Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Evergrande shares plunge as much as 87% as trading resumes after 17 months

cnbc.com

Post reply on HN
Print view View original

121–130 of 196 posts

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#121

Post by MrsPeaches »

ww520 wrote: post #104
dilippkumar wrote: post #61

As a lay person, it has been extremely difficult to figure out what is going on. I have a weak grasp on four points(with low confidence on any of them being completely accurate): 1. There is an excess supply of apartments including the ones that have already been sold. The demand side is mostly people buying second and third units as investments. 2. China is going through a weird demographic situation. The younger ge…

The problem started long time ago when the central government took most of the tax revenue from the local provincial and city governments leaving them without funding to operate. As a compensation, they were granted the authority to sell the land use right of their lands. Land is never privately owned in China. What is sold is the right to use the land for a period of time. Since the state owned all the lands and the…

Greatly appreciate your detailed post. Very interesting!

Could I kindly request that you update your post with references?

This sounds very plausible, but it's difficult to acertain the veraciy of the claims.

Even if the references are anectodal, or based on your experience, it would be really helpful to know where this knolwege is coming from.

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#122

Post by slushh »

csomar wrote: post #119
slushh wrote: post #70

Earlier quoted context omitted.

Would it be worthwhile to create the insights? E.g. if there were a global registry of credit dependencies and ownership, at least for system relevant companies, we should know what is going to happen. But what is the worst that could happen? If companies fold, ownership will be transferred. As long as the companies are profitable, their business will continue.

That will mean companies won't have any privacy at all (all info will need to be public) and essentially centralize them into a single "massive" world company. It didn't work back then (it's similar to communism in that sense) and I don't think it'll work now (it's every bureaucrat wet dream).

How does public knowledge centralize the control of the companies? Owners would still be in control and there still would be laws prohibiting collusion between companies.

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#123

Post by TheOtherHobbes »

ww520 wrote: post #104
dilippkumar wrote: post #61

As a lay person, it has been extremely difficult to figure out what is going on. I have a weak grasp on four points(with low confidence on any of them being completely accurate): 1. There is an excess supply of apartments including the ones that have already been sold. The demand side is mostly people buying second and third units as investments. 2. China is going through a weird demographic situation. The younger ge…

The problem started long time ago when the central government took most of the tax revenue from the local provincial and city governments leaving them without funding to operate. As a compensation, they were granted the authority to sell the land use right of their lands. Land is never privately owned in China. What is sold is the right to use the land for a period of time. Since the state owned all the lands and the…

The end game is a political crisis. Chinese peopple tolerated the semi-dictatorship of the CCP while the economy appeared to be booming. If the economy collapses there's going to be a very unpleasant - likely violent - crisis of legitimacy.

It's one reason China is pushing a BRICs currency. If China can print its way out of this disaster there's some hope of mitigation - messy, but not fatal.

If that doesn't happen there's a good chance of a financial and political implosion, with possible Western contagion.

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#124

Post by throwawaymaths »

dilippkumar wrote: post #61

As a lay person, it has been extremely difficult to figure out what is going on. I have a weak grasp on four points(with low confidence on any of them being completely accurate): 1. There is an excess supply of apartments including the ones that have already been sold. The demand side is mostly people buying second and third units as investments. 2. China is going through a weird demographic situation. The younger ge…

Aside from 2) Is it not basically the same as the US mortgage crisis, except a bigger magnitude? That it could get worse shouldn't be surprising since China doesn't exactly promote liquidity of information.

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#125

Post by rightbyte »

landemva wrote: post #97
itronitron wrote: post #89

Earlier quoted context omitted.

Worst that can happen? If banks have used peoples' savings to purchase Evergrande debt or anything related then the banks may not get repaid which would result in the banks losing peoples' money leading to people spending less money resulting in a recession or depression.

Instead of default the bad debt and a recession, what alternative is there? Prop it up a little longer? Default on everything, go to CBDC, and issue everyone monthly CBDC tokens to buy food?

I guess you could forgive the loans people took for houses that were not built and let the bond holders share the hit.

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#126

Post by throwawaymaths »

irjustin wrote: post #103
dilippkumar wrote: post #61

As a lay person, it has been extremely difficult to figure out what is going on. I have a weak grasp on four points(with low confidence on any of them being completely accurate): 1. There is an excess supply of apartments including the ones that have already been sold. The demand side is mostly people buying second and third units as investments. 2. China is going through a weird demographic situation. The younger ge…

> Thing is, all four of these can not possibly be right. It’s a little too insane. Whoever is on the other side of all those mortgages should have abandoned ship a long time ago otherwise. Why can't all 4 of these be right? "A little too insane" defines every bubble in hindsight. Point to a bubble w/ a collapse and I'll give you a set of statements that are "a little too insane" such that fundamentals don't hold up.…

I think it's too simplistic to blame it on greed. It's other things like, "I can't get married if I don't have a home to my name", or, "we want to have an investment to take care of ourselves in old age and there is literally nothing else we can out our money into"

On the policy side, it's very much "property taxes are the only way local government can secure revenue and so we must do whatever we can to keep the bubble inflated"

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#127

Post by rcme »

throwawaymaths wrote: post #124
dilippkumar wrote: post #61

As a lay person, it has been extremely difficult to figure out what is going on. I have a weak grasp on four points(with low confidence on any of them being completely accurate): 1. There is an excess supply of apartments including the ones that have already been sold. The demand side is mostly people buying second and third units as investments. 2. China is going through a weird demographic situation. The younger ge…

Aside from 2) Is it not basically the same as the US mortgage crisis, except a bigger magnitude? That it could get worse shouldn't be surprising since China doesn't exactly promote liquidity of information.

The U.S. mortgage crisis was really more of a rating issue than anything else. Risky assets were rated as having extremely little risk.

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#128

Post by 2OEH8eoCRo0 »

dvh wrote: post #49

Can someone explain to me why is this problem? The houses that they've built are still standing, people can still live in them, what's the problem?

If they were built, then where did the money to build them come from?

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#129

Post by irjustin »

throwawaymaths wrote: post #126
irjustin wrote: post #103

Earlier quoted context omitted.

> Thing is, all four of these can not possibly be right. It’s a little too insane. Whoever is on the other side of all those mortgages should have abandoned ship a long time ago otherwise. Why can't all 4 of these be right? "A little too insane" defines every bubble in hindsight. Point to a bubble w/ a collapse and I'll give you a set of statements that are "a little too insane" such that fundamentals don't hold up.…

I think it's too simplistic to blame it on greed. It's other things like, "I can't get married if I don't have a home to my name", or, "we want to have an investment to take care of ourselves in old age and there is literally nothing else we can out our money into" On the policy side, it's very much "property taxes are the only way local government can secure revenue and so we must do whatever we can to keep the bubb…

Sorry, with greed i was referring to those who sell the houses.

In 08, greed was the real estate agents and loan officers who gave loans to people who should never have had them when it was clear they couldn't afford it long run.

The home buyers many times just wanted a house but also wanted "more home" to maximize and was able to obtain a larger loan because the greed went all the way down.

first time trickle down economy works?

Re: Evergrande shares plunge as much as 87% as trading resumes after 17 months

#130

Post by namaria »

barkingcat wrote: post #81
dilippkumar wrote: post #61

As a lay person, it has been extremely difficult to figure out what is going on. I have a weak grasp on four points(with low confidence on any of them being completely accurate): 1. There is an excess supply of apartments including the ones that have already been sold. The demand side is mostly people buying second and third units as investments. 2. China is going through a weird demographic situation. The younger ge…

These questions indicate a misunderstanding of how markets inside China work. I suggest you don't look at "what makes sense" but more look at the reality of what's happening. What you are also missing is that sometimes, parties are not allowed to abandon ship. Couples who have bought homes with mortgages but are not moved in for years are not allowed to give up, they are not allowed to stop paying on threat of impris…

An autocratic government running a fiat currency economy is a dangerous thing. On the one hand they can engineer the economy quite deeply. On the other hand, the imbalances are hidden and thus likely to be worse then they would ever be in a liberal democracy. But China has many centuries of track record running a command economy.
Post reply on HN