Chinese Economics Thread

[siegecrossbow]

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[Overbom]

So no one has ANYTHING to say about the billions in debt that Evergrande is about to default on?

Debt will get restructured, bondholders a debt haircut

No worries about contagion to other markets

See above. Gov will control the spread. Banks are state-owned. Company will not get in bankruptcy.
It still has plenty of assets, it just needs time to liquidize them into hard cash

Not even worried about ur own house prices

Prices go up, prices go down. Unless you sell, you dont have losses. Most if not all people, hold it for the long term. Do you think that 5-10-15 years down the line, property prices will remain low?

TLDR: some people will lose money, vast majority of the people will be ok

 

[Gatekeeper]

Debt will get restructured, bondholders a debt haircut



See above. Gov will control the spread. Banks are state-owned. Company will not get in bankruptcy.
It still has plenty of assets, it just needs time to liquidize them into hard cash



Prices go up, prices go down. Unless you sell, you dont have losses. Most if not all people, hold it for the long term. Do you think that 5-10-15 years down the line, property prices will remain low?

TLDR: some people will lose money, vast majority of the people will be ok

This is it. The western MSM is trying to portrait this as some kind of China economic collapse. Gee this isn't on the same scale as the Lehman bros, Freddy Mac and Fanny May.

Get real.

 

[Franklin]

So no one has ANYTHING to say about the billions in debt that Evergrande is about to default on? No worries about contagion to other markets, no worries about it sparking a new financial crises?

Not even worried about ur own house prices?

lol

What is happening with Evergrande is part of the larger picture of debt deleveraging and containing of financial risk in the economic system. If Evergrande can get its debt restructured then they can continue under the new plan if not they should go bankrupt. But I also feel it should be a managed bankruptcy where the 1.5 million people who paid a retainer to Evergrande for a house can still get their homes. But the holders of stocks, wealth management products and those who have made personal loans to Evergrande will be wiped out. Banks and bond holders should get some money to prevent the potential for a bigger financial crisis.

 

[AndrewS]

So no one has ANYTHING to say about the billions in debt that Evergrande is about to default on? No worries about contagion to other markets, no worries about it sparking a new financial crises?

Not even worried about ur own house prices?

lol

Not at all.

There will be an agreement over Evergrande, and as you say, it is only worth say $200 billion. That is 1.3% of Chinese GDP.

In comparison, Lehman had $35 Trillion ($35000 Billion) outstanding when it collapsed. That is a 175x bigger problem than Evergrande. Plus Lehman debts were more than twice the size of the US economy.

 

[caudaceus]

$35 Trillion

Are you sure about this number? That's like 250% of US GDP back in 08

 

[Bellum_Romanum]

So no one has ANYTHING to say about the billions in debt that Evergrande is about to default on? No worries about contagion to other markets, no worries about it sparking a new financial crises?

Not even worried about ur own house prices?

lol

Are you losing millions in this debacle? I certainly won't. It's a problem that must be addressed now and if letting Evergrande to sink is the best way to ensure long term recovery in exchange for short term mega pain then so be it. This issue must not and can't be kept on being delayed forever because sooner or later the problem will occur and then maybe by that time the situation won't be as manageable and then it'll be even more difficult to manage.

 

[AndrewS]

Are you sure about this number? That's like 250% of US GDP back in 08

Yes. And the Lehman $35 Trillion may actually be an understatement

At the time Lehman filed for bankruptcy, it was a major player in the global derivatives market. Its portfolio included 906,000 derivative transactions with an estimated notional value of $35 trillion, accounting to roughly 5% of the global market value.

ccp12.org/the-lehman-case/

Lehman had 1.2 million derivative contracts, with a notional value of $39 trillion

manchesteropenhive.com/view/9781526100580/9781526100580.00011.xml

 

[caudaceus]

Yes. And the Lehman $35 Trillion may actually be an understatement

Just learned that derivative number is Hella huge. I hope China companies don't play derivative too much.

 

[AndrewS]

Just learned that derivative number is Hella huge. I hope China companies don't play derivative too much.

Of course