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

#211

Post by ethbr0 » Wed, Nov 10, 2021, 9:41 PM UTC

baq wrote: post #182

HFguy wrote: post #136

Earlier quoted context omitted.

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…

the fed are clowns. inflation data should have been priced in as anybody worth their salt (or indeed anybody doing any kind of shopping, which is everyone) knew that inflation would print above expectations, especially fed's. today's reaction was... panic of uninformed volume?

The Fed never said they weren't expecting inflation: they said they expected any inflation to be transitory (e.g. to return to expected levels by the end of 2022/23).

So, we'll see.

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

#212

Post by h2odragon » Wed, Nov 10, 2021, 9:46 PM UTC

qnsi wrote: post #47

This is not even frontpage of ft, bloomberg etc. Bloomberg Europe TV station talks about Johnson & Johnson factory problems in China but not Evergrande. My reading from above pieces of information: it's not that important yet. Maybe they will pay late again as they did previously when they were late one day.

"The leak from that dam has been going on for years, and only the one crazy guy keeps making noise about it. We'll just enjoy our home under it by the stream until it becomes important"

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

#213

Post by majormajor » Wed, Nov 10, 2021, 9:47 PM UTC

yaacov wrote: post #134

jen729w wrote: post #129

Earlier quoted context omitted.

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.

Printing money doesn't necessarily create inflation if it doesn't go into circulation.

My understanding is that "printing money" with a jobs program would be more effective at stimulating spending that, say, "printing money" with cheap interest rates (which might just mostly ultimately go into people's bank accounts as they sell assets to people borrowing the cheap money).

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

#214

Post by chunghuaming » Wed, Nov 10, 2021, 9:49 PM UTC

DebtDeflation wrote: post #84

Speaking of misleading headlines: https://www.nytimes.com/2021/11/10/business/evergrande-bond-... https://archive.md/cPsjv "China Evergrande meets a Wednesday payment deadline for two of its bonds." On multiple levels, too. "It was not immediately clear whether it had made payment on the third bond, which matures in 2024, or if all of the investors in the other two bonds had received payment." So basically they MIGHT…

Some investors have not received Evergrande unit's bond interest due Nov 6, say sources https://www.reuters.com/business/some-evergrande-units-offsh...

Evergrande bondholders say they have not received $148m interest payments https://www.ft.com/content/88dcb535-3945-4138-b394-dda82292b...

Basically, selective default by Evergrande. Full official default likely very soon, and for most of the Chinese real estate companies.

加速加速加速更快看到结局

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

#215

Post by HFguy » Wed, Nov 10, 2021, 9:49 PM UTC

baq wrote: post #182

HFguy wrote: post #136

Earlier quoted context omitted.

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…

the fed are clowns. inflation data should have been priced in as anybody worth their salt (or indeed anybody doing any kind of shopping, which is everyone) knew that inflation would print above expectations, especially fed's. today's reaction was... panic of uninformed volume?

It wasn’t priced in or the market would not have moved.

“everyone knew that Inflation would be above expectations” you should think about this more.

Regardless, why does any of this make the feds clowns?

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

#216

Post by majormajor » Wed, Nov 10, 2021, 9:54 PM UTC

whimsicalism wrote: post #108

JumpCrisscross wrote: post #92

Earlier quoted context omitted.

> I don't think anyone doubts that China is an economic superpower They are, but the foundation is rickety. Xi is a dictator. That increases the odds of catastrophic failure. Were an economic collapse to become protracted, it's not hard to imagine separatist movements and competing power sectors turning to violence as a political tool.

People have been talking about the "rickety foundation" of China for decades. I'm sure when they have an economic downturn sometime in the next two decades, those people will all come out to crow about how they had been right all along. To me, they seem to be building on top of a more modern infrastructure base and do not have the super-prevalent NIMBY problems that exist in the West.

> To me, they seem to be building on top of a more modern infrastructure base and do not have the super-prevalent NIMBY problems that exist in the West.

How new the roads and houses are doesn't seem like the most relevant factor for future economic growth.

The US built modern infra for the time, then it stagnated.

Japan built modern infra for the time, then it stagnated.

The US and Japan otherwise took very divergent economic growth paths.

China could go either way, but the increasing central control is hardly without risk for future economic development. Miss a few big bets and you have less of a backup plan than a less-organized economy.

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

#217

Post by rp1 » Wed, Nov 10, 2021, 9:55 PM UTC

justicezyx wrote: post #66

rp1 wrote: post #42

Earlier quoted context omitted.

China has been waging economic warfare via equity markets for a while now. The U.S. hasn’t done anything to protect investors from billions in losses. Totally embarrassing.

Wait a second... How is Evergrande's foreign debt default translate to "waging economic warfare via equity markets"? Of course China is responsible for its own domestic debt, because evergrande borrowed from state-backed banks. Are foreign debters also backed by Chinese government? Are you suggesting Chinese government should take responsibility for foreign investors? And "for a while"? Name another case remotely mat…

Since you asked, China basically had an inside man in the Californian pension system and purchased a large amount of Chinese tech stocks. Beijing then pulled the carpet out from under them, causing 400B in US pension losses: https://www.google.com/amp/s/californiaglobe.com/articles/us...

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

#218

Post by ethbr0 » Wed, Nov 10, 2021, 9:55 PM UTC

kipchak wrote: post #173

xxpor wrote: post #158

Earlier quoted context omitted.

No comment on the content of the lynalden.com post (haven't read the entire thing yet), but for the love of pete, blog writers, please make sure you put a date on your posts. Especially when you're discussing something that involves current events.

I think she might just have forgotten to date this one? Most other articles back to 2020 seem to have publish dates. Either way this one seems to be from April 2020.

It does seem to be a trend in less-than-professional blogs.

Although I'd assume, maybe it helps with traffic? Presumably people would be more interested in reading a previous financial post, if they didn't know it was 2 years old.

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

#219

Post by tomputer » Wed, Nov 10, 2021, 9:58 PM UTC

whimsicalism wrote: post #113

nostromo wrote: post #73

Earlier quoted context omitted.

> 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.

It looks like they went from too tight to too loose:

https://fred.stlouisfed.org/series/BOGMBASE

I’m not an economist but that graph looks unhealthy.

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

#220

Post by manquer » Wed, Nov 10, 2021, 10:02 PM UTC

lamontcg wrote: post #205

raesene9 wrote: post #197

Earlier quoted context omitted.

So AFAIK Tether has ~$30b of commercial paper ( https://tether.to/wp-content/uploads/2021/08/tether_assuranc... ) which would make it one of the larger commercial paper operators in the US market if it operated there. From what I've read, other paricipants in the US market have stated they don't see Tether partipating there, to that kind of volume. Combine that with the fact that, until recently, China was a huge mar…

I don't understand why anyone believes Tether when they say they own $30b of commercial paper. The fact that nobody in any of the commercial paper markets know who they are suggests that Tether is once again at least being misleading if not lying.

They have to own something for $30B+ [1]. It is unlikely it is anything in significant in the U.S, both because it is harder not to be noticed as you say and also greater risk of interference from regulators etc.

It is not unreasonable to think China has good chunk of those deposits, and in China real estate is a big component of the economy and growth in the recent years.

Chinese real estate market is both large enough and opaque to be able to ingest that kind of capital.

[1] It is possible they are issuing tokens out of thin air without actually taking in equivalent USD/fiat currency, but given it trading volume on crypto exchanges it seems unlikely say 90+% of their $73B + are tokens fake. Even 10% is $7.3B a very significant sum.