A Hong Kong court ordered the liquidation of China Evergrande, the world’s most indebted property developer.
Evergrande has assets of about $245 billion, but owes about $300 billion.
Its demise is a “controlled collapse,” but still raises systemic risk and will hurt investors, says an analyst.
I am somewhat concerned about the global implications of this. Evergrande is a symptom of a deeper malaise in the Chinese real estate market.
is a symptom of a deeper malaise in the Chinese real estate market.
Its even worse than that because retail investors in China use real estate as their primary investment vehicle. Where as someone in the USA might put money in a 401k for retirement or a brokerage account for investing, those don’t exist (in the reliable way) in China. So many regular people’s nest egg is tied up in real estate. So this isn’t just the real estate market getting wiped out, its millions of working class people’s life savings just evaporated.
Not just a China thing. Canada is absolutely fucked with the government floundering to try and keep house prices from falling
Correct me if I’m wrong. I know that Canadian home prices are bonkers, especially in large cities like Vancouver or anywhere in the GTA (are the Quebecois also having this trouble?). However, the problem with Evergrande isn’t just failure of this company reduces home prices (which is where lots of Canadian savings resides), but Evergrande had taken deposits for tens of thousands of homes it never built or never completed.
So while the value/sale price of a home in Canada may be falling. At the end of the day it still does have value monetarily, and still serves a vital function of housing a family.
China’s situation with Evergrande means the money paid for the house by the owner simply evaporated with no possibility of a refund and the house doesn’t exist because it was never built (or never completed). So to me the China situation looks significantly more dire.
This is from Economics Explained two years ago. It basically explains the whole thing, but it isn’t really a TLDR.
https://www.youtube.com/watch?v=lbH_8Nj51HU
If that’s too long, Peter Zeihan recently gave a fair summary in a six-minute video.
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https://www.piped.video/watch?v=lbH_8Nj51HU
https://www.piped.video/watch?v=JD3m6U6g53k
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I think it’s something like: CCP controls what investments citizens make. CCP wants to expand infrastructure and build up a lot of properties. The company gets overfunded. CCP also implements one child policy for like, idk four decades. Not enough people to live in all the properties they built that never relied on market demand.
Does it hurt anyone other than investors? Because I could not possibly care less about investors.
That’s the problem with investors, if they’re not making more money than last year they find a way to fuck the rest of us. Either they pressure companies to lay off workers, they pressure the government to cut taxes, lower pesky labour and environmental regulations, or just handover cash in the form of a subsidy or bailout.
Either way they get our money somehow and enshittify our lives. If there’s no hell we’ll need to invent a special kind of justice for these people.
I don’t know if I can really blame the investors themselves for enshittification… I mean, sure, it’s done for their sake but is it their call? They want a return on the investment, but how much say do they have in the companies that actually do the shitty things?
Then again if I gave money to someone and said “go bring me some milk” and they got me milk, but also murdered everyone they saw along the way, I would definitely not be hiring them again and probably could be in trouble despite not asking for or wanting the murders. If the investors don’t pull out when the company is doing shitty things to make them money, they are definitely evil themselves.
Sorry I was just watching a video that was explaining that most companies are run by a handful of people who basically each represent several of the largest shareholders combined. I suppose I was imagining these people making the actual decisions and hiring the board and pushing the direction of the company and the lobbying efforts as the “investors”.
You’re right I don’t mean we should commit war crimes against grandpa because he has a pension fund lol
The chickens are finally coming home to roost with the decades of bullshit in commercial real estate worldwide without proper regulation. This isn’t unexpected to anyone with half a brain looking at the industry, which means it obviously completely blindsides major institutional investors who never even consider anything more than quarterly numbers in a vacuum. The pandemic exposed the systemic issues so quickly they couldn’t just brush it under a rug with misinformation.
I’m not saying it’s ideal or healthy.
But I don’t see how the west would have an upcoming issue with real estate.
People are still willing to pay increasingly large amounts of money for real estate and when locals can’t afford it they just bring in immigrants.
I’d be interested to know how the real estate valuation in the west is going to decrease.
I have a feeling that “too big to fail” will continue to be the mantra in the west for bailing these institutions out.
The thing with debt is that every time someone (or something) that owes a world-changing amount of it suddenly goes kaput, it becomes pretty clear how much of the debt system is made up.
If Evergrande owes banks, they’ll just write off the debts and pretend it never existed. If they owed companies, they’ll recoup “lost” money from assets and loans from someone else.
Most of the debt system is arbitrary and totally nonexistent. This wont be the collapse of the chinese economy like ““china waters”” claimed it would be; for a capitalist country masquerading as a classless economic system they’re doing capitalism a lot better than most of the world right now.
They just write it off 😃
Here is an alternative Piped link(s):
https://m.piped.video/watch?v=BAjxn2US7J8
Piped is a privacy-respecting open-source alternative frontend to YouTube.
I’m open-source; check me out at GitHub.
and will hurt investors
breaks out world’s tiniest violin
Investors can go suck it, I’m in the corner of the working class.
Even here the system will be rigged in favor of big investors vs small investors vs people who bought an asset and will get squat. Because working class who gave them money upfront to purchase an appt or house will be the last one in the collectors queue.
But your response is accurate to the “claim” that investors will be hurt. Media is so messed up that they don’t even mention the customers that will get the worse impact than investors.
