251–260 of 408 posts
> 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…
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?
Isn’t $148 million like four meme NFTs? Why would a large company be teetering on the edge for such a small amount of money?
When you have 0 liquid dollars then $148 million is more than you have.
> 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…
Name 1 example of a currency crisis where the debtor nation had debt denominated in their own currency. I'll save you the time. There are no examples. Every currency crisis has debt denominated in a foreign currency. - Germany in the 1930 (WW1 reparations were gold marks) - Argetina (foreign borrow and currency peg to USD). - Thailand. - Turkey (now, borrowed in Euro). https://en.wikipedia.org/wiki/War_reparations "G…
But yes, it has happened. Russia 1998 is the most well-known example. Everyone believed that because Russia could issue GKOs in RUB, they wouldn't blow up like Asia...they did. This also happened, to a large extent, in Mexico in 1994 (Mexico actually issued tesobonos, they were domestic currency denominated but shifted the currency risk to taxpayers, they were quite a security).
The reason why is fairly simple: it doesn't matter if the debt is denominated in domestic or not, because people buy the bonds and then hedge their currency exposure which leads (eventually) to the domestic banking system having the same synthetic position as if your debt was denominated in a foreign currency.
The slight issue with historical examples is that the situation is correlated to high levels of financial globalization, which largely didn't happen until the 90s. But because something has never happened, doesn't mean it is impossible.
The point is confused though. The causes of currency crises are changes in capital flows. That is really just saying: the reason why currencies fall is because people sell. They don't really need some "explanation", they definitely contra-indicate with stuff like domestic currency debt...but there is no universal theory possible beyond: people sold the currency (and so currency crises have happened with capital outflows for some exogenous reason, war, etc.).
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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 eno…
Anything else is ridiculous because people would notice it. If it is all self-contained withing crypto then it makes vastly more sense.
Once you think of a cold wallet full of bitcoin as having value like real estate[*] then it makes sense to take out tether loans against that collateral.
They need to make up something though to sound responsible so they call it "commercial paper" and for some reason nobody questions if they might be grossly twisting the meaning of those two words.
[*] Which I don't, but everyone involved in crypto certainly does.
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.
Hasn't Ray Dalio been advocating investing in China for a couple of years now? His thesis is that the US is a world power on the decline and China will soon rise to take its place. I wonder how that worked out for him and his fund?
I feel like someone has mistaken 100 years for 10 years.
Interesting about this is that Evergrande is defaulting only on foreign held debt. Not internal debt after a ccp mandate. If their economy continues its downturn then this precedent would hold for all debt. I would really watch personal funds and investments and insure they dont hold any chinese debt as an asset.
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As long as you can make sure they don't rot before people move in. There are pros and cons to both approaches and I have personally seen the downsides to not building enough housing. We also allow far too much speculation on residential real estate in the US for my liking. People's livelihoods shouldn't be traded commodities.
You need speculation to send price signals to the housing producers. Speculation without any building is the problem. Speculators blocking new building is also a problem.
Everyone needs housing, but when owning a house means it has a speculative resale value, you have to pay that premium in order to buy one.
This has a few consequences:
1. Downpayments and mortgages grow, because you aren't just buying shelter, you are buying a financial instrument with a significant resale value.
2. Your financial well-being is now deeply entwined in the fate of the housing and mortgage market. Higher interest rates become horrible for you, as they depress housing prices, and put your home underwater. New construction is horrible to you, as it reduces the value of the speculative portion of your purchase. Likewise for the existence of affordable forms of housing, and renter-friendly legislature.
Speculation from the perspective of a developer is part of running a business. They shoulder a fair amount of financial risk when they choose to develop, and obviously want to hedge it. Speculation as a 'every homeowner in the country is also a speculator, whether they want to be one or not' leads to some questionable outcomes.
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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.
This is just treating a symptom, and not the underlying cause(whatever that may be).
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 compan…
Haha, trying to buy an apartment in Shenzhen? I can't say the sentiment here is much different amongst young people.