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China’s property giant Evergrande files for bankruptcy protection in Manhattan

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Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#181

Post by worrycue »

eunos wrote: post #156
jamesaurichs wrote: post #18

Some real estate related news from China: - Country garden, China's second biggest property company after Evergrande, missed a mere 22.5M payments for dollar denominated bonds. It is trying to restructure a $340B debt owned. https://abcnews.go.com/Business/wireStory/chinas-government-... - Li Ka Shing, richest man in Hong Kong, just offered an immediate 30% off on his newest buildings for sale - One of China's bigges…

> China stopped reporting youth unemployment, estimated around 20-50% youth unemployment data is just another toxic data that rarely used before in China and others just like "Total Debt" metrics that only used against China for some reason. > China's economy slipped into deflation Mainly caused by normalizing pork price, last year it went wild due to swine flu.

> Mainly caused by normalizing pork price, last year it went wild due to swine flu.

Seriously? One food can cause the entire economy to slip into deflation?

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#182

Post by lotsofpulp »

vkou wrote: post #147
somenameforme wrote: post #87

Earlier quoted context omitted.

This is a crisis happening everywhere in the developed world. A stable practical fertility rate is 2.1. South Korea has the lowest fertility rate in the world, below 0.8, and there was no government meddling there. The US fertility rate is also plummeting and now down to below 1.7 and heavily biased by income. The birth rate for households earning $200,000 [1] with a near perfect linear relationship for incomes in be…

> Systems of social security, healthcare, and the general economy will just collapse under that sort of pressure. Maybe we could buttress them by all the 4x to 10x productivity gains that automation has brought us. [1] Maybe we could cut back on all the useless, extraneous, low-to-negative ROI shit we're doing. We have options, here, that don't require a population ponzi scheme. (Also, you can't be blaming this situa…

Expectations of comfort are always changing. Humans are a competitive species.

If the expectation for quality of life for the vast majority is living off of 1 income household, then that is an acceptable quality of life. If that expectation for the vast majority changes to quality of life by living off of 2 income households, then a quality of life from a 1 income household is no longer sufficient.

Also, expectations of work itself change. It could be possible that a sufficiently large portion of the population is simply unwilling to change bedpans for a price close to what old people themselves can afford (even if the cost is implicit from getting services from a family member). In this case, it becomes a political issue of how to allocate labor, i.e. who to tax, how much to tax them, and who gets the benefits of government spending.

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#183

Post by benterix »

NhanH wrote: post #173
tremon wrote: post #166

Earlier quoted context omitted.

That sounds suspiciously like a pyramid scheme: the only thing financing the current construction are payments to new construction. How did they get into this situation? By continuously selling under cost, or perhaps by siphoning off profits?

Land price keeps increasing caused this problem. You can just imagine land price to increase 50% YoY (hypothetical number) and you will understand the situation. Basically you can not have enough cash on hand to purchase the next piece of land for your development, but you want to always plan for the next step.

The first time it happens, you can call it a mistake. But second, third? Is int't it obvious that, seeing this trend, you should calculate the risk and factor in the land cost increase when pricing your offer?

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#184

Post by joshuaissac »

drekipus wrote: post #159
adra wrote: post #2

Nice, creates corporation in tax havens to maximize tax dodging, files for bankruptcy in country that can actually put disgruntled debt owners to task. Good ol' capitalism.

* communist country is corrupt, falls apart * Good ol' capitalism strikes again. Real communism has never been tried. Yet again

Which country is falling apart? Or did you mean to write 'communist company' instead?

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#185

Post by worrycue »

BossingAround wrote: post #44
jimbob45 wrote: post #43

Earlier quoted context omitted.

Wow, I thought you were making that up. It’s real. Why not just repeal the child limitations then? No reason to keep them in place if the rate is that low.

If you're talking about the one-child policy, that has been repealed in 2016.

That's kind of late ... Wasn't anyone there keeping an eye on the birthrate?

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#186

Post by worrycue »

irjustin wrote: post #12
csomar wrote: post #8

Earlier quoted context omitted.

The chinese stock market (Shanghai index) has been through lots of boom and busts. It didn't affect western market in the slightest. I'd not expect otherwise. The only difference is that if the Chinese economy tanks hard (great depression style), this might be contagious to the rest of Asia and eventually to the rest of the world. But any guess is good if that happens.

Agreed a crash in China would have fallout but not 08/09. The Chinese housing market was fueled by the familial need to own a house. Which led people to lead no matter what people would buy property, basically "stocks always go up"... "housing always goes up"... We can never run out of buyers!

> The Chinese housing market was fueled by the familial need to own a house.

And as a store of value I believe since they have nowhere else to invest their savings.

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#187

Post by jacquesm »

This isn't necessarily super bad in its own right even though it is a very large company and it signals that some of China's big developers are under water. The question is whether it is a harbinger or the whole of it. If the former there will be a domino effect just like what happened in 2008, but hopefully more limited to China. I imagine that 'heads will roll' is more than just a figurative expression here, Xi & co will do everything they can to lay the blame with others even though this clearly happened on their watch and is a failure of oversight as much as incompetence at Evergrande.

China real estate is a subject you could write several books on (and it probably has been done) it is a series of houses of cards that are all precariously balanced against each other and that is why the fall-out from this could be substantial.

It will be an interesting number of weeks, the larger questions that will determine some of the outcome are:

Who holds the debt?

Which other companies are overextended in the same way?

What will Xi & co do to deflect blame?

Are the assets valued fairly or are the worth much less in a sale than their book value? (the bigger the discrepancy the larger the effect will be, for a giant of this size to fall over would have to result in a significant effect on the market)

This could be everything between 'meh' and 'there goes the house' and I have no idea how you'd get to reliable information from inside China to get those questions answered.

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#188

Post by throwaway4good »

oblio wrote: post #150
berdario wrote: post #84

Earlier quoted context omitted.

Yes, prosperous. But as prosperous as the US? And being prosperous doesn't mean not being dependent. Japan agreed to the Plaza accords https://youtu.be/pU_yyadYgG8 Other Asian countries probably are going to be careful before signing up for something equivalent.

Is the US supposed to make these countries as prosperous as itself? Please do list all the prosperous Chinese or Russian allies. I'll wait.

Many have gotten rich of the Chinese boom - from Singapore to Australia - from Apple to Tesla.

Re: China’s property giant Evergrande files for bankruptcy protection in Manhattan

#189

Post by [deleted] »

hurril wrote: post #95
throwaway2037 wrote: post #85

Earlier quoted context omitted.

Some of these companies have trillions in RMB on their balance sheets. I don't understand this sentence. It is nonsensical to use balance in this way. You wrote "trillions in RMB". Let's assume (your hand-wavy use of the term) balance sheet means: outstanding debt. Further, each 1T RMB is 137B USD. How many companies in the whole world carry more than this much debt? Let alone Chine property developers? Wildly overst…

Moral hazard and inflation. If I know that I will be bailed out with a certain probability, then my actual cost of capital is much lower (since I am not expected to pay the entire volume of interest.) For instance: why not make the investors whole again instead by giving them the "printed money" instead of going through the middle-man of propping up these failed giants?

[deleted]
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