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

reuters.com

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

#131

Post by zhdc1 »

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?

I think the OP is saying that you can have a situation where the short term demand for dollars outstrips the supply available at that given time (think in terms of hours or days). This could lead to a sharp but short increase in the value of the dollar, since there's only a limited, albeit extremely large, amount available on the market at any given time.

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

#132

Post by darawk »

whatever1 wrote: post #130
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…

The US can keep issuing dollars for as long as they like. And you will buy these pieces of paper because they are backed by the US Military, the US Air Force and the US Navy.

They can keep issuing them. They will not have the same value, though.

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

#133

Post by whimsicalism »

thereddaikon wrote: post #127
whimsicalism wrote: post #119

Earlier quoted context omitted.

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…

Neither do you get one from China itself. Its hard to tell what is really going on when everyone has an agenda to warp reality.

Totally. I found actually visiting China to be informative.

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

#134

Post by yaacov »

jen729w wrote: post #129
yaacov wrote: post #121

Earlier quoted context omitted.

Are you predicting large scale deflation? That’s the opposite of what we’re seeing now, but if it happens the fed can fix it by just printing money.

I’m far from an expert, but can the US Fed really print more money? Didn’t I hear that something like 30% of the USD in circulation today didn’t exist at the start of 2020? It has to stop somewhere. Doesn’t it? (Genuine question!)

The limiting factor is inflation!

If we get massive deflation from a “dollar short squeeze” (which I don’t actually think is likely but it’s what OP was suggesting) that means we need more inflation, which printing money would produce.

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

#135

Post by polyomino »

jen729w wrote: post #129
yaacov wrote: post #121

Earlier quoted context omitted.

Are you predicting large scale deflation? That’s the opposite of what we’re seeing now, but if it happens the fed can fix it by just printing money.

I’m far from an expert, but can the US Fed really print more money? Didn’t I hear that something like 30% of the USD in circulation today didn’t exist at the start of 2020? It has to stop somewhere. Doesn’t it? (Genuine question!)

Technically it doesn't stop, but they are optimizing a complex system, and want to mitigate negative effects on their measures.

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

#136

Post by HFguy »

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…

Rates went up because of the release of the inflation data. It wasn’t anything to do with what you are mentioning.

Also, while the dynamic you describe is real (1) the mechanics are not similar to an equity short squeeze , not a good analogy and (2) unlikely this type of pressure comes from China. They need to hold/buy treasuries to manage their currency (ie keep it weak). If they don’t, their export competitiveness suffers which is last thing that gov will allow. They have other ways of managing the situation.

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

#137

Post by scoopertrooper »

codyb wrote: post #118
rwmj wrote: post #111

Earlier quoted context omitted.

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…

The real fun begins when the fed starts buying treasuries.

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

#138

Post by [deleted] »

whatever1 wrote: post #130
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…

The US can keep issuing dollars for as long as they like. And you will buy these pieces of paper because they are backed by the US Military, the US Air Force and the US Navy.

[deleted]

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

#139

Post by throwuxiytayq »

paulpauper wrote: post #126
soperj wrote: post #93

Earlier quoted context omitted.

They owe 300 billion. So no they couldn't.

This is doable by a large govt. $300 billion is 1/10 of covid aid and related stimulus. The point is that small, strategic payments can stave off much greater systemic damage, which is what a bailout does.

So what you're saying is, if you had $300 bln, this is what you'd spend it on?

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

#140

Post by baybal2 »

adventured wrote: post #122
baybal2 wrote: post #91

Earlier quoted context omitted.

> Is the financial press just afraid of upsetting China here? BlackRock is the biggest foreign owner of Evergrande bonds. Next there are Vanguard, and a few other equally big Western funds. https://www.reuters.com/business/finance/blackrock-hsbc-amon...

Where does the article say that? It says: "BlackRock, HSBC among largest buyers of Evergrande debt" Those are relatively recent purchases and they were tiny re BlackRock - "BlackRock added 31.3 million notes of Evergrande's debt between January and August 2021, pushing its stake in the company to 1% of the assets in its $1.7 billion Asian High Yield Bond Fund, according to Morningstar." 1% of $1.7 billion, or $17 mil…

Is it important, or the fact that a megafund like BlackRock makes completely hopeless C rated bonds from a very shady market 1% of their fund?

1% of a BlackRock fund is a megaton of money.

Remember, LTCM went down after a few percent sell-off turning into an avalanche.

And yes, this below is very appropriate.

https://blackrockloveschina.com/

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