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China's Lehman Brothers Moment?

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Re: China's Lehman Brothers Moment?

Unread postby Plantagenet » Sat 25 Sep 2021, 22:46:32

EnergyUnlimited wrote:300 * 10^9 USD?
For China these are peanuts.
That is like if every Chinese citizen lost about 200 USD.
Not a great deal.


Its not like that at all.

The losses aren't distributed equally among all Chinese citizens.

The loses are mainly impacting the banking and the housing sector.

For instance, there are over a million Chinese investors in EVERGRANDE who will lose all their money if EVERYGRANDE goes bankrupt.

There are over a million Chinese families who PAID IN ADVANCE for apartments that Evergrande was supposed to build. They will lose all their money.

There are banks and individuals in China and outside China who bought Evergrande bonds. They will lose all their money.

And its likely there will be contagion, i.e. Banks and the housing sector in China are being hurt by a collapse in Evergrande, and some of them may also collapse.

The concern is that Evergrande may be like Lehman brothers, and just as the Lehman brothers bankruptcy triggered off a financial crisis in the US, the Evergrande bankrucupcy may trigger off a financial crisis in China. .

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Evergrande is bankrupt! Stop all work on building one million apartments that have already been paid for!!!

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Re: China's Lehman Brothers Moment?

Unread postby vtsnowedin » Sat 25 Sep 2021, 23:57:32

A bit of prospective!! A million investors in China is only one out of a thousand, as is also one home buyer out of a thousand. When you have a billion people it takes a bigger bite to really effect the total market.
The public and the government might not like this down turn but I am pretty sure they have the depth needed to withstand it.
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Re: China's Lehman Brothers Moment?

Unread postby Plantagenet » Sun 26 Sep 2021, 00:30:30

vtsnowedin wrote:A bit of prospective!! A million investors in China is only one out of a thousand, as is also one home buyer out of a thousand. When you have a billion people it takes a bigger bite to really effect the total market.
The public and the government might not like this down turn but I am pretty sure they have the depth needed to withstand it.


Of course the Chinese government has the "depth" and money and resources to "withstand" the Evergrande bankruptcy.

Thats not the question.

The question is whether or not the communist party of China is going to swing into action and bail out the Evergrande corporation.

That isn't clear at all.

Chairman Xi has spent the last four years complaining about the excesses of the Chinese real estate market and the high prices of apartments. It seems unlikely to me that Chairman XI will now
direct the communist party to bail out the Evergrande Corporation and pay off the foreign bondholders and the other banks in China and then go on to build a million units of overpriced apartments for the EVERGRANDE corporation to sell at inflated prices, because those are precisely the things that Chairman Xi opposes.

IMHO its quite possible that the CCP wants the property market to collapse to bring housing prices down, and wants to rein in the banking sector, just as they have been reining in the high tech sector and causing tech stock prices in China to collapse for the last 6 months or so. In that case the CCP will see this as an opportunity to push the Chinese housing sector goes into collapse, along with a good part of the banking sector. I know it seems illogical, but the CCP is already attacking its own tech sector. Why shouldn't the CCP also attack its own banking and housing sectors?

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Comrade XI wants you to get out there and bail out the EVERGRANDE Corporation.........Not.

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Re: China's Lehman Brothers Moment?

Unread postby EnergyUnlimited » Sun 26 Sep 2021, 04:36:30

Plantagenet wrote:In that case the CCP will see this as an opportunity to push the Chinese housing sector goes into collapse, along with a good part of the banking sector. I know it seems illogical, but the CCP is already attacking its own tech sector. Why shouldn't the CCP also attack its own banking and housing sectors?

On the West so called "Big Tech" is made of parasitic structures like Google or Facebook and all what it does is accelerating social degeneration of nations infested by it.
Chinese have noted that and have decided to eradicate this malignancy before it has spread beyond control.
Kudos for them.

The same hold true for housing development.
Prices of housing should be affordable for masses without going into life long debt slavery.
And if for achieving that we need to eradicate few dozens of fat cats and a million of fools who thought they are "investors" then let it be.
Big developer (and renting) corporations very much like "big tech" have turned into parasites.
Finish them off and no bailout.
Liquidate the crap and out of cash from proceeds pay small men who wanted to buy a flat, paid upfront but didn't get it.
Once done put few fat cat execs in front of Chinese styled tribunal, state their guilt (as it is obvious and nothing needs proving) and send hem to labour camps or in front of execution squads.
Job done.
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Re: China's Lehman Brothers Moment?

Unread postby vtsnowedin » Sun 26 Sep 2021, 10:53:12

The CCP attacking their real estate and banking industries will be killing the proverbial goose that lays golden eggs. Almost as dumb as invading Taiwan would be.
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Re: China's Lehman Brothers Moment?

Unread postby Plantagenet » Sun 26 Sep 2021, 12:17:06

vtsnowedin wrote:The CCP attacking their real estate and banking industries will be killing the proverbial goose that lays golden eggs. Almost as dumb as invading Taiwan would be.


Now you are proving my point.

The world has already seen that the CCP is dumb enough to allow "gain-of-function" research on bat viruses, only to have the new virus escape from the Wuhan lab and kill millions of people around the world.

We've already seen that the CCP is dumb enough to put a million Uighurs into concentration camps, and to conduct nazi-style medical experiments on them.

We've already seen that the CCP is dumb enough to take over Hong Kong and kill another goose laying golden eggs for them.

We've already seen that the CCP is dumb enough to attack its own tech sector.

We've already seen that the CCP is dumb enough to threaten to invade Taiwan (and may very well do so now that the Biden administration has demonstrated in Afghanistan that they are incompetent cowards),

OF COURSE the CCP is quite capable of undermining its own banking and housing sector. They've already demonstrated over and over again that they are dumb enough to do exactly that.

But, if we look more closely, they aren't being dumb......whats happening is that they are adhering to their extremely nationalist version of communist ideology.

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Altogether now....everyone do what Comrade Xi tells us to do!

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Re: China's Lehman Brothers Moment?

Unread postby EnergyUnlimited » Sun 26 Sep 2021, 14:13:03

vtsnowedin wrote:The CCP attacking their real estate and banking industries will be killing the proverbial goose that lays golden eggs. Almost as dumb as invading Taiwan would be.

They don't really need ghost cities occupied by no one and crumbling into ruins while new due to lack of maintenance.
After finding out that such situation has taken place it is the best move to dismantle part of industry responsible for such a sorrow state of affairs.
This means that they need to trim real estate sector and slap bankers who overoptimistically lent money there.

Re taking Taiwan - why not?
It is ripe for taking and sleepy Joe won't even notice.
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Re: China's Lehman Brothers Moment?

Unread postby vtsnowedin » Sun 26 Sep 2021, 21:34:55

EnergyUnlimited wrote:
Re taking Taiwan - why not?

I expect Taiwan to defend itself even without senile Joe's help and the amount of destruction on both sides of the strait will cripple the economies of both sides. They are doing quite a bit of profitable commerce with each other now and it would be best for them to continue without a attempted takeover.
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Re: China's Lehman Brothers Moment?

Unread postby Plantagenet » Mon 27 Sep 2021, 01:00:48

Another huge Chinese Development company named Sunac is going into crisis, as its stock plunges and its bond yields collapse

huge-pressure-chinas-developer-cash-crunch-spreads-sunac

Contagion from Evergrande is now spreading to other Chinese companies.

Image
Humpty Dumpty and a fat cat
Used to lay on a hill
Watching their stock price go up
Was such a thrill!!

Until Humpty Dumpty
Sat on a wall
Then Humpty Dumpty
Had a great fall

And all the CCP's horses
And all the CCP's men
Couldn't put Humpty Dumpty
back together again!!!


Humpty Dumpty's gonna fall!!!

Look out below!!
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Re: China's Lehman Brothers Moment?

Unread postby evilgenius » Sun 24 Oct 2021, 12:27:16

I think what might really be going on is that China is considering whether or not the economic model that has brought them this far has run its course? You can forgive a Westerner for thinking that sort of doubt is absurd, but the West doesn't have a very good track record with the Chinese.

America has gone out of its way to criticize the Chinese advances. They didn't use to criticize China in this way. But, all of a sudden, as far as the Chinese are concerned, you have all of this anti-Chinese rhetoric, for things they consider to be part of the deal when they bought this deeply into capitalism.

When Trump comes back, or the next one to take his place, and piles on China again, they will really be pressed. I would be looking not only at what they say about Taiwan, but about how they plan on extending their influence throughout the rest of Asia, to say the least.

I worry that the average American doesn't care enough about these sorts of things to want a version of justice that extends beyond them alone. They think they can simply "not pay any taxes" while the situation falls apart. But we have roads because we can cooperate.

I wouldn't look at the Chinese, either, and assume they have less upper body mass. I think they can handle things, as long as they stay within their wheelhouse, as long as they stay connected in some way to those things which really do impact upon their future. That might include Africa, I don't know.
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Re: China's Lehman Brothers Moment?

Unread postby JuanP » Sun 24 Oct 2021, 16:09:09

"China's Lehman Brothers Moment?"
Most definitely not, not even close!
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Re: China's Lehman Brothers Moment?

Unread postby BrianC » Thu 09 Dec 2021, 15:09:49

Evergrande Has Defaulted On Its Debt (cnn.com) 71
Posted by msmash on Thursday December 09, 2021 @10:20AM from the closer-look dept.
Evergrande, the embattled Chinese property developer, has defaulted on its debt, according to Fitch Ratings. From a report:
The credit ratings agency on Thursday downgraded the company and its subsidiaries to "restricted default," meaning that the firm has failed to meet its financial obligations. Fitch said the downgrade reflects the company's inability to pay interest due earlier this week on two dollar-denominated bonds. The payments were due a month ago, and grace periods lapsed Monday. Fitch noted that Evergrande made no announcement about the payments, nor did it respond to inquiries from the ratings agency. "We are therefore assuming they were not paid," Fitch said. Evergrande has about $300 billion in total liabilities, and analysts have worried for months about whether a default could trigger a wider crisis in China's property market, hurting homeowners and the broader financial system. The US Federal Reserve warned last month that trouble in Chinese real estate could damage the global economy.

https://edition.cnn.com/2021/12/09/inve ... index.html
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Re: China's Lehman Brothers Moment?

Unread postby Pops » Fri 10 Dec 2021, 08:48:09

C H Smith has a good take on China's problems.
THURSDAY, DECEMBER 09, 2021
Xi's Gambit: China at the Crossroads


Basically, government owns all land and leases it to developers
Developers build apartments
Wealthy people buy apartments as investments
Since apartments lose value when rented they stay empty hoping for appreciation (Regular folks couldn't afford them anyway).

Pretty crazy. Call it declining returns or just the inefficiency of inequality.

About as crazy as a stock market priced entirely on the hope share prices will rise—because share prices are already so high relative to earnings that the investment wouldn't show a profit for 40 years.

Like an a rental apartment that never gets rented.
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Re: China's Lehman Brothers Moment?

Unread postby vtsnowedin » Fri 10 Dec 2021, 23:35:31

While an apartment that never gets rented is indeed absurd I don't think most of America's stock markets are. The hope for exponential growth is founded on the history of many new stocks doing just that. And the market still has many large cap stocks that have P/E ratios under 15 which is not that far off the historic norm of 10. Tesla of course at 325 is sheer speculation but to be fair it was over 1000 not to long ago so is marching towards the speculators goals.
Just last January the S&P 500 P/E =39.9 but it has declined to 25.3 On 10/1/2021 very near is average post 1990 of 23.36 so if it is over priced it has remained so for decades.
I put the money I don't want to risk losing into index stocks that track one of the whole market indexes. And my play money (or beer money or lottery ticket money,if you prefer)into stocks I think are under valued and might make significant gains.
For example I bought Exxon for an average of $45 a share and it is now at $63 and I bought UPS at $166 and it is now $209. Of course I have some losers at present like Intel bought at $57.6 and now at $50.6 but so far at least I have about three winners for each loser and the losers added up is chump change compared to the winners total.
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Re: China's Lehman Brothers Moment?

Unread postby Outcast_Searcher » Sun 19 Dec 2021, 01:44:20

vtsnowedin wrote:Outcast_Searcher"
I'm not convinced either system gets a gold star vs. the other, re overall finances.

I beg to differ. The results in economic growth speak for themselves. You never see lines of people climbing over fences trying to get into dictatorships or communist countries.

China, which is a mixed system of both communism and capitalism has had a MASSIVE economic growth rate, re GDP growth, in recent decades.

It's slowing down over time, as is natural for any large economy as it matures.

I'm NOT saying China is all great compared to the US. Their housing situation is a disaster (before the current defaults -- just due to cost and limited supply), but the people, not being free, have no choice.

But the US certainly has PLENTY of serious problems, and if you're going to make relative economic growth the choice for success, places like China and India are beating the crap out of the US.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: China's Lehman Brothers Moment?

Unread postby Tuike » Sun 19 Dec 2021, 07:04:12

There was in today's newpaper a translated article from Wall Street Journal, which said China withholds information even harder than before. Chinese companies renevues and debts are withheld and even positions of oil tankers in chinese waters. If someone claims China is headed to economic disaster, it's easy to brand him as tin foil hatter as there is no proof due to lack of data.
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Re: China's Lehman Brothers Moment?

Unread postby Newfie » Sun 19 Dec 2021, 14:05:44

That the Chinese are turning off AIS, the tracking function, when in home waters has been reported in shipping industry sources.

Why is debatable. Most likely just to back off the shipping managers.

But I get the bigger message, the Chinese are secretive and manage information to their advantage.
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Re: China's Lehman Brothers Moment?

Unread postby vtsnowedin » Sun 19 Dec 2021, 15:08:05

Outcast_Searcher wrote:China, which is a mixed system of both communism and capitalism has had a MASSIVE economic growth rate, re GDP growth, in recent decades.

It's slowing down over time, as is natural for any large economy as it matures.

I'm NOT saying China is all great compared to the US. Their housing situation is a disaster (before the current defaults -- just due to cost and limited supply), but the people, not being free, have no choice.

But the US certainly has PLENTY of serious problems, and if you're going to make relative economic growth the choice for success, places like China and India are beating the crap out of the US.

It is easy to have large growth rates when you start near zero which was where China was at the end of the Moa period. And of course the USA has serious problems. I never implied we do not. Instead of relative growth rates I think a fairer measure is per capita GDP, which for China is $11,000 and for the US $63,200 per year. The possibility of getting a share of that US pie ,in spite of those problems, is what keeps people fording over the Rio Grande. An immigrant or a teenager can start emptying the trash cans at McDonald's for $16/ hour or $32,000 per year. Compared to much of the world that is economic easy street or heaven on earth.
China and India maybe closing that gap but they both still have a long long way to go.
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Re: China's Lehman Brothers Moment?

Unread postby Doly » Tue 21 Dec 2021, 15:35:24

Instead of relative growth rates I think a fairer measure is per capita GDP, which for China is $11,000 and for the US $63,200 per year.


That misses something, because one dollar buys different things in the US and China. To compensate, people estimate PPP (purchasing power parity). PPP isn't an ideal measure, but it gives you a better notion of how GDP per capita compares in real life. GDP per capita in China in 2020 was $16,410
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