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Real estate giant China Evergrande will be liquidated

nytimes.com

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Re: Real estate giant China Evergrande will be liquidated

#191

Post by resolutebat »

cdf wrote: post #174
yorwba wrote: post #124

Earlier quoted context omitted.

Thanks, I much prefer text over video anyway, and now even people who can't read Chinese can join in on the fun, though Google Translate struggles a bit with the 暴雷 slang https://en.wiktionary.org/wiki/%E6%9A%B4%E9%9B%B7#Verb

I'm an overseas Chinese and can read Chinese but not keeping up with modern slang and 暴雷 means to me what you see in the translation... a thunderbolt?

暴⫽雷 (verb-object)

to default on a large scale; to fail to repay the loan or deposit of many creditors or clients

Re: Real estate giant China Evergrande will be liquidated

#192

Post by nradov »

kube-system wrote: post #125
loeg wrote: post #121

Earlier quoted context omitted.

Yeah but in the west it is based on claim seniority rather than like, hose foreign creditors first.

No, in the US, claims are paid out based on the type of debt, outlined in the Absolute Priority Rule.

Except when it's politically advantageous to change the rules. During the GM bankruptcy and bailout in 2009, President Obama gave his supporters in the UAW a sweetheart deal which allowed them to recover more than the other unsecured creditors. This set a terrible precedent and undermined the rule of law.

Re: Real estate giant China Evergrande will be liquidated

#193

Post by resolutebat »

In the long term, the bursting of China's property bubble is probably good news, affordable housing is in the interest of everybody except property developers.

In the short term, though, this is likely to trigger a domino effect of other property developers defaulting and a lot of pain for everybody who (thought they had) bought property with them. The real tests are whether China will allow the Chinese entity to go bankrupt (and not just the HK one), and what's going to happen to foreign shareholders and ordinary Chinese citizens who trusted these companies with lots of hard-earned money.

One unpredictable ripple effect will also be on the crypto markets: there have been persistent rumors that Tether is heavily invested in Chinese property developers in general and Evergrande in particular.

Re: Real estate giant China Evergrande will be liquidated

#194

Post by resolutebat »

loeg wrote: post #45
littlestymaar wrote: post #42

Earlier quoted context omitted.

Why would someone accept your USDT and give you bitcoin if USDT is de-pegged and worthless?

De-pegged is just any value less than $1. If USDT is 50% collateralized, maybe it is worth $0.50, which is de-pegged but not worthless.

The only stable values of a USD stablecoin are $1 and $0.

Re: Real estate giant China Evergrande will be liquidated

#195

Post by berserk1010 »

doughnutstracks wrote: post #175
berserk1010 wrote: post #49

A couple of things to note: 1.) Why did it take Evergrande 3 years to liquidate? In western countries, liquidation happens in a few months. One should note that Evergrande did not get that big by itself; obviously it had the support of CCP elites to secure huge bank loans. Therefore, when it went bankrupt, the delay was to allow these elites to pull money/liquidable assets out of Evergrande. Thus after 3 years, Everg…

[flagged]

Depends, are you one of those overseas Chinese police that threatens Chinese citizens abroad with their families' life in China unless they cooperate and stay silent on social media?

https://www.bbc.com/news/world-us-canada-65305415

https://www.justice.gov/opa/pr/two-arrested-operating-illega...

Re: Real estate giant China Evergrande will be liquidated

#196

Post by photonbeam »

nradov wrote: post #186
loeg wrote: post #139

Earlier quoted context omitted.

A little bit, maybe, but probably not entirely. The joke is that debt investors have no memory. For example, Argentina has defaulted many times in recent memory but was still able to market a 100-year bond in 2017 (which it has already defaulted on).

This is more a sign that the bond rating process remains broken despite some superficial reforms after the 2008 financial crisis. The major rating agencies gave that Argentine bond a B rating which allows many institutional investors to buy, despite the reality that it's obviously garbage. Then when the next default hits the fund managers can blame their losses on the rating agencies. Nothing changes.

Can anyone start a ratings agency? Or is it special somehow?

Re: Real estate giant China Evergrande will be liquidated

#197

Post by nradov »

photonbeam wrote: post #196
nradov wrote: post #186

Earlier quoted context omitted.

This is more a sign that the bond rating process remains broken despite some superficial reforms after the 2008 financial crisis. The major rating agencies gave that Argentine bond a B rating which allows many institutional investors to buy, despite the reality that it's obviously garbage. Then when the next default hits the fund managers can blame their losses on the rating agencies. Nothing changes.

Can anyone start a ratings agency? Or is it special somehow?

Rating agencies have to comply with the SEC registration rules. There are currently 10, but only 3 dominate the market for large bond issues. In theory anyone could start a new one but in practice it would be difficult. The most recent company to obtain registration was Demotech which did it in 2022 but the company had been around since 1985.

https://www.sec.gov/about/divisions-offices/office-credit-ra...

Re: Real estate giant China Evergrande will be liquidated

#198

Post by yreg »

resolutebat wrote: post #193

In the long term, the bursting of China's property bubble is probably good news, affordable housing is in the interest of everybody except property developers. In the short term, though, this is likely to trigger a domino effect of other property developers defaulting and a lot of pain for everybody who (thought they had) bought property with them. The real tests are whether China will allow the Chinese entity to go…

In the long term, the bursting of Tether is probably…

Re: Real estate giant China Evergrande will be liquidated

#199

Post by 1over137 »

yreg wrote: post #198
resolutebat wrote: post #193

In the long term, the bursting of China's property bubble is probably good news, affordable housing is in the interest of everybody except property developers. In the short term, though, this is likely to trigger a domino effect of other property developers defaulting and a lot of pain for everybody who (thought they had) bought property with them. The real tests are whether China will allow the Chinese entity to go…

In the long term, the bursting of Tether is probably…

and in the short term too!

Re: Real estate giant China Evergrande will be liquidated

#200

Post by photonbeam »

thriftwy wrote: post #135
onlyrealcuzzo wrote: post #86

Earlier quoted context omitted.

The issues were apparent since 2000. The vast majority of Evergrande's outstanding foreign debt is from >2012. BlackRock, HSBC, and UBS poured in about $3B of the $25B in 2021 alone... And, I'm sorry - if you didn't see a risk doing that in 2021 - you're gonna lose all your money sooner or later. In BlackRock's case - it was primarily for 401k-ers for exposure to Chinese bonds. I think the US should've made it illega…

What's wrong with Russian bonds? That land is unlikely to be going away, may contain even more mineral wealth and is climate change resistant.

Not if climate change triggers a new ice age :)

Though I guess that bond prices would be meaningless for most at that point

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