Evergrande, one of China’s real estate giants, just filed Chapter 15 bankruptcy.
Meanwhile, China’s HY real estate index is down a massive 82% in just over 2 years.
This puts the index back down to 2008-levels.
All while China just “unexpectedly” cut interest rates.
Is China… pic.twitter.com/p3yuIqPmxL
— The Kobeissi Letter (@KobeissiLetter) August 18, 2023
An affiliate, Tianji Holdings, also sought Chapter 15 protection on Thursday in Manhattan bankruptcy court.
A lawyer for Evergrande did not immediately respond to requests for comment.
Evergrande’s filing comes amid growing fears that problems in China’s property sector could spread to other parts of the country’s economy as growth slows.
Since the sector’s debt crisis unfolded in mid-2021, companies accounting for 40% of Chinese home sales have defaulted.
No pb, PM Scumbag’s SNC Lavalin will pick up the slack in a jiffy.
Didn’t he quietly and nicely saved those guys while that worm Lametti was big honcho at Justice?
Welcome to the worldwide depression. This will not stay within the borders of China. And in related news, WEF is holding meetings in China once a year, in addition to the Davos gathering (fact, not conspiracy).
The Mo Strong Memorial Meetup.
And another one…
https://www.reuters.com/markets/asia/country-garden-how-bad-is-chinas-property-crisis-2023-08-17/
I read somewhere on the Internet (so perhaps take this with a grain of salt) that a world-wide recession would occur if one of the following 4 things happened:
1. Another American Civil War
2. Russia invading over the Pole (does the Ukraine war count instead?)
3. A muslim attack which kills a western leader OR
4. Collapse of the Chinese Economy
I am retired and live a frugal lifestyle and yes, I do think there is a recession coming as it is long overdue. In my own personal experience, recessions used to happen every 8-10 years. Our father lost his job in the early 1960’s, there was a recession in the early 70’s, but I was in university so was already poor. Then there was another in the early 80’s and the company which I worked for went bankrupt and I became self-employed. There was a very bad one in the early 90’s which severely affected the design and construction industries, so again I was hit. Then with the short one in 2001 (after the 9/11 bombings), I moved back to western Canada. The next one was in 2008 with the collapse of the mortgage market in the United States. Since then, it has been “all systems go”. By my reckoning, there should have been another recession in 2018, but it was “kicked” into the future by the world governments spending like crazy. I feel for my daughter’s generation as it has been all “sweetness and light” for most of them.
There are 2 good things about recessions. They generally last about 12-18 months and they weed out all of the badly run businesses. Sadly, I wish this were so for all levels of government.
I spent three and a half years at the University of Ottawa, ending up with a master’s degree in economics, where I spent the first two years in dire poverty. The memory will always stick with me.
“they weed out all of the badly run businesses. Sadly, I wish this were so for all levels of government.”…….actually I believe recessions exacerbate the situation. The employees of the badly run businesses seek secure jobs in government and the cycle begins again with a higher tax burden.
China is not a heavily indebted nation, unlike all Western countries. Most Chinese debt is corporate and interbank debt. The Chinese economy does not depend heavily in the donestic consumer, but rather on the foreign, developing world consumer. There is comparatively far less personal debt. This real estate reckoning is way overdue. A bunch of property-speculating billionaires are going to get wiped out. And housing will be affordable for regular people again.
There were entire cities built by speculators “on spec” as it were – there was never any demand for them. It was seen as a way for China to deal with what they thought was a crushing current account surplus, soaking up excess donestic capital, I guess. One way to let the rich play monopoly, I suppose.
It’s kinda cool though that the vile Yankee “ooh, it says “China” on the page, let’s pour money in” hedge fund set is going to get shafted in all of this.
You are too accurate.
How does a company run up $330 billion in debt? what kind of muppets are lending to them?
I ask myself the same question. There some big financial corporations that are stupid enough to lend the hucksters money.
China is losing by who’s metric? Communists do not play by the same rules we do.
Too true VOWG, the Chinese think and plan in terms of decades and centuries, not months or years, or, as in our case the PM thinks in minutes and hours,….if he ever even thinks at all!
In the short term, perhaps not. But in the longer term, everyone plays by the same rules: reality is what it is.
The Chinese government has made some serious errors in recent years, particularly their lockdown response to Covid and a lot of money printing to prop up state-owned companies. They are likely to have several very difficult years cleaning up that mess. But China has a lot going for it, and I think they will be doing just fine a decade from now.
The US has made even bigger errors, and also faces some very difficult years as things unravel. But unless major changes in policy are made, I do not see the US doing well a decade from now.
Xi is an authoritarian and the worst thing to happen to China since Mao. I got no love for Chicoms so seeing Xi drag them back into the centrally controlled nightmare combined with deadbeat demographics is satisfying. More to come, their window is closing. UnMe and NME666 hardest hit.
Empty cities, full of investment properties?.. Even with a gun to your head the lack of demand will catch up with you..