[News] Another 2008 in the making?

Argartu · Sep 17, 2021

https://www.reuters.com/business/investors-brace-great-fall-china-2021-09-16/

Things aren't looking good for the housing market in China, western hedge funds heavily invested in the bonds and it doesn't look like the CCP are willing to prop up their biggest housing developer.

Comrade Sam · Sep 17, 2021

What a stupid economic system capitalism is, even in its Chinese pretend Communist guise. The drive for profit and competition looks set to ruin the lives of billions again.

dwayne · Sep 17, 2021

Fingers crossed would love a massive correction. It's about time.

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Machiavelli · Sep 17, 2021

No, according to my limited understanding of this. I don't think it'll result in contagion affecting those financial instruments investing in property in western markets. Unlike in 2008, the capitalisation of Chinese property is small compared to US, UK, etc. It'll probably have an impact on the Chinese economy though, but doubt it'll ripple out too far beyond there.

Nobby Cybergoat · Sep 17, 2021

Argartu said:
https://www.reuters.com/business/investors-brace-great-fall-china-2021-09-16/

Things aren't looking good for the housing market in China, western hedge funds heavily invested in the bonds and it doesn't look like the CCP are willing to prop up their biggest housing developer.

No, no. The world has definitely learned it's lessons from last time. It will all be fine

B-right-on · Sep 17, 2021

Nobby Cybergoat said:
No, no. The world has definitely learned it's lessons from last time. It will all be fine

Lol.

Head
Sand
Buried

(I know you're joking)

The whole housing bubble was based on the CDS stuff imploding in America and giving lots of cheap credit to people who can't afford it. I think we are in a similar
similarly now and as soon as there's a hike in interest rates to cool off inflation, Shit, Fan, Hit.

Every county was completely bankrupt before the massive Covid bailouts. Will come home to roost at some point, but probably not for another good decade or so imo.

Stat Brother · Sep 17, 2021

B-right-on said:
Lol.

Head
Sand
Buried

(I know you're joking)

The whole housing bubble was based on the CDS stuff imploding in America and giving lots of cheap credit to people who can't afford it. I think we are in a similar
similarly now and as soon as there's a hike in interest rates to cool off inflation, Shit, Fan, Hit.

Every county was completely bankrupt before the massive Covid bailouts. Will come home to roost at some point, but probably not for another good decade or so imo.

Unless you're Margot Robbie taking a bubble bath...

...f**k off.

Happy Exile · Sep 17, 2021

On the slightly tinfoil hat reddit forums about finance there's a lot of people who think a massive crash is coming in the US which will have global impact, and stories of large institutions and members of congress ditching stocks and shares in favour of other investments, the federal reserve being almost empty, hedge funds about to collapse etc. From 1st October every major US bank has to have a trillion dollars so they can keep lending to businesses and individuals in a major recession (this much appears true). Some see that as just-in-time legislation, though there's also concern that apparently (pinch of salt) only 4 out of 35 banks can meet this requirement at the moment so they are calling in debts to boost their funds.

saafend_seagull · Sep 17, 2021

No chance. 2008 based on over lending. Not happening again.

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Machiavelli · Sep 17, 2021

saafend_seagull said:
No chance. 2008 based on over lending. Not happening again.

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Would you care to share the level of private debt in 2007/8 as compared to now with us? Go on, as you're so certain about such things.

Lyndhurst 14 · Sep 17, 2021

Where's Bernie Madoff when you need him ?

Swansman · Sep 17, 2021

Throughout history the economy has crashed every now and then and it will do it again. Its very, very naive to believe that it wont.

beorhthelm · Sep 17, 2021

Happy Exile said:
On the slightly tinfoil hat reddit forums about finance there's a lot of people who think a massive crash is coming in the US which will have global impact, and stories of large institutions and members of congress ditching stocks and shares in favour of other investments, the federal reserve being almost empty, hedge funds about to collapse etc. From 1st October every major US bank has to have a trillion dollars so they can keep lending to businesses and individuals in a major recession (this much appears true). Some see that as just-in-time legislation, though there's also concern that apparently (pinch of salt) only 4 out of 35 banks can meet this requirement at the moment so they are calling in debts to boost their funds.

sounds like interwebs getting things mixed up. only signficance of 1st October is a budget bill needs to be passed by then, otherwise government cant spend. happened under Trump and Obama, lots of parks shut, federal buildings close.

there is a whiff of crash on the breeze. there's a lot riding on the prospect of a return to normal, while countries keep re-closing, partially or completely. these leads to closures of factories and ports, break of the supply chains across the world. along with interruption to services and consumers not being able to consume as much, likely have some impact to recovery expectation. its the expectation not being met that may lead to recession if suddenly business cut back on spending and that filters through.

i know nothing about Evergrande other than they have massive debt . i suspect CCP, while not bailing out the business itself, will step in to prevent onward spread of debt burden.

Machiavelli · Sep 17, 2021

Swansman said:
Throughout history the economy has crashed every now and then and it will do it again. Its very, very naive to believe that it wont.

Well, not really. It might be the case that throughout its history, the capitalist economy has gone through booms and busts, but that wasn't the case with the feudal economy (mind you, there was little growth in that).
In being sceptical of the thread title and being reticent to link the Evergrande collapse to 2008, it does not mean that the capitalist economy will have further busts, it merely means that either this won't result in a 2008 crash or that Evergrande's collapse won't be the cause of it.

Blue3 · Sep 17, 2021

dwayne said:
Fingers crossed would love a massive correction. It's about time.

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A true correction not the ones that pile debt onto the less fortunate, I always liked the medieval corrections where by proclamation a date was set that all debts needed to be repaid or compensation in kind sought if not achieved within a set date all debts were cancelled

Hugo Rune · Sep 17, 2021

Machiavelli said:
Would you care to share the level of private debt in 2007/8 as compared to now with us? Go on, as you're so certain about such things.

People still believe the Tory lie, shocking.

House prices in the US went from $200,000 to $20,000 and banks like Nothern Rock had all our money invested in them. Not a hard concept to grasp.

Blue3 · Sep 17, 2021

China Evergrande cranes dominate the skylines of many Chinese cities. The company develops and manages real estate across China, primarily focussing on residential apartment complexes. According to the company website, Evergrande Real Estate owns more than 1300 projects in over 280 Chinese cities.

It is the second-largest property developer in China and ranks amongst the top 150 companies in the world based on revenue. According to Fortune 500, the company has over 123,000 employees, and posted total revenues of $73.5 billion in 2020.

Alongside its enormous property development and management operations, Evergrande has also made investments into other sectors such as electric vehicles, internet and healthcare businesses.

The company was founded by billionaire businessman Xu Jiayin in 1996. He is ranked by Forbes as the third-richest person in China and the 31st richest man in the world.

Xu Jiayin, 62, announced his resignation as Chairman of Evergrande Real Estate Group on Tuesday, August 17 2021.

Evergrande is listed on the Hong Kong stock exchange (HKG: 3333). Since July 2020, its share price has plunged around 80%.

China Evergrande’s debt crisis
There’s speculation of more than $356 billion of global debt exposure to China Evergrande.

The company is the largest issuer of US dollar denominated Chinese junk bonds – bonds that very few investors now want to touch.

As Hilliard MacBeth, author of When the Bubble Bursts, puts it on the Richardson Wealth blog:

“Evergrande bonds which had been trading at par, and maturing in 2025, are now trading below 40 cents.

“This implies a return of more than 2.5 times in just 4 years, plus a 10.5 percent coupon, which means that the market believes there is little chance that Evergrande can pay this debt.”

Asia Markets notes the yield to maturity on Evergrande bonds maturing in 2023 is now hovering at around 35% – an huge yield, implying a risk level unacceptable by most investors.

BN41Albion · Sep 17, 2021

dwayne said:
Fingers crossed would love a massive correction. It's about time.

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What like last time in 2008?

Bodian · Sep 17, 2021

It can't happen again, as the last global financial crash was caused by Labour being in power in the UK.....

Machiavelli · Sep 17, 2021

Blue3 said:
A true correction not the ones that pile debt onto the less fortunate, I always liked the medieval corrections where by proclamation a date was set that all debts needed to be repaid or compensation in kind sought if not achieved within a set date all debts were cancelled

In ancient Athens, the cancellation of debt initiated a new form of power, the strength of the demos

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