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

cnbc.com

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

#231

Post by Balero »

dougmwne wrote: post #168
blackoil wrote: post #143

Earlier quoted context omitted.

China has a gross savings rate of 45-50%. Current gen has saved for their future.

Money is an abstract representation of the labor of others. If there’s no one to labor for you then your currency is just paper.

I agree in theory with you. But you can 'bank' labour for later on. Building infrastructure (that will last) when you have a population bulge, means that the generations after can take advantage of that infrastructure, and have to do the lower amount of work, of maintaining it. This can go for things like education, investing in businesses, and generally any capital.

Of course you can also over build this capital that will never be used, but will need to be paid back (for example a local government pays to build a town that there are no people to fill it with) and the maintenance is too much, but you still have to look after the people who did the building.

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

#232

Post by vulcan01 »

newsclues wrote: post #223
lotsofpulp wrote: post #169

Earlier quoted context omitted.

Because the people who lent money to Evergrande did so on condition that the deal was subject to the US’, and specifically New York’s, courts. Presumably because they trusted New York courts more than China’s courts in the event of a conflict.

I don't understand why NY Courts would provide this service to China. Do they get paid for it?

I don't know if they get paid for it, but it is apparently NY law.

https://www.lexology.com/library/detail.aspx?g=e36cde01-e97b...

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

#233

Post by onlyrealcuzzo »

AnthonyMouse wrote: post #29
ipnon wrote: post #5

There are many real estate giants and so-called "trust" companies who are incapable of repaying debt right now. Some of these companies have trillions in RMB on their balance sheets. The central bank can bail them out but at the expense of the assets of the middle and lower class. This would only further incentivize cash hoarding, and tighten the middle income trap. It is not an enviable situation.

Are they actually underwater or do they just have higher loan payments than rental income? If it's the latter, let them sell some properties or transfer them to the bank in lieu of loan payments.

They are massively underwater.

They have hundreds of thousands of unfinished apartments, and no money to finish them.

And even if they could, no one wants to buy the unsold apartments.

The average person in China owns more housing than the average person in the US or the EU.

This, with house prices being roughly equal but incomes being 1/6th on average, and there being about ~2.5B unfinished sqft of space (~2 sqft per person), and a rapidly shrinking population.

You do the math. Houses have been in a massive bubble in China for a long time, on nearly the same level as the Japanese bubble.

Who knows if it's finally going to pop. But the writing definitely seems on the wall now.

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

#234

Post by ethbr1 »

vkou wrote: post #165
anovikov wrote: post #155

Earlier quoted context omitted.

Still, you need money to control the army and keep it interested. Then there comes a choice of either being unable to do it because of not raising enough cash from society to make a sufficiently big army to keep population in check, being able to have better income they can have in civilian life; or doing it and ruining the competitiveness of the overall economy - like the good old Soviet Union. Now, in the post-indu…

> Still, you need money to control the army and keep it interested. Making payroll is never an issue for a sovereign that controls a central bank that controls their own currency. You're completely missing the point, because you're thinking in terms of money. A country isn't a business, or a household, it doesn't budget in the way you think. > Money is the force of reason, ignoring it comes at one's own peril regardl…

For counterexamples of the primacy of money, see also: North Korea, Iran, Russia, Pakistan.

You have to have bases of power, who are compensated and secured.

It's less stable, but doable with the right mix of alternatives, to ignore "the people" as one of those bases of power.

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

#235

Post by onlyrealcuzzo »

throwaway2990 wrote: post #201
jacquesm wrote: post #187

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 & c…

The people are the ones who suffer. Not the banks. Evergrande sold homes that didn’t exist. People got loans from banks to buy those homes. Citizens in China can’t file for bankruptcy. So even if they never get a home. They are in debt for life. This is what you get living under the rule of the CCP.

People associated with Evergrande are very screwed.

Yes, the people who bought unfinished homes are screwed, too, and there's more of them.

But the whole entire country is screwed when their housing bubble pops.

This happened just 15 years ago with 2008 in the US. China and the CCP aren't particularly extraordinary. And they definitely didn't invent incompetence and greed...

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

#236

Post by onlyrealcuzzo »

ironborn123 wrote: post #217

How can a declining population selling mostly commoditized goods support ever increasing property prices, that too when property is already overleveraged!! This crash was always on the cards. Just a matter of when, and the when may have finally arrived.

> How can a declining population selling mostly commoditized goods support ever increasing property prices

It's pretty simple.

If you believed China was going to keep growing at 10% per year indefinitely - then the property prices were a bargain.

I think you needed to be mathematically challenged to believe that, but a lot of people did, or at least thought everyone else just assumed it would happen and they could get in and out before anything bad happened.

You also have to realize it wasn't foreign investment, and the Chinese are astoundingly nationalistic.

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

#237

Post by ethbr1 »

throwawayqqq11 wrote: post #123
oblio wrote: post #57

Earlier quoted context omitted.

> it was all about keeping asians down and dependent. Probably because of this. The US is allied to several prosperous Asian countries.

The US is chasing hegemonial "interests overseas". Every other country, that tries to develop a sovereign position in too many industrial sectors contradicts that. Thats how the US justify their industrial/political espionage on basically all their "allies".

Japan and South Korea?

Given China's rise and size, US Asian hegemonial interests primarily trend towards making any not-China country in the region as economically strong as possible.

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

#238

Post by hospitalJail »

bigbacaloa wrote: post #190

Thread has far too much analysis premises on notions such as the US economy works the best and everything works like in the US that are simply stupid.

I think long term we are going to find out economics is more religion than science.

What is good for the macro (Spending on consumables during a recession) isnt good for the micro.

Hording assets that hedge fiat currency is good for the micro, but not good for the macro.

CPI/real inflation wasn't averaging 2% for the last 30 years, but probably was like 3-4%. Technology and out sourcing kept CPI looking like it was 2% + some gaming by each administration.

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

#239

Post by onlyrealcuzzo »

txdv wrote: post #141

It's been a long process, 2 years ago people were already talking about Evergrande falling

Psh, I've been talking about Evergrande failing since at least 2016.

This broken clock is gonna be right sooner or later - even if I gotta wait til the heat death of the universe!

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

#240

Post by bohadi »

zpeti wrote: post #49
jimmySixDOF wrote: post #35

Earlier quoted context omitted.

I heard someone on the radio recently speculate that due to the political climate China could prefer and produce a Japanese style decades long unwinding of economic bubbles vs a western style resolution through crisis. Of interest also was the level of Municipal debt and it's stratification between provincial higher default risks and a handful of real high flyers.

Except they will be doing this at a much lower economic situation than Japan. Japan still got to being a first world country, but then busted. China won’t get there.

Don't know where you're from or your experience but you maybe want to update your priors on the meaning term first world, which peaked in usage roughly 1948...

https://books.google.com/ngrams/graph?content=first+world&ye...

The mean and median living some places might surprise you. For example visit HongKong, Singapore, Taipei, Tokyo, or a mainland city this millenium. Or dont'!

First world, it mostly conjures automobile culture and car infrastructure which is nothing special these days but check the world's largest car makers... you would guess Germany Japan or even the USA recently no?

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