International China 2nd largest real estate firm close to collapse. Over $300 billion in liabilities

Not China, but was surprised to read how much control real estate companies have over California's Democrat run government. Sounds like a bad deal for Californians.

Tucker Carlson exposes real estate companies 'wrecking' America
'Tucker Carlson Tonight' host discusses the implications of rising housing prices in California and failed legislation

https://www.foxnews.com/media/tucker-carlson-real-estate-companies-wrecking-america

excerpt:

....At the behest of his donors, Gavin Newsom is turning the state of California into a swamp. It’s not just happening in California, recently Oregon passed a statewide ban on single-family zoning. This is insane! Cities like Minneapolis and Sacramento have begun to allow multifamily dwellings on single-family lots. Crowding problem, anyone think? Only the government of China, by the way, appears to be doing anything to reign in real estate developers. "Housing should be living and not for speculation," said the President of China. Woo, hate to quote the president of China, but in this case, he is right one of the largest and most leveraged real estate companies in the world is collapsing and China has given the indication they’re not interested in bailing out ever again. In this country, real estate companies don’t just get bailouts, they get to write the law, wreck your neighborhood. And in many parts of America, they will be able to demolish the home next door and turn it into an apartment complex. Great!
 
Nothingburger, sorry
orly?

I revise a famous quote:

If you owe the bank $100,000, then you have a problem.

If you owe the bank $100 million, then the bank has a problem.

If a Chinese development company owes $300 billion, then the global financial system has a problem.
 
We all know something is coming in the global market, US stocks are skyhigh, credit swap defaults in China just exploded with this news. Its time to be off the market

I have been in cash for about a month. The price to earnings ratio of the US stock market is stupid, it has no rational basis for support at such a high level. It is bound for a correction now that the government is pulling back from quantitative easing.
 
What's the quality of the buildings like

I used to love watch ADV China's videos where that Youtuber Serpentza and his buddy would drive around the mainland in their motorcycles and do their podcasts through mics on their helmets

They had a few videos on the shoddy construction of some.places. I did a lot of business there (never went personally) and was always told how poorly and unsafely buildings are constructed.


You couldn't pay me to fly to China in one of their planes or get in anything over 1 story. I purchased on of their motoX dirt bikes about three years ago. Not only heavy AF about 270lbs for a 450 four stroke wereas the japensess and austrian bikes are about 200... Didnt even last a weekend. No lie $5000 down the drain. Chinese still make junk. Never went Japan.
 
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No bailout yet.

China Makes Preparations for Evergrande’s Demise
Beijing, reluctant to bail out the country’s most heavily indebted property developer, is asking local officials across the country to prepare for a ‘possible storm’

https://www.wsj.com/articles/china-makes-preparations-for-evergrandes-demise-11632391852


Chinese authorities have told local officials to prepare for a potential demise of heavily indebted property developer Evergrande, The Wall Street Journal reported Thursday.

Local officials described the signals from Chinese authorities as “getting ready for the possible storm” and said the government told them they should only step in at the last minute to prevent spillover effects from Evergrande’s demise, the WSJ report said.

https://www.cnbc.com/2021/09/23/chi...sible-storm-if-evergrande-fails-wsj-says.html

Well, that'll give them something to blame besides the policies they've been implementing for the last decade and explicitly outlined at the 19th National Congress in 2017.
Their "economic pivot" to "common prosperity", "dual circulation" and "new development" as opposed to the policy of "reform and opening". "Reform and opening" being what lead to China's economic growth and improvements in human rights over the prior 3 decades or so.
Now they are winding that back to a command economy and authoritarianism, another crack at the same old style Chinese Communist shtick in new clothes.
Their economic downturn was the inevitable consequence, and a focus on their domestic market won't prevent the contraction.
 
China's economy is a collosal house of cards far worse than anyone really wants to publicly admit and their construction industry is fucked. Evergrande cannot survive on its own and will only make it out by the CCP bailing them out which, if they do, may be done very quietly and under the radar.

China was building whole cities with no people in it because real estate was the only 'safe' investment its citizens could make. There's countless huge developments that are left unfinished in China as developers go bust and they regularly demolish not just one or two towers but a dozen of them at once. The scale of the problem is pretty astronomical: it's estimated there are more than 65 million empty apartments across the country.
 
orly?

I revise a famous quote:

If you owe the bank $100,000, then you have a problem.

If you owe the bank $100 million, then the bank has a problem.

If a Chinese development company owes $300 billion, then the global financial system has a problem.
No it doesn't, they have already been saved by the China banks
 
What's the quality of the buildings like

I used to love watch ADV China's videos where that Youtuber Serpentza and his buddy would drive around the mainland in their motorcycles and do their podcasts through mics on their helmets

They had a few videos on the shoddy construction of some.places. I did a lot of business there (never went personally) and was always told how poorly and unsafely buildings are constructed.



I spent 3 years outside of major Chinese cities where they were building these mega apartment complexes that no one could afford. The quality was really bad. You would see these huge 30 story multiple unit buildings with no lights on. Meanwhile reg Chinese were still living in their homes built in the 70’s.
 
Well, that'll give them something to blame besides the policies they've been implementing for the last decade and explicitly outlined at the 19th National Congress in 2017.
Their "economic pivot" to "common prosperity", "dual circulation" and "new development" as opposed to the policy of "reform and opening". "Reform and opening" being what lead to China's economic growth and improvements in human rights over the prior 3 decades or so.
Now they are winding that back to a command economy and authoritarianism, another crack at the same old style Chinese Communist shtick in new clothes.
Their economic downturn was the inevitable consequence, and a focus on their domestic market won't prevent the contraction.

In Evergrande's case, the real estate side of the company - which is the main business - kept burrowing and burrowing to build more and more apartments. While they did sell a lot of real estate, they kept sinking the profits into further real estate purchase, along with burrowing more money. They seemed to be following the Amazon business model, i.e. Amazon was not showing a profit for the first several years but was running on the idea that it was investing for the future.
 
In Evergrande's case, the real estate side of the company - which is the main business - kept burrowing and burrowing to build more and more apartments. While they did sell a lot of real estate, they kept sinking the profits into further real estate purchase, along with burrowing more money. They seemed to be following the Amazon business model, i.e. Amazon was not showing a profit for the first several years but was running on the idea that it was investing for the future.

Yeah, but it's precisely the sort of regulatory failure that would provide easy justification for Xi Jinping's return to heavy handed state interventionism. My understanding is that Evergrande was paying the interest on their loans by preselling unbuilt (off-the-plan) apartments.
 
Yeah, but it's precisely the sort of regulatory failure that would provide easy justification for Xi Jinping's return to heavy handed state interventionism. My understanding is that Evergrande was paying the interest on their loans by preselling unbuilt (off-the-plan) apartments.
Every builder in China presells unbuilt units.
 
Stock market is already over it.
Xi-and-Pooh.jpg


Pooh is on it. He is injecting cash into Chinese Banks. Deficits don't matter anymore.

Don't talk about Pooh bear!!!
 
Every builder in China presells unbuilt units.

Sure, it's common enough everywhere, but usually it's not done just to pay off the interest on massive debt. Quite different to using it to fund construction.
It's not a model that works under any conditions except rapid growth, and now they have 1.4 million properties they are committed to completing without an income even capable of servicing their debt.
 
Sure, it's common enough everywhere, but usually it's not done just to pay off the interest on massive debt. Quite different to using it to fund construction.
It's not a model that works under any conditions except rapid growth, and now they have 1.4 million properties they are committed to completing without an income even capable of servicing their debt.
Dubai did the same , selling off-plan and uncompleted apartments to speculators. It was ok when everyone thought the market would only keep going up but when the bubble burst, it was like a Ponzi scheme. Some YouTubers have described Evergrande's behavior as akin to a Ponzi scheme.

A researcher who foresaw Evergrande’s troubles says it’s a pyramid scheme
https://qz.com/2062541/this-researcher-foresaw-chinas-evergrande-group-collapse/


Over the years, Evergrande has run up around $300 billion in debt. In a 2017 interview, Stevenson-Yang called it “the biggest pyramid scheme the world has yet seen.” But Evergrande’s troubles were obvious even 10 years ago, Stevenson-Yang told Quartz. “It’s just been holding on, somehow, for 10 years.”
 
Evergrande has missed the payment deadline.

Evergrande misses payment deadline, EV unit warns of cash crunch.
https://www.reuters.com/world/china...olders-limbo-over-debt-resolution-2021-09-24/


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Was listening to the YouTube ADV Podcast yesterday, from SerpentZA and Laowhy86. Both guys stated upfront they are not financial experts but based on their knowledge of China, the CCP will not let Evergrande collapse.

They reckon the CCP will lean on the banks, which are beholden to the CCP, to extend Evergrande's loans and fogive some of it. The CCP does not want to publicly be seen as bailing out Evergrande because it runs counter to their criticism of unrestrained Capitalism and it tells other large companies they can always rely on the government to bail them out. So the CCP will bail out Evergrande but do it behind the scenes.

Skip to 48:00 if you are only interested in hearing about what the CCP will behind the scenes bail out Evergrade
 
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