Evergrande teeters on edge of default as $148M payment falls due • Hacker News Board

Re: Evergrande teeters on edge of default as $148M payment falls due

#111

Post by rwmj » Wed, Nov 10, 2021, 7:50 PM UTC

pezzana wrote: post #103

> Shares of developer Fantasia Holdings (1777.HK) plunged 50% on Wednesday after it said there was no guarantee it would be able to meet its other financial obligations following a missed payment of $205.7 million due on Oct. 4. Watch the US bond market closely. Today saw a sharp selloff on the 10-year maturity, a favorite "asset" of foreign governments and companies. When those organizations get into trouble, they s…

Is your theory that the US government will run out of dollars? How do you imagine that will happen - a paper shortage?

Re: Evergrande teeters on edge of default as $148M payment falls due

#112

Post by whimsicalism » Wed, Nov 10, 2021, 7:50 PM UTC

LurkingPenguin wrote: post #41

mmastrac wrote: post #20

How much exposure does the Western world have to this? My guess would be "not much". It'll sting some emerging market investors, but I don't think you'll see a massive knock-on here.

> It'll sting some emerging market investors, but I don't think you'll see a massive knock-on here. China has basically been the single biggest driver of global growth over the past decade. Its highly overleveraged real estate market is a huge threat to its overall economy, and that has plenty of potential to create a massive knock-on. https://www.reuters.com/article/us-economy-global-kemp-colum...

> China has basically been the single biggest driver of global growth over the past decade. Its highly overleveraged real estate market is a huge threat to its overall economy, and that has plenty of potential to create a massive knock-on.

I think what Western observers are missing is that this was an intentional "let fail" in order to prevent this structural weakness from becoming too big of a problem.

China is basically euthanizing this industry because they perceive it as a structural weakness.

Re: Evergrande teeters on edge of default as $148M payment falls due

#113

Post by whimsicalism » Wed, Nov 10, 2021, 7:52 PM UTC

nostromo wrote: post #73

JumpCrisscross wrote: post #23

Earlier quoted context omitted.

> is this still "the next Lehman brothers"? No, and it never was. With Lehman, the banks stopped lending to Lehman and then to everyone else. In China, Beijing can let Evergrande default while compelling lending to peripheral players. Thise players know this. The market knows this. That makes contagion risk de minimis . (For Western central banks, the analogous policy tool is “extraordinary measures,” i.e. committing…

> They’re wilfully deflating the bubble American policymakers ignored in ‘08. The Fed was aware of the real estate bubble and tried to deflate it in 07-08. But it's hard to deflate a bubble gradually without triggering a catastrophic downturn. The Fed played a huge role in triggering the recession. They intended to deflate the housing bubble, but didn't realize it would cause several banks to implode and risk the ent…

They knew it was too hot, but the market failure in the bond rating market hadn't been identified so they were operating off of flawed information.

The real failure of the Fed was being way too tight monetarily after the crisis started though.

Re: Evergrande teeters on edge of default as $148M payment falls due

#114

Post by AlexandrB » Wed, Nov 10, 2021, 7:53 PM UTC

riffraff wrote: post #94

mmastrac wrote: post #20

How much exposure does the Western world have to this? My guess would be "not much". It'll sting some emerging market investors, but I don't think you'll see a massive knock-on here.

I'm personally looking forward to see if tether comes out of this with a hole in their books, due to common suspicion they hold a ton of Chinese commercial paper.

Even if they do, does it matter? Everyone already seems to be ok with Tether lying about the backing of USDT. I don't expect USDT holders to decide to sell based on loss of value in the assets backing USDT. Especially when Tether is so opaque that's it's hard to know what the real impact might be.

Re: Evergrande teeters on edge of default as $148M payment falls due

#115

Post by whimsicalism » Wed, Nov 10, 2021, 7:54 PM UTC

jjoonathan wrote: post #70

WhisperingShiba wrote: post #31

Earlier quoted context omitted.

I think the complicating factor is that the Chinese housing market is where the people of China attempt to have savings. A major housing market panic in China could create a lot of despair and unrest in China.

Which would challenge CCP legitimacy, which would push the CCP to rely on the time tested tactic of blaming someone else and going to war over it. I really, really hope I'm wrong about that.

The CCP has a long way to fall - it is much more popular among its populace than our government is and we aren't seeing substantial armed rebellion here yet.

The dynamic in China is that the central government is overwhelmingly popular and the local governments are more derided.

Re: Evergrande teeters on edge of default as $148M payment falls due

#116

Post by Andrew_nenakhov » Wed, Nov 10, 2021, 7:54 PM UTC

rwmj wrote: post #111

pezzana wrote: post #103

> Shares of developer Fantasia Holdings (1777.HK) plunged 50% on Wednesday after it said there was no guarantee it would be able to meet its other financial obligations following a missed payment of $205.7 million due on Oct. 4. Watch the US bond market closely. Today saw a sharp selloff on the 10-year maturity, a favorite "asset" of foreign governments and companies. When those organizations get into trouble, they s…

Is your theory that the US government will run out of dollars? How do you imagine that will happen - a paper shortage?

Digits overflow would be a more appropriate concern

Re: Evergrande teeters on edge of default as $148M payment falls due

#117

Post by thereddaikon » Wed, Nov 10, 2021, 7:58 PM UTC

There has been talk for years about China's wild construction programs, creating entire cities that nobody lives in. It was obviously unsustainable. Could it be finally falling apart?

Re: Evergrande teeters on edge of default as $148M payment falls due

#118

Post by codyb » Wed, Nov 10, 2021, 8:00 PM UTC

rwmj wrote: post #111

pezzana wrote: post #103

> Shares of developer Fantasia Holdings (1777.HK) plunged 50% on Wednesday after it said there was no guarantee it would be able to meet its other financial obligations following a missed payment of $205.7 million due on Oct. 4. Watch the US bond market closely. Today saw a sharp selloff on the 10-year maturity, a favorite "asset" of foreign governments and companies. When those organizations get into trouble, they s…

Is your theory that the US government will run out of dollars? How do you imagine that will happen - a paper shortage?

The system isn't that simple?

The US Government sells treasuries and bonds to raise dollars. These have to be approved by congress, which is why every so often you'll hear about government shutdowns, because, yes, if for whatever reason, the US Congress doesn't pass a debt ceiling lift, the US Treasury will not have enough money to run things anymore.

Then there's the Federal Reserve, which loans dollars to banks to create liquidity and velocity in the monetary system depending on certain conditions (Primarily inflation and unemployment I believe).

(Presumably there's a fair amount more to it than that as well).

Re: Evergrande teeters on edge of default as $148M payment falls due

#119

Post by whimsicalism » Wed, Nov 10, 2021, 8:01 PM UTC

thereddaikon wrote: post #117

There has been talk for years about China's wild construction programs, creating entire cities that nobody lives in. It was obviously unsustainable. Could it be finally falling apart?

The follow up reporting (not widely circulated in the West) on this was that many of those cities have since been filled up and inhabited.

https://asia.nikkei.com/Spotlight/Society/China-s-largest-gh...

Wade Shepard, author of Ghost Cities of China:

> Today, China’s so-called ghost cities that were so prevalently showcased in 2013 and 2014 (...) have filled up to the point of being functioning, normal cities

I would be really, really skeptical of post-2012 reporting on China. I understand why people are increasingly anti-China (the Uyghur stuff is disgusting) but you really don't get close to a neutral perspective from most of the Western media.

Re: Evergrande teeters on edge of default as $148M payment falls due

#120

Post by emkoemko » Wed, Nov 10, 2021, 8:05 PM UTC

beervirus wrote: post #64

HenryKissinger wrote: post #43

Earlier quoted context omitted.

The U.S. shouldn't protect investors from the free market? That's the free market at work. Investors are not entitled to be paid. All investments carry risk.

Yes, the CCP changing the rules is “the free market.”

free market where if i want to invest into a Chinese company i have to invest into a fake company in the Bahamas? If i want to really invest into China there are crazy rules and in the end they will just take your ip...