China’s property giant Evergrande files for bankruptcy protection in Manhattan • Hacker News Board

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

#301

Post by chasd00 » Fri, Aug 18, 2023, 1:20 PM UTC

thechao wrote: post #260

AnthonyMouse wrote: post #121

Earlier quoted context omitted.

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…

Until people demand their RMB, and all the bank has is piles of building materials…

> Until people demand their RMB

It's China, the authorities will just say "no." and then jail anyone who asks again.

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

#302

Post by geysersam » Fri, Aug 18, 2023, 1:23 PM UTC

brigadier132 wrote: post #291

wenyuanyu wrote: post #266

Earlier quoted context omitted.

To me, the use of exit bans and coercive measures to bring fugitives back to China does not seem unreasonable under specific circumstances. While employing these tactics for political reasons would be problematic, they serve as some of the only tools available to the Chinese government to act against corruption and embezzlement. These measures provide leverage and serve as a deterrent to prevent corrupt officials fro…

So punishing innocent people is justified?

Innocent in what sense? In China it's not always enough to not break a law to be innocent. You might also have to act in the spirit of the law (as interpreted by the CCP) to be sure to not become the target of the justice system.

This is very different from the western system. But I think most people would agree that sometimes complete "rule of law" can also lead to perverse outcomes where very immoral business behaviours go unpunished.

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

#303

Post by anovikov » Fri, Aug 18, 2023, 1:23 PM UTC

ethbr1 wrote: post #251

anovikov wrote: post #244

Earlier quoted context omitted.

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 ever…

Those are all countries in which I'd hazard a free and open election, without a thumb on the scales and voted in by all citizens, would topple their governments. Your description of Russia seems accurate, ~1995 to ~2010. However, policies appear to be changing into tighter, more direct state control of oligarchs, in an effort to ensure civil stability. Additionally, Putin is now 70... which is getting to the age that…

I don't mean oligarchs. I mean everyday men and women. People don't want to be politically active because they know that Putin allows and wants them to acquire wealth (and even has no problem with them exporting that wealth abroad); and they also know that the masses don't want them to be allowed that, and if Putin is out, most probably masses will have it their way.

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

#304

Post by throwawaylinux » Fri, Aug 18, 2023, 1:23 PM UTC

jacquesm wrote: post #256

throwawaylinux wrote: post #250

Earlier quoted context omitted.

> 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…

They also: - execute people https://www.bloomberg.com/news/articles/2021-01-29/china-fin... - blackmail people by targeting the family members of those that have moved abroad aka collective punishment https://www.economist.com/china/2023/02/14/how-chinas-police... - are on the take themselves in a way that makes all of this other stuff look like peanuts I take it that doesn't need a source link. - make people disappe…

> They also:

As I said, I'm not a CCP apologist, I know they do bad things and I wasn't trying to say the west is equivalent. I was purely asking about the things listed (plea / cooperation deals and monitoring and travel restrictions) which by themselves don't sound bad.

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

#305

Post by jacquesm » Fri, Aug 18, 2023, 1:26 PM UTC

throwawaylinux wrote: post #304

jacquesm wrote: post #256

Earlier quoted context omitted.

They also: - execute people https://www.bloomberg.com/news/articles/2021-01-29/china-fin... - blackmail people by targeting the family members of those that have moved abroad aka collective punishment https://www.economist.com/china/2023/02/14/how-chinas-police... - are on the take themselves in a way that makes all of this other stuff look like peanuts I take it that doesn't need a source link. - make people disappe…

> They also: As I said, I'm not a CCP apologist, I know they do bad things and I wasn't trying to say the west is equivalent. I was purely asking about the things listed (plea / cooperation deals and monitoring and travel restrictions) which by themselves don't sound bad.

Sure, but all of these other things are definitely on the menu for execs that end up displeasing their overlords.

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

#306

Post by geysersam » Fri, Aug 18, 2023, 1:35 PM UTC

fnordpiglet wrote: post #290

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…

It’s interesting we hear the terms “bail out” when connected with how the US managed major institutional collapse. However from what I experienced on the street during these “bail outs,” Lehman, Bear, SVB, First Republic no longer exist. Their assets were salvaged and remaining functional assets acquired. The fed, treasury, and other institutions involved in the bailout ended up making handsome profits from the reper…

> There’s a lot of speculation that the relatively mild inflation the US experienced post pandemic was due to all the QE and other moves the government and governmental bodies did, as well as pandemic stimulus.

How would stimulus and QE help prevent inflation? Can you point to someone doing that speculation?

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

#307

Post by tacker2000 » Fri, Aug 18, 2023, 1:35 PM UTC

bartvk wrote: post #216

AnthonyMouse wrote: post #121

Earlier quoted context omitted.

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…

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

Of course. Some banks have their own real estate arms that sell/rent/manage these types of assets

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

#308

Post by toomuchtodo » Fri, Aug 18, 2023, 1:35 PM UTC

_fat_santa wrote: post #297

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…

This video[1] was posted about 6 years ago but I think were starting to see the effects of the bubble they were talking about. In the video they said most new apartments were bought as investments as real estate is seen as one of the only "safe" investments in China. It would be one thing if most of these buildings were occupied by residents and only a percentage was investment properties but it sounds like there wer…

When making a trade, being early is the same as being wrong [1]. You are right, the writing has been on the wall that eventually, the real estate pyramid scheme Chinese wealth is built on was going to crumble (the zeitgeist was that real estate was the path to wealth vs capital markets or other asset classes, and it was until it wasn't). We are only recently within sight of the event horizon, and there are no greater fools [2] left.

[1] https://news.ycombinator.com/item?id=27673627

[2] https://en.wikipedia.org/wiki/Greater_fool_theory

(ADVchina is a great channel btw, highly recommend the content if you're a remote scholar of Chinese macro)

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

#309

Post by mensetmanusman » Fri, Aug 18, 2023, 1:36 PM UTC

Zetobal wrote: post #70

AnthonyMouse wrote: post #29

Earlier quoted context omitted.

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.

The problem they have is that nobody buys their properties...

Hard to rationalize with land rights that expire. You are just playing with government land for a while.

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

#310

Post by throwaway4good » Fri, Aug 18, 2023, 1:37 PM UTC

oblio wrote: post #261

throwaway4good wrote: post #188

Earlier quoted context omitted.

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

I said allies. Those people you tell, in writing, signed by your highest authorities: if your people start dying at the hands of another country, our people will start dying with them. Talk is cheap.

China does not have allies in that manner.