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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

#271

Post by busterarm »

cyanydeez wrote: post #267
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…

Their housing market was a ponzi scheme, in that they took money to build developments, but used that money to market new development. Local authorities got their cuts by rezoning areas. Very little likely escaped the country. It's all in country fraud.

Where do you think those local authorities spent their money? They knew the local housing market was no good. Even the things that did get built were Tofu-dreg projects.

The bought real estate in the US and Canada.

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

#272

Post by jncfhnb »

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…

Evergrande collapsing in slow motion is the limit of pushing things around

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

#273

Post by nradov »

onlyrealcuzzo wrote: post #236
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 ge…

It was more like there was no alternative. Capital controls prevent regular Chinese investors (those without special Party connections) from taking their money out of the country. The domestic stock market is a joke. Banks pay low interest rates. So, the only thing they can do with their money is speculate in residential real estate.

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

#274

Post by jncfhnb »

AnthonyMouse wrote: post #121
lmm wrote: post #78

Earlier quoted context omitted.

Who says those properties are worth their book value? This is how a crash happens these days - distressed asset holders forced into fire sales of the assets themselves, lowering asset values and putting more of the holders into distress.

They don't have to be worth book value to be worth more than the outstanding loan principal. This is also why it can make sense to pay the bank in real estate. The bank doesn't need to sell it immediately because they don't need to pay a mortgage so they can just sit on it and collect rental income until they can find a buyer. Another alternative is for the real estate trust to sell new shares into the market and use…

If you sell one building at a large discount to pay your bills, the market is likely to rapidly devalue the rest of your buildings

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

#275

Post by slv77 »

nradov wrote: post #258
bartvk wrote: post #216

Earlier quoted context omitted.

Does this actually happen? A bank that owns real estate and collects rental income on it?

That happens all the time in the US and other countries. Banks typically try to sell off those repossessed real estate assets fairly quickly because they aren't really in the landlord business, but when there's a supply glut they may have to hold for several years.

US regulators also require banks to move non-performing loans and assets off the balance sheet. Allowing banks to hold them makes the balance sheet murky and hard to determine if the bank is solvent. In the 2008 financial crisis banks sold houses off in blocks of 1,000 at a time to hedge funds.

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

#276

Post by eunos »

worrycue wrote: post #181
eunos wrote: post #156

Earlier quoted context omitted.

> 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?

Pork price is a huge component of Chinese CPI. Also the price reductions were massive, like double digit huge.

https://www.cnbc.com/2023/08/09/china-reports-smaller-than-e...

"A 26% year-on-year drop in pork prices, a staple food in China, contributed to the overall decline in the CPI in July"

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

#277

Post by jncfhnb »

throwaway2037 wrote: post #85
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.

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…

If you have trillions on the balance sheet, then you have trillions in assets, funded by either debt or equity. In this case clearly debt.

It is confusing why you say “use balance this way” because it is a “balance sheet”. You can’t pull the word balance out individually.

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

#278

Post by krona »

oreally wrote: post #242
krona wrote: post #225

Earlier quoted context omitted.

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.

Name a law passed by a foreign government against its own will at the behest of the US.

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

#279

Post by paxys »

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…

You are sharing the official written policy, but the reality on the ground is very different in China. Most business happens under the table. Corruption and bribes are commonplace in every transaction. Books are all fudged to a high degree. Millions of people who put up large deposits and made monthly payments for under construction houses to developers like Evergrande are never getting anything back, and laws aren't going to help them. The central government has a tight grasp on maintaining its control but not much else. That's just how things work in China.

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

#280

Post by jncfhnb »

onlyrealcuzzo wrote: post #239
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!

Evergrande has been failing for a long time with no ambiguity
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