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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

#381

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…

> Tax payers” paid nothing, and benefited from the recovery from the disorderly Lehman collapse and the credit squeeze that caused. 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 This is completely wrong and naive, please let us know what agency you work for.…

https://www.usinflationcalculator.com/inflation/historical-i...

Let me be clear - the “bailouts” didn’t cost anything. They were never done with tax payer dollars, except for TARP, which was repaid in full plus interest.

> On December 19, 2014, the U.S. Treasury sold its remaining holdings of Ally Financial, essentially ending the program. Through the Treasury, the US Government actually booked $15.3 billion in profit, as it earned $441.7 billion on the $426.4 billion invested.[2][3]

https://en.m.wikipedia.org/wiki/Troubled_Asset_Relief_Progra...

Quantitative easing and other long term asset related balance sheet transfers materially reperformed as the assets were acquired during a stressed credit period and as credit improved the long term asset values increased, causing internal growth of the balance sheet value at the fed.

Additionally, the additional money supply contributed modestly towards inflation, but overall relieved enormous market pressures and allowed the economy to stay on stable footing:

> Several studies published in the aftermath of the crisis found that quantitative easing in the US has effectively contributed to lower long term interest rates on a variety of securities as well as lower credit risk. This boosted GDP growth and modestly increased inflation.[94][95][96][97][98][99]

https://en.m.wikipedia.org/wiki/Quantitative_easing

To answer your question, I don’t work anywhere right now as I’m taking a break between gigs. But I did used to be a fairly senior person at the mega banks and was a senior person in securities trading during the financial crisis and navigated my bank through it successfully (albeit we were never distressed, but all banks were treated as distressed to prevent further runs). I have no skin in any of these things though, but am always surprised by the populist hot takes from folks so far removed from the system and what actually transpired in real reality that I often wonder how wildly diverged most folks view of reality is from the actual history that I literally saw unfold around me.

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

#382
post #278

Earlier quoted context omitted.

> 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.

Switzerland, Bahamas and back secrecy laws.

Not just a law but a constitution

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

#383
post #377

Earlier quoted context omitted.

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.

The story that somehow the Chinese government tried to censor somebody in Hong Kong (pre-2019) for saying a non-state-owned-enterprise was doomed didn't seem quite right. So I looked it up. https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-ann... It looks like this Andrew Left claimed Evergrande was insolvent in *2012*. This seems more specific than "the company was doomed". I suspect the claims in 2012 was at…

Evergrande has been insolvent for a long time. The government kept patching it up, but anyone could tell just by looking at the data.

So you know, if the numbers say your debt is waaaaaay over your asset (they’ve been leveraged since 2008 or so, most Chinese real estate companies, just that Evergrande was exceptionally so), but the government keeps you alive for 10 years anyways, is the trader wrong or you know, the government.

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

#384
post #380

Earlier quoted context omitted.

That’s because it is. China lacks a safe financial system that the ordinary person can invest in, the way that an American can park funds in an index fund and expect a reasonable rate of return. (The Shanghai and Hong Kong indices are not as healthy as the general economy.) It also lacks generous pension schemes like those in Europe. So part of the reason this is so bad is because most Chinese citizens put their nest…

If you think the S&P500 and NASDAQ in recent years merely gives a "reasonable rate of return" you'll realize that there really aren't any other economies with a "safe financial system". Most markets don't have that level of growth. The Chinese predisposition to invest in real property is much more cultural (and irrational) than what you suggest. The Chinese stock market is actually much more rational in this regard a…

I don't disagree with any of that. Most of the other developed countries though have some kind of government or corporate (in the case of Japan) safety net that China lacks. The only example that I'm aware of that lacks either is South Korea, which has extremely high elder poverty rates compared to OECD peers.

I guess the word I was looking for to describe the Chinese financial system is 'immature.' It is unfortunately not uncommon for some Chinese firm to get delisted for accounting fraud or some other type of impropriety, so investing in the indexes is a worse idea than it is in many other countries. And then there's all the marketing of dubious financial products that people inevitably lose their savings on and protest; before people swarming the Evergrande HQ demanding their money it was P2P lending and many other scams.

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

#385
post #377

Earlier quoted context omitted.

The story that somehow the Chinese government tried to censor somebody in Hong Kong (pre-2019) for saying a non-state-owned-enterprise was doomed didn't seem quite right. So I looked it up. https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-ann... It looks like this Andrew Left claimed Evergrande was insolvent in *2012*. This seems more specific than "the company was doomed". I suspect the claims in 2012 was at…

Evergrande has been insolvent for a long time. The government kept patching it up, but anyone could tell just by looking at the data. So you know, if the numbers say your debt is waaaaaay over your asset (they’ve been leveraged since 2008 or so, most Chinese real estate companies, just that Evergrande was exceptionally so), but the government keeps you alive for 10 years anyways, is the trader wrong or you know, the…

Also, the reason the HK court gave for its judgement is not that Andrew Left lied or was touting fake numbers or anything like that, but the literal judgement is that “He had the right data but didn’t understand how the Chinese market was different from the West.”

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

#386

Earlier quoted context omitted.

> Remember, just a few decades, when somehow, a single working adult could comfortably provide for a whole family? Why can't he, anymore? What has changed? We are more productive per worker, we have more workers participating in the economy, but somehow, you think we can't provide for everyone. In Thomas Piketty's Capital in the 21st Century , he argues that the period you're talking about is an anomaly historically…

How does he respond to the 1971 [1] argument? That whole page is alluding to the ending of the Bretton Woods system. Until 1971 the USD was directly convertible to gold at a fixed rate. This was supposed to prevent bad economic behavior because if we weakened the dollar too much (by e.g. 'printing' money), then people/countries could 'bankrupt' the US by converting all their USD to gold. Of course we [shockingly] did…

One current presidential hopeful has a policy position of undoing that, by having the dollar become a stable unit of measurement against real commodities. It's an interesting idea, and perhaps one more realistic than going back to the gold standard.

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

#387

Earlier quoted context omitted.

How does he respond to the 1971 [1] argument? That whole page is alluding to the ending of the Bretton Woods system. Until 1971 the USD was directly convertible to gold at a fixed rate. This was supposed to prevent bad economic behavior because if we weakened the dollar too much (by e.g. 'printing' money), then people/countries could 'bankrupt' the US by converting all their USD to gold. Of course we [shockingly] did…

One current presidential hopeful has a policy position of undoing that, by having the dollar become a stable unit of measurement against real commodities. It's an interesting idea, and perhaps one more realistic than going back to the gold standard.

I don't entirely understand the difference? As the USD has no inherent value, if you stabilize it against a measurement of various commodities you end up with the same thing where 1 'unit' of commodity groups = $x USD. Perhaps it's that the volume of commodities expands more regularly, so eases expansion of the monetary base more than e.g. gold where there is limited supply expansion?

[1] - https://fred.stlouisfed.org/series/A091RC1Q027SBEA

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

#388

Earlier quoted context omitted.

Evergrande has been insolvent for a long time. The government kept patching it up, but anyone could tell just by looking at the data. So you know, if the numbers say your debt is waaaaaay over your asset (they’ve been leveraged since 2008 or so, most Chinese real estate companies, just that Evergrande was exceptionally so), but the government keeps you alive for 10 years anyways, is the trader wrong or you know, the…

Also, the reason the HK court gave for its judgement is not that Andrew Left lied or was touting fake numbers or anything like that, but the literal judgement is that “He had the right data but didn’t understand how the Chinese market was different from the West.”

I'm reading the raw report - https://www.mmt.gov.hk/files/Evergrande_Report.pdf

It looks like Left's concerns were largely legitimate, but he wasn't familiar enough with the standard accounting and industry practices that the authorities were able to nitpick details he got wrong, and he probably used a bit of hyperbolic tone to describe the real concerns about the Chinese property market.

The problems with the Chinese property market isn't "accounting fraud" as alleged because everybody is doing it in the open, I guess.

I think Left's main "fault" was that he shorted the stock, triggered a small panic, and profited from the deal. I mean, that's market manipulation unless the allegations are true, and it really is unfortunate that when it comes to truth, it's more like "what I said might be technically wrong, but I'm telling the truth!"

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

#389

Earlier quoted context omitted.

> Tax payers” paid nothing, and benefited from the recovery from the disorderly Lehman collapse and the credit squeeze that caused. 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 This is completely wrong and naive, please let us know what agency you work for.…

https://www.usinflationcalculator.com/inflation/historical-i... Let me be clear - the “bailouts” didn’t cost anything. They were never done with tax payer dollars, except for TARP, which was repaid in full plus interest. > On December 19, 2014, the U.S. Treasury sold its remaining holdings of Ally Financial, essentially ending the program. Through the Treasury, the US Government actually booked $15.3 billion in profi…

Oh I could tell you work in finance, that was obvious from the language usage and technical terminology.

I'm not going to write an essay to refute this, we shouldn't have to as the results are obvious, aka how's that Big Mac index doing on the 10y.

Do you know who Henry Duncan was, what his value prop was, and how/why it died?

The end game was inevitable, and very senior people were ignored in the 80s when the flaws where pointed out.

What you have stated here, I would argue it is the perception people have of what transpired, you saved the banks but are you really saying there was no cost, and if so where did the value generation come from and at who's expense?

We are talking about different points of view, and I do realize what I'm saying can be viewed as a critique of your value, and many more like you, however I'm not.

I understand, and agree with you, that like yourself many many people have been doing amazing work to keep the financial networks flowing.

The critique is with erosion of purchasing power of our store of value, the average person is not a wall street guy and didn't understand that Henry's value prop died in 1971 and how to store value completely changed.

| but am always surprised by the populist hot takes from folks so far removed from the system

Why are you surprised, serious question. The system isn't straight forward and there are elements that are just straight up dishonest, and unless you work in the industry you won't really understand all these things.

I would argue that the networks are designed this way now, versus how they used to work and this is where people's understanding of how it's supposed work, and the disconnect you see, derives from.

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

#390

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…

China do have CIA-Gestapo-like agents operating abroad to kidnap those individuals. It is way more effective than the one used by Mossad or CIA. What we have heard of infamous Putin polonium was pale in comparisons to Chinese agents network. The closest to the strength and execution of these operations would be how NK dispensed the brother in Malaysia. CIA or FSB-KGB or Mossad cannot match how clean the ops carried out. Till today, vast majority still think it was done purely by NK and couldnt even pin down a single NK agent. While routinely, we get to know who did what on CiA/KGB/Mossad ops.
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