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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

#241

Post by seanmcdirmid »

wenyuanyu wrote: post #220

The Chinese government's approach to dealing with failing real-estate companies, including Evergrande, is distinct from typical Western bailouts. In China, the strategy often involves allowing such companies to default in a controlled manner. Given that the major lenders and banks are state-owned , this essentially means that the government bears the loss through these institutions (what else can happen anyway??) . A…

They also trade it in the market, and anyone who tried to raise warning bells early is censored. Andrew Left got banned from trading in HK in 2016 because he said the company was doomed. We’ve known for a long time that Evergrande was in serious trouble, that was 7 years ago, and the Chinese government’s solution was to look for suckers who would listen to them rather than look at the numbers.

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

#242

Post by oreally »

krona wrote: post #225
oreally wrote: post #167

Earlier quoted context omitted.

> For starters there isn't a level playing field. Think about it, who determines what is a 'level playing field'? That's right, the US in this context. Every country has the right to determine it's own policies, and the US shouldn't have any say, and yet is applying pressure for it's own benefits. The same goes when China insists on one-on-one bilateral country negotiations on the issue of the south china sea instead…

The US is still nominally governed by and accountable to the rule of law. Companies cannot use the court system in China to hold the government to account, the government is accountable only to itself. This difference is irreconcilable.

> The US is still nominally governed by and accountable to the rule of law.

You mean the rule of law that it imposes upon others that they didn't agree on? And they'll bring it up only when it's convenient.

I'll say it again: Big countries will be big countries.

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

#243

Post by tigeroil »

nologic01 wrote: post #228

Fears about the Chinese real estate sector have been around for at least a decade. The amount of stuff that has been erected is just mind-boggling and unprecedented in human history. You cannot "rightsize" an exponential process. But a spectacular bust to obliterate all speculative busts is not the deterministic outcome in this instance. The intermingling or state finances, state supported banks etc. is also a major…

Anecdotal but I will say the shift to WFH isn't really a thing in China from what I've seen.

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

#244

Post by anovikov »

ethbr1 wrote: post #234
vkou wrote: post #165

Earlier quoted context omitted.

> 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.

Idk how you can include any of those but North Korea in the list (North Korea only exists because China secures it). Russia at least, is a good example of the opposite: give people chance to earn and invest money and enrich themselves and they will give no shit about even the most ridiculous things government does.

Soviet Union has collapsed while having whole lot more economic power and raw output of just about every industry, and was much more up to date technologically, but it deprived people of their basic instinct: to save and invest money and grow rich. Today's Russia allows and encourages that. Moreover, it even allows people say, to blatantly ignore taxes on all levels (i know people who make millions bucks per year in Russia and they don't know what tax number is, receiving and spending money through the banks in the open - and banks even help then when they need to make that money look legit abroad). As long as you don't try to oppose the great Pu or mess with politics overall, the regime has nothing against people enriching themselves - so the support base is rock solid and need for violence to maintain internal order is next to nonexistent.

Russia isn't democratic, but it is capitalist in the sense: you can own capital and government wants you to, and sees people who have capital as by default more well-behaved and loyal than those who don't. The sickest shit Putin may say on TV is shrugged by those people as "Pu just wants to make those peasants happy", and they may be even right.

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

#245

Post by swexbe »

worrycue wrote: post #185
BossingAround wrote: post #44

Earlier quoted context omitted.

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?

Bad policy tends to stick around for longer when you don't allow criticism of the ruling elite.

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

#246

Post by misja111 »

bradleyjg wrote: post #230
wenyuanyu wrote: post #220

The Chinese government's approach to dealing with failing real-estate companies, including Evergrande, is distinct from typical Western bailouts. In China, the strategy often involves allowing such companies to default in a controlled manner. Given that the major lenders and banks are state-owned , this essentially means that the government bears the loss through these institutions (what else can happen anyway??) . A…

To address these challenges, the Chinese government has enforced exit bans and placed these individuals under strict supervision. They are often required to return these funds to China, potentially under threat of reduced prison sentences. This sounds not right... but yeah... it is China. And China does not have other means to use like US to extradite fugitives or request the money back even it got all the evidence..…

Exactly, I was about to say the same. I find it a very good idea to hold executives personally accountable for mismanagement. I'm not a great fan of Chinese politics but the rest of the world could learn something from China here. (remember the credit crisis anyone?)

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

#247

Post by NhanH »

benterix wrote: post #183
NhanH wrote: post #173

Earlier quoted context omitted.

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?

It's a different issue than what you are imaging. It's not that they sell the property for less than the relevant land cost, it's that the increase is too steep that they can't buy and build the next one without pre-selling the lot, the company just doesn't have enough cash.

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

#248

Post by slushh »

anonylizard wrote: post #40
whimsicalism wrote: post #25

Earlier quoted context omitted.

Yes, it is not looking good for their outlook. That said, nobody is seriously claiming Chinese youth unemployment at 50% unless you are looking at something like labor force participation rate, which is then a similar number for the US as well.

No, it can actually be 50%. Why do you think that's not serious? Greek youth unemployment was at 60% during their peak debt crisis. China's mega debt tsunami is starting to slam the shores right now. China already tried its hardest to suppress youth unemployment rates. Student councillors in China are given strict KPIs to ensure their students graduate with a job. So obviously they co-operate with shady companies tha…

If they have many university graduates and lack cheap labour, why don't they let those graduates build robots or organize the outsourcing of the labour into countries with cheap labour?

How can there be a surplus of educated people who are unable to organize something profitable?

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

#249

Post by bradleyjg »

nologic01 wrote: post #228

Fears about the Chinese real estate sector have been around for at least a decade. The amount of stuff that has been erected is just mind-boggling and unprecedented in human history. You cannot "rightsize" an exponential process. But a spectacular bust to obliterate all speculative busts is not the deterministic outcome in this instance. The intermingling or state finances, state supported banks etc. is also a major…

The intermingling or state finances, state supported banks etc. is also a major characteristic of the Chinese system. In such a system you can push around and hide issues, redistribute the pain wherever it is politically acceptable and other such "conveniences".

Japan famously has had decades of zombie conglomerates surviving despite insolvency. I don’t think state intermingling is necessary.

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

#250

Post by throwawaylinux »

wenyuanyu wrote: post #220

The Chinese government's approach to dealing with failing real-estate companies, including Evergrande, is distinct from typical Western bailouts. In China, the strategy often involves allowing such companies to default in a controlled manner. Given that the major lenders and banks are state-owned , this essentially means that the government bears the loss through these institutions (what else can happen anyway??) . A…

> They are often required to return these funds to China, potentially under threat of reduced prison sentences. This sounds not right... but yeah... it is China. And China does not have other means to use like US to extradite fugitives or request the money back even it got all the evidence... exit-ban and blackmailing are the only way China can go...

How is this different from western governments? Can the state even blackmail a person? Isn't that just called a deal or leniency for cooperation with prosecutors/regulators? And isn't it fairly routine for people charged with fraud and embezzlement to be prevented from leaving the country, particularly if they are had moved assets to foreign countries?

I'm no communist party apologist, but using tools like surveillance, deals, and travel bans to recover proceeds of white collar crime doesn't seem so wrong to me.

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