H/T numberonepal
Posted on 01/29/2024 8:30:02 AM PST by Vermont Lt
A court in Hong Kong has ordered the winding up of Evergrande Group, the world’s most indebted property developer, dealing another blow to investor confidence as China’s ailing real estate sector continues to weigh on its economy.
(Excerpt) Read more at cnn.com ...
But liquidated means they sell off the real estate. That must be worth something.................
How will Everglade creditors receive payment? Who will supervise the liquidation?
Will the Chinese government, who aided Everglade to get where it is at, be willing to send assets now in Chinese banks to non-Chinese creditors?
Will the Hong Kong Court be willing to rule against a Chinese company for non-Chinese creditors?
I do not expect you to necessarily know the answer, but someone may.
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There is a big difference between the Railroad Bonds of the ROC and the Evergrande bonds in the PRC. The thing with the railway bonds s the the PRC will tell you they are not THAT other country.
This is the same issue folks had with Czarist Russia and the Cubans when they turned commie.
The Evergrande issue will impact the PRC, not because of THIS default—this has been coming since late 2021. It got buried with a lot of Covid news. This will be a big deal because it suggests that many other real estate developers in China will follow in their paths.
China is overbuilt with a declining population that cannot afford and cannot use the housing it has. They are literally tearing down complexes that have been empty and decaying for years. Complexes that were NEVER occupied. A lot of party officials are going to be sent to the rice fields for allowing this to happen. Lots of people in the “ruling” class are going to become insolvent.
This trend could impact China for a long, long time. I could lead to a “tightening” of economic control. Neither of those things are good for the world.
H/T numberonepal
I just read on another site that Blackrock had a piece of this.
I don’t wish people ill…very often. But Blackrock taking a little hit wouldn’t make me cry.
It’s interesting to watch the gold market and the bitcoin markets today. They popped up on very little other news.
I don’t know if that is ‘good’ or ‘bad’.....
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Bad, very bad. All the world’s financial systems are now tied together, in one way or another. No telling ( they will not) how much Goldman, Morgan, etc and other financial giants had interest in them.
Do remember Bear Sterns? “ Blamed”- noted as the first to start the dominoes falling in ‘08?…..BS, first was a Bank out of Scotland that Bear Sterns was deeply invested in….silver contracts if I remember correctly.
All that said, should China bail out Evergrand, it means much less money spent on purchasing US debt notes, more Yuans printed, and a host of other consequences
So before the “ bad China” crowd starts celebrating , be very careful of what you wish for….it will in some form effect the global financial system.
*************
Yep life is ever changing over the eons from birth to death.
Used to be walk, paddle, horse and buggy, then mail order,
now internet. It's now get on the internet, punch a few keys
and your order arrives at your door or designated place. It's
getting pretty much like your daily chores are pooping/peeing.
Get cremated, have your ashes scattered as you desire saving
what is left for your designates.
It will only help if a purchase of the real estate is done with debt and not purchased outright.
Also, that debt will need to be marked to market, which is a whole lot less than what Evergrande was marking it in their books.
Evergrande is only the first shoe to drop - and they aren't even the largest one. China is in deep economic trouble.
Wouldn't be surprised to see a move on Taiwan as a result - China needs some means of obtaining enormous amounts of debt - and fast.
Sort of like the US - there's a reason Yellen is creating so much new debt and the crooked lawmakers on both side of the aisle keep spending into oblivion. Also where the US government is the one doing most of the hiring to keep the charade afloat.
I'm sitting on the sidelines in short-term t-bills watching the nightmare unfold.
The historical record is for China to pull back from contact with the rest of the world.
Bad in a lot of ways, but particularly bad for China.
There’s an old African proverb:
When elephants fight, the grass gets trampled..................
One of the unintended benefits of China’s very tight regulations on their finance sector, is that their finance sector ended up being limited access and mostly closed off to foreign parties, so although there is exposure to the west on stuff like this (of which more are coming), it isn’t nearly as bad as it could have been otherwise.
Normally a financial crisis with the size of their economy would probably set off a chain reaction that would be catastrophic to the global financial market. But in this case there will be a significant but manageable hit to the rest of the world. Inside China though, I think we could see a replay of the Great Depression, or what happened in Venezuela the last 15 years.
This could be just the first domino of a much larger debt/financial calamity. All of this type of financial shenanigans are interlinked worldwide. If something big and bad occurs one place, it will affect others elsewhere.
Glad to see someone knows the consequences, they will stretch far and DEEP…..could this be the catastrophic “ Event “ that ushers in the cashless digital currency ( CBDG) to “save” the financial system?
To early to tell, however , it’s coming….and it will be out from nowhere….a four foot surfing wave developing into a Tsunami. Stay tuned.
“I just read on another site that Blackrock had a piece of this”
Last autumn, I got out of Blackrock—just because.
No cost to me...
All money is a claim on debt.
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Are you talking about the US?
All world economies - with the exception of very few.
Yemen does not have debt-based money. Gee...I wonder if anyone will try to change that like they did with Iran and Iraq during the Gulf War.
Yes, no big surprise here.
From a CNN article:
“...The Shenzhen-based developer, with total liabilities of 2.39 trillion yuan ($333 billion) at the end of June last year, filed for bankruptcy in New York in 2023.
Overseas creditors are owed $25 billion, the Hong Kong court document showed...”
Less than 10% is owed to foreigners. I would imagine a big chunk of the rest is Hong Kong, but in any case, China is a communist country, so they can figure out ways to smooth this over without really following Western business practices.
I understand what you are saying, but billions of US companies are invested in China and any kind of liquidity crisis will flow over.
Again, this is just the end of a long death process. One would hope those companies have “adjusted.”
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