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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

#261

Post by rp1 »

justicezyx wrote: post #250
rp1 wrote: post #217

Earlier quoted context omitted.

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...

Now sure how to connect the dots from your article to the claim that China "waging economic warfare through equity market". Facts: * US pension fund lost 400B on China investment. That's total in US not directly related to the "inside man in the CA pension system". But wait for others facts below. * This CA pension system inside man "Yu Ben Meng" is chief investment officer of CA public employees retirement system (C…

Sorry, that’s a lot of words that doesn’t address anything. This guy is under investigation because of his actions. Bringing up a bunch of irrelevant facts just serves as a distraction. Seriously, the U.S. causing the global financial crisis is your counter argument?

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

#262

Post by adregan »

riggins wrote: post #175
beambot wrote: post #167

Earlier quoted context omitted.

GP agrees with you: They're saying the currency crisis starting in Asia is USD-denominated (the international bonds in particular), which is creating a positive feedback loop when USD-RMB exchange rates spike. They're saying you might see this manifest as big movements in bond redemptions or sales as people scramble to secure USD.

I assume you mean OP? > The entire world (including the US federal government) has taken a short position on the US dollar I read this as a prediction of some type of crisis. Anyway, wrt the US Federal Government, having government debt is not that same as having a short position. For one, the US Fed govt's revenue (i.e. tax collection) is denominated in the same USD as the debt. So if USD goes up, tax collection go…

> I assume you mean OP?

"GP = grand parent, i.e. the post that the post-your're-replying-to was replying to"

Source: https://news.ycombinator.com/item?id=8363625

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

#263

Post by vmception »

lamontcg wrote: post #255
manquer wrote: post #220

Earlier quoted context omitted.

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…

They're probably exchanging Tether for loans that their counterparties write against crypto collateral and calling that "commercial paper". 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 co…

Honestly, if anybody ever bothered to assume that Tether worked the way it was advertised most of the time - just like both the NYAG and CFTC found most of the time for most Tethers - it would actually all make sense.

Why would better managed and more transparent competitors like USDC, GUSD, and PAXOS all be rising in circulation at the exact same trajectory as Tether, if Tether was just doing funny money accounting or having completely uncollateralized Tethers compared to just the same distribution of regional crypto enthusiasm in the same kinds of transactions. What if, yeah I know, what if people actually just deposit fiat and rarely redeem for fiat because they treat stablecoins as basically their savings and investing account. The craaaziest idea, I know, but the behavior is being mimicked across all fiat-backed stablecoins which suggests that its harder to assume the worst about Tether simply because its never transparent enough and yeah, it won't be. My only point is to think "hm maybe people actually use it and like it and that's the vast majority of the creation of more tethers just like two US regulators found."

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

#264

Post by ethbr0 »

rsj_hn wrote: post #238
ethbr0 wrote: post #227

Earlier quoted context omitted.

The world buys dollars because it needs them to fulfill oil and other commodity contracts, that are priced in dollars, which are then typically reinvested in US Treasuries by commodity exporters (because why not?). https://www.investopedia.com/terms/p/petrodollars.asp https://www.bloomberg.com/news/features/2016-05-30/the-untol... If a country wanted to not buy dollars, here's how that would go. No Dollars: "Hi, we'd…

> 10% over the exchange rate between Pentali Marcograms and US dollars. You know oil producers trade in dollars, right?" You are off by three orders of magnitude, which is pretty amazing. Forex markets have incredibly tight spreads measured in pips, say 1-4 pips, where 1 pip = 0.0001. The reason why dollars are important is that people store the results of their oil sales in USD assets. What a good is purchased with…

If we're talking about a country that's attempting to (or has no choice but to) cut USD out of its foreign trading, I don't think we're talking about a standard, highly-liquid currency pair.

And what currency a good is purchased in absolutely means something!

Your claim is that people store the proceeds of sales in dollars because of the trust factors, volume, and tight spreads. But I'd say that 2/3 of those (volume and tight spreads) are consequences of its utility and use as an international settling currency. Catch 22.

Yet are those things worth enough that international exporters would continue to trade in / hold in (effectively the same, if we collapse the goods trader and forex trader into a single entity) if the dollar ran 5% inflation and low central bank rates for years?

I suppose we'll see, but that's an atypical situation in the last 50 years of pure fiat international finance.

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

#265

Post by Geee »

yaacov wrote: post #121
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…

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.

That's exactly why they're printing so much money. Deflation would cause a deflation spiral - i.e. a short squeeze on the dollar. They can keep doing it, but it's basically a mass-scale confiscation of assets from people. Not sure if that's the goal.

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

#266

Post by mikeyouse »

hogFeast wrote: post #254
riggins wrote: post #161

Earlier quoted context omitted.

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…

It depends what you mean by currency crisis. 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 secu…

In 1998, Russia was propping up their currency by buying USD and Eurobonds at staggering rates.. The crisis wasn't due to anything to do what the US is facing but not being able to pay their foreign creditors, not being able to call the Soviet-era debt back from debtors, and owing the IMF billions of dollars they couldn't repay.

Russia wouldn't have had a currency collapse if they had a floating currency to begin with;

> After reviewing the three generations of currency crisis models, we conclude that four key ingredients can trigger a crisis: a fixed exchange rate, fiscal deficits and debt, the conduct of monetary policy, and expectations of impending default.

https://files.stlouisfed.org/files/htdocs/publications/revie...

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

#267

Post by gizmondo »

ulber wrote: post #244
01100011 wrote: post #33

Earlier quoted context omitted.

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?

>His thesis is that the US is a world power on the decline and China will soon rise to take its place. Something I've found interesting about these kinds of theses (although I'm sure there's more to his) is that just believing that a company/country/whatever is going to be successful doesn't make it a good investment. It's all about the pricing of the asset and ultimately, for assets priced by a market mechanism, abo…

I don't think this criticism applies here. The thesis is clearly contrarian, as the market prices US assets lavishly and Chinese dirt cheap. The reader can be assumed to know that.

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

#268

Post by drumhead »

Time for China to learn all about financial restructuring. I'm thinking a Debt for equity swap, a haircut for investors and jail time for the directors. Property is a religion in Asia, there's an unshakeable belief in its robustness as an investment, this may help to shake that a bit.

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

#269

Post by ncallaway »

xwdv wrote: post #191

$148M correct? Seems small, like a fairly wealthy multi-billionaire could just pay that off in one fell swoop.

My mortgage payment is small enough that a lot of people could easily afford a single payment if I had defaulted on it. That doesn’t mean they could just pay off the entire remainder of a mortgage.

Paying off the current payment doesn’t deal with the remaining $300B debt that they need to service. It just kicks the can down the road a few days.

Good luck finding a multi-billionaire that’s going to swoop in and make $148M payments on a regularly recurring basis for the next decade.

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

#270

Post by IAmGraydon »

Geee wrote: post #265
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.

That's exactly why they're printing so much money. Deflation would cause a deflation spiral - i.e. a short squeeze on the dollar. They can keep doing it, but it's basically a mass-scale confiscation of assets from people. Not sure if that's the goal.

Apparently in the age of WSB apes, everything is a “short squeeze”. Even GME wasn’t a short squeeze (the SEC report clearly presents irrefutable evidence) and neither is deflation.
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