141–150 of 196 posts
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that is not how bankruptcy works. it does not mean everything zero. it is process of paying creditors. what is left is paid to shareholders.
Right. But assets < liabilities means that “what is left” is nothing.
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> What's the worst that can happen? The Great Depression, the Great Recession. > Why should the government and the non-investors pay for government agencies that enforce regulations? Apart from them being ostensibly a communist nation, it's good for business. Everyone's business. This is also why Greece got a lot of help from Germany and the IMF about 10-15 years back. > If investors cannot handle due diligence, let…
>> What's the worst that can happen? > The Great Depression, the Great Recession. If China descends into chaos, it could be alot worse than the Great depression, since so much of the world depends on China, and since they have a crazy arsenal of weapons.
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Evergrande sells apartments before they are built to fund construction, and the purchasers pay mortgages during the build. If the company has insufficient funds to complete ongoing construction, which gets delayed, purchasers stop paying their mortgages and the company goes into a death spiral. Meanwhile purchasers get shafted, buildings stand uncompleted, and construction workers and materials suppliers see demand c…
This creates a situation where developer and homeowner interests aren’t aligned. Once the developer receives the money, they are not incentivized to deliver the house on time or do quality construction. The other model, where investors fund development before the house is sold, aligns both parties. The developer/investor wants to produce a good product so that it will sell at a high price and the buyer has the chance…
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Bed Bath and Beyond and Sears helped me realize that the cold eyes sanity of investors is often overstated. These were both bankrupt companies who developed stockholders with cultish beliefs around the company's ongoing viability. With Evergrande, I imagine some people believe it might be important enough for China that it may someday get a bailout. I don't believe it.
I agree with you, but it might not be completely irrational to buy an about to be bankrupt company. If the assets on book is sufficiently larger than the stock price, investors might get a payout when it gets sold off after fees. When Enron was liquidated, the last investors that bought the stock ended with an 8x RoI (according to an Acquired episode). Still an insane gamble obviously.
Institutional investors will attempt to liquidate but are largely locked in as significant sales will take the price to zero. It is the irrational retail investors who see the stock trading above zero and believe that “smart money” is accumulating shares.
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Right. But assets < liabilities means that “what is left” is nothing.
On paper before the bankruptcy process happens. There is often a restructuring, assuming the business can become a going concern again.
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As I understand from this "The Plain Bagel" video [0], they're not bankrupt. Instead, they're likely nearing the completion of their debt restructuring. [0] https://www.youtube.com/watch?v=c-n6RN8a2Zo
The problem is the term "bankruptcy". Colloquially people seem to think a company is just out of money. All you need to file for bankruptcy is to be unable to service debts at a specific time. It might even just be a transitory state.
Evergrande is insolvent and is now bankrupt. There is no reasonable scenario here where the company continues to operate as a growing concern.
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Right. But assets < liabilities means that “what is left” is nothing.
On paper before the bankruptcy process happens. There is often a restructuring, assuming the business can become a going concern again.
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> yeah, and because Chinese citizens are outraged by Fukushima release, they are boycotting Japanese seafood, and in general all seafood, which has decimated the entire seafood industry in China overnight, with no traffic to seafood market or restaurants. This one is hilarious. China imports very little seafood from Japan, and they just single handedly tanked their domestic seafood industry for a few bananas worth of…
So Japan's dumping of radioactive waste into the ocean might just be one of the greatest things ever done for marine life. This could be the first time in history that the "green" / petroleum alliance's anti-nuclear FUD has ever had a positive outcome for the environment.
Why isn’t it down 100%? According to the article, they’re in bankruptcy with way more liabilities than assets. Presumably the shareholders are getting wiped out.
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This will cause Australia's first recession in over thirty years. Chinese steel is made from Australian iron ore, which is Australia's biggest export. At the start of the Global Financial Crisis, the Chinese government stimulated the domestic housing market, which was the start of this bubble, but the demand for steel was enough to ensure that Australia suffered no economic downturn at all. All that's about to come c…
Ouch, that's going to hurt: https://commons.wikimedia.org/wiki/File:Australia_Product_Ex...