks in banks? Who knew?

“Traders involved in this price-determining process have knowledge which, even for a short time, is superior to other people’s knowledge,” said Thorsten Polleit, chief economist at Frankfurt-based precious-metals broker Degussa Goldhandel GmbH and a former economist at Barclays. “That is the great flaw of the London gold-fixing.”

Stay tuned. Kamaaina Loan blog will be keeping an eye on this.

 

 

 

 

Gold gets interesting

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As readers know, the daily and weekly gyrations in the price of gold (and silver) don’t concern our Maui pawn shop too much. We make our money off commissions, so when gold goes up $25 or down $30, it doesn’t affect us that much.

Where will it go?

Where will it go?

 

But when gold gets near a top or a bottom, then we start paying attention. Today, the Dow-Jones average topped 16,000 for the first time and the S&P topped 1,800 for the first time. As often happens when stocks are up, gold is down, by $17 to about $1,273. That’s near the lowest for the 21st century.

Will it go lower? We have no idea. But here’s a good roundup of differing views from Bloomberg News. Some of the big noises in the Republican Party, like Rep. Paul Ryan, are gold bugs and, the story says, trying to get the Federal Reserve to tie the valuation of the dollar to the commodity price of gold.

Not everybody thinks that is a good idea:

“It’s a stupid idea,” Joseph Gagnon, a former Fed economist, said in an interview. “It’s pretty clear the Fed thinks so, too, since they do the opposite. They go out of their way to exclude commodities.”

It looked different, at least to vice presidential candidate Ryan, in 2010. His prophecy didn’t turn out too well:

To Representative Paul Ryan of Wisconsin, record gold prices in 2010 heralded “a lower standard of living for many Americans.” Representative Ted Poe of Texas foresaw “a blast of inflation that will crush the middle class” adding: “Where gold prices go, other prices follow.” Fellow Texas Representative Ron Paul, a perennial critic of the Federal Reserve, warned that “confidence is being lost in the entire fiat monetary system,” a reference to money created by central banks.

But the price of gold didn’t keep going up, up, up. Instead, it has dropped by a third.

The gold bugs may yet turn out to be right, but not so far.

Canonization for Big Rich

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When correspondent Emily Bott of Maui No Ka Oi magazine asked if she could do a profile of Big Rich for the November-December issue, Rich had no idea he’d be portrayed as the “St. Nick of Market Street.”

talk-story-pawn-shop-richard-dan

Emily riffed off the fact that Saint Nicholas is the patron of pawnbrokers (and sailors). She didn’t tell  Big Rich, however, about St. Nick’s other characteristic: Throwing bags of gold through the windows of poor fathers so they could provide doweries for their marriageable daughters.

Rich likes being St. Nick but he is not planning on throwing bags of gold through anybody’s window.

Nationally, 80 percent of pawnshop clientele reclaim their collateral on time. Dan’s average is 93 percent. “People pawn items they have an attachment to. They prefer to redeem them.” Dan makes it easy to do so. A wall filled with testimonials backs up his claim that “I hear ‘God bless you’ all the time.”

(Photo by Sue Hudelson, courtesy of Maui No Ka Oi magazine)

Pawn shop busts ring thieves

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From New Mexico, a story about how an alert pawnbroker used a tip from a savvy theft victim to catch two thieves.

Reason to celebrate

Reason to celebrate

It started when a woman advertised on Craigslist that she wanted to sell her wedding ring for $6,000.

OK, not too savvy to start with. At our Maui pawn shop, we cringe when we see ads that, in effect, tell bad guys: “I have something valuable, come on over and take it from me.” There was a notorious Florida case where  Craigslist seller with a boat was lured to a secluded location and murdered. In the New Mexico case, the woman was not hurt. When she handed the ring to the robbers, they ran.

But at least she had a digital file photograph of her ring, and she was smart enough to email it to every pawn shop in town.

On Maui, she could have used Kamaaina Loan’s mystolengoods.com to post her loss, not only to us, but for the police to see. (The New Mexico story does not say, but the woman should also have reported her loss to local police. Probably she did.)

Then she got lucky. The robbers brought the ring to a pawn shop, and it was distinctive enough that the pawnbroker recognized it. He did not offer to buy it, but he did get a license plate number as they drove off and reported that to the woman. She called the police and arrests follow.

She was lucky in more ways than one. First, she wasn’t injured in the robbery. Second, the robbers went to a pawn shop and not to a flea market or other unlicensed outlet. Third, the robbers didn’t try to fence the ring on  the Internet.

Despite common belief, pawn shops are not an easy place to fence stolen property. They are probably the most dangerous.

First, pawnbrokers are trained to spot suspicious characters. Second, many (though not all) have computer systems that help organize information about stolen goods. Third, if the pawnbroker is unwary enough to take in the stolen property, he also takes in picture ID, address, thumbprint, usually a telephone number: Everything needed to make it easy to trace the miscreant.

It’s a good idea to keep records of your valuable property: serial numbers, photos, receipts. And back them up on a disc or external drive in case the valuable property that’s stolen is your computer.

 

 

Does Macy’s tell Gimbel’s?

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We don’t know. But according to The New York Times, EZ Pawn does tell Tiffany’s.

It’s been a rough few weeks for Tiffany’s. First a vice president was charged with stealing over a million dollars worth of jewelry. Next a customer wearing a riding cap (whatever that is) grabs nearly $100,000 worth of jewelry from a clerk and runs out.

The store got his picture on surveillance camera but, so far, not him.

EZ Pawn, well known in New York because it has lots of ads in the subways, offers advice to Tiffany’s (which has been in business since 1837 and you’d think wouldn’t need it) on how not to get robbed.

One thing that the Tiffany clerk did that even rookies are taught not to do is to take out two items for inspection at the same time. It’s tedious, sometimes, but most jewelers put one piece back before taking out another.

For 9,999 out of 10,000 customers, it’s an irritation. For that 10,000th one, who’s looking to grab and run, it’s a wise precaution. Maui readers may recall the crook who grabbed a $65,000 Rolex and ran from a Wailea jeweler a few years ago.

He didn’t get away  but he did create plenty pilikia.

At our Maui pawn shop, we follow most of the tried-and-true precautions that EZ Pawn recommended to Tiffany’s. But one we don’t:

Ms. Simon said that when a customer entered, she looked at his shoes. If they are tightly laced, that is a sign of trouble: “They’re a runner,” she said. It was pointed out to her that a couple of customers were, at that moment, wearing tightly laced shoes and seemed innocent enough. She shrugged.

Most of our customers wear slippers.IMG_1041

More ‘Pawn Stars’ soap opera

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According to Fox News, “Pawn Stars” dumped Oliva Black because she was formerly a model at the Suicide Girls nude website.

Apparently, she still works at the pawn shop.

We are pretty sure Big Rich has never modeled for Suicide Girls.

When we auditioned for a reality TV show for Kamaaina Loan, we asked the

staff to sign model releases, but nude modeling was not on our minds.