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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

#341

Post by AnthonyMouse »

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…

Banks don't actually have as much cash as they have deposits. When you take out a loan they just credit your checking account and debit your mortgage account, which cancels out. When you pay the seller they debit your checking account and credit theirs. The amount of cash they hold hasn't changed.

Whether thing backing the credit to the seller's checking account is a mortgage loan or the deed to the property likewise has no effect on the amount of cash in their vault.

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

#342

Post by fnordpiglet »

geysersam wrote: post #306
fnordpiglet wrote: post #290

Earlier quoted context omitted.

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?

I didn’t say it prevented inflation, I said inflation was mild given the amount of stimulus. IMO this is because as supply of money increased demand did too, and supply was sufficient to meet demand and the economy expanded rather than price inflation.

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

#343

Post by AnthonyMouse »

jncfhnb wrote: post #274
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…

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

That's assuming your sale is the only data they have about the value of your assets. But real estate sales happen all the time.

Now, if everybody is selling every building at a large discount, that's a housing crash, and highly-leveraged real estate companies are toast. But that should only happen if there is a real estate bubble, in which case a market correction is ultimately necessary and the entities that buy at the peak of the market are supposed to lose their shirts.

What you want to do in that case is not to save them. They're done. What you want is to prevent a cascading failure into the rest of the economy.

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

#344

Post by fmajid »

tjpnz wrote: post #75
fmajid wrote: post #67

Earlier quoted context omitted.

Except it’s been loosened after decades, and suddenly the economy tanks? The more likely explanation is Xi’s authoritarianism and crackdown on the private sector. Anyone with a brain in China is trying to get their money and themselves out of the country.

One thing didn't cause the other but it needs to be considered when looking longterm. Its effect will have an impact on the economy for many decades.

Of course, demography is destiny, but the point is the sudden worsening of China's economic outlook did not coincide with tightening of the one-child policy, quite the opposite. The challenge for China is that it got old before it got rich like the European nations or Japan, and this transition will be much harder to navigate.

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

#346

Post by jncfhnb »

AnthonyMouse wrote: post #343
jncfhnb wrote: post #274

Earlier quoted context omitted.

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

That's assuming your sale is the only data they have about the value of your assets. But real estate sales happen all the time. Now, if everybody is selling every building at a large discount, that's a housing crash, and highly-leveraged real estate companies are toast. But that should only happen if there is a real estate bubble, in which case a market correction is ultimately necessary and the entities that buy at…

There is a real estate bubble, and everyone, especially government entities, are deeply invested.

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

#347

Post by ethbr1 »

vkou wrote: post #336
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…

> 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. The Soviet Union pissed half of its economy away into its military, and the other half into its particular brand of waste, inefficiency, and corruption. It had a shortag…

Or as someone wryly observed: most French revolutions started when Paris ran out of bread.

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

#348

Post by keepamovin »

paxys wrote: post #279
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…

I don't mean to burst your bubble, but... this picture of a "house of cards"-economy, with "swindles all the way down", riddled Swiss-cheese-style with corruption, while indeed a Western populist idyll visage of China these days (a sort of Western-denialists wet dream of impending Chinese doom), is inaccurate, and I think, dangerous for folks in the West to believe, if they truly hope to compete with "their biggest strategic adversary."

Surely there is corruption, failure and incompetence, but if it was on the scale that comments like this yearn for, China would look more like Cambodia, or Myanmar, or even Thailand, than China.

The simple truth is China would not have been able to achieve the scale of productivity and growth that it has (and if you doubt the scale, you must travel there in earnest, you will leave mind-expanded, if not fully blown), if it were truly like you merely wish it were. Sorry, but truth ain't always easy to hear.

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

#349

Post by keepamovin »

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…

Your faith in your government is commendable. But doesn't China indeed have ways to rendition fugitives? There have been some legitimate cases, so I don't know what you're talking about when you say it can't do so.

Also, this will probably come across as callous or obtuse, or even deceptive or arrogant, so I'm sorry, but, no offence, yet you do sound a little bit concerned with the present situation, and your optimism, while seemingly bullet-proof does come off a little bit forced. I only mention this because I'm curious if you are want to share more about the zeitgeist there...are people worried? Bullish? Uncertain?

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

#350

Post by BossingAround »

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?

I see you haven't encountered authoritarian regimes very much.
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