Chinese construction Mega-Bankruptcy. Evergrande about to crash for 355B

[teosanru]

Lehman Brothers went bankrupt with passives of 619B. Evergrande, a Chinese firm with ties to the CCP has admitted an insurmountable debt and has recently hired the same lawyers that prepared Lehman´s case for bankruptcy. 128 banks and 121 societies have claims against the company. The shockwaves may be felt through China and all the Asian region. The direct impact is around 2% of Chinese PIB and may cause more collapses.

Evergrande is a Real State / Construction company which works mostly in China and owns its own bank.

https://www.theguardian.com/world/2021/sep/14/china-property-giant-evergrande-admits-debt-crisis-as-protesters-besiege-hq

The story would be the same again, either the government will have to bail them out to make sure people's deposits in the company as well as in the bank that they own can be repaid so ultimately taxpayers will have to bear the burden of all this by paying taxes and also taking hit of inflation, these big real estate firms in almost all the parts of the world are really going cash dry, especially due to COVID, there was a surge in construction material cost, which was supplemented by reduced demand for real estate has led to a great cash crunch for even the largest of the companies. Either government will bail them out or a corporate shark would take up the company for pennies to transform it. 

[Sithara007]

The story would be the same again, either the government will have to bail them out to make sure people's deposits in the company as well as in the bank that they own can be repaid so ultimately taxpayers will have to bear the burden of all this by paying taxes and also taking hit of inflation, these big real estate firms in almost all the parts of the world are really going cash dry, especially due to COVID, there was a surge in construction material cost, which was supplemented by reduced demand for real estate has led to a great cash crunch for even the largest of the companies. Either government will bail them out or a corporate shark would take up the company for pennies to transform it. 

This is the problem. They know that the government will bail them out. That is the reason why they go for high-risk business. We all know what happened in 2008-09. Many of the banks went bankrupt, but the government bailed them out. And in a couple of years, the top officials were allotting them tens of millions of USD in annual bonus. Only the ordinary tax payer is losing here. Either the tax slabs will increase, or the purchasing power of the national currency will go down.. or in some cases, both will happen.

[STT]

I was trading through the Lehmans failure and it was far larger because it was symptomatic and also with contagion effect.   AIG would have failed also, this was the backing for many other instruments or ETN assets which essentially are traded prices that actually are debt or IOU.  Multiple failures would have caused others to fail in simple terms.  
   What happens with Evergrande despite them having finance operations is the contractors go broke, its damage to the building industry I wouldnt doubt and outside of that private citizens who had some debt with Evergrande expecting payoff in housing or monetary value wont receive even half back I guess.  So its a deflationary effect but Im not sure it spreads like the way all banks are entwined to each other in the system known as fractional reserve etc.

[Wind_FURY]

China can, A. BRRR-print, and pump their economy with Yuan to stop the crash, OR B. Let the economy fix itself by leaving it alone, and let it be through a recession. For Bitcoin HODLers, we can, A. Relax, OR B. embrace another golden opportunity to buy the dip and HODL.

[Gyfts]

A lot of other Chinese firms are beginning to fail - expect this to have some serious ramifications for the global markets. Some of these firms are state owned so it's something to consider, but crypto's already tanked a bit and it's probably going to get a whole lot worse.

To put Evergrande's liabilities into context, they're on the hook for 300 billion...

[sana54210]

I was trading through the Lehmans failure and it was far larger because it was symptomatic and also with contagion effect.   AIG would have failed also, this was the backing for many other instruments or ETN assets which essentially are traded prices that actually are debt or IOU.  Multiple failures would have caused others to fail in simple terms.  
   What happens with Evergrande despite them having finance operations is the contractors go broke, its damage to the building industry I wouldnt doubt and outside of that private citizens who had some debt with Evergrande expecting payoff in housing or monetary value wont receive even half back I guess.  So its a deflationary effect but Im not sure it spreads like the way all banks are entwined to each other in the system known as fractional reserve etc.

Lehman situation was not an individual situation, that is the biggest difference. This company is a huge one that is bankrupting and that is understandable because every company can bankrupt, even apple or amazon could bankrupt one day, however 2008 crisis was a lot bigger. I mean we have seen nations like Spain, Italy, Greece, Turkey and many Balkan nations get so much affected by that 2008 crisis that it is silly to realize it was just some bankers combining some bad mortgages with some good ones to sell some more stuff.

Imagine a world where some bankers used some money to sell bad house loans and that impacted half of Europe’s economy. THAT was a big one, this? This is just some construction company going bankrupt, it is expected when people can't afford to buy houses, what else were they expecting to begin with?

[ilovealtcoins]

The effect from Evergrande is spreading and affecting the real estate market as well as the entire stock market in China. Sinic holdings Group, a real estate development company in China, has lost 87% of its stock value today.

[Wind_FURY]

The effect from Evergrande is spreading and affecting the real estate market as well as the entire stock market in China. Sinic holdings Group, a real estate development company in China, has lost 87% of its stock value today.

Then the Central Planner of China will have no other choice in this situation. The government will, BRRR-print Yuan into existence, and BAIL EVERY COMPANY OUT if they need it. OR, there won’t only be a great economic crisis, but there will also be the Great Resignation of a leader. The choice is his, Bail out or Resign.

[Lucius]

I was watching CNBC yesterday and noticed one interesting interview that someone luckily posted on YT. This is a person who warned in 2012 of the Evergrande case, which at the time, according to his research, had a debt of only $12 billion. After that report, Andrew Left (Citron Research Founder) was banned from trading in Hong Kong, which shows how important it was for the Chinese to sweep everything under the rug, even though it was only a matter of time before a complete breakdown occurred.


(click on picture to watch video)

[ilovealtcoins]

The effect from Evergrande is spreading and affecting the real estate market as well as the entire stock market in China. Sinic holdings Group, a real estate development company in China, has lost 87% of its stock value today.

Then the Central Planner of China will have no other choice in this situation. The government will, BRRR-print Yuan into existence, and BAIL EVERY COMPANY OUT if they need it. OR, there won’t only be a great economic crisis, but there will also be the Great Resignation of a leader. The choice is his, Bail out or Resign.

I don't think the Chinese government will save this company because if they buy dollars it will devalue the yuan. This will greatly affect other sectors of China's economy. They ignored Evergrande's call for help in July.

[fillippone]

So, Evergrande didn't pay the coupon on their debt due today, as expected.
Still, this is a problem for China, as the vast majority of this debt, exposure is onshore to china (roughly, 200 BLN out of 300).
Contagion abroad, if it will ever happen, will be slower than expected. I hope.

[(o)(o)ilikeboobs(o)(o)]

So, Evergrande didn't pay the coupon on their debt due today, as expected.
Still, this is a problem for China, as the vast majority of this debt, exposure is onshore to china (roughly, 200 BLN out of 300).
Contagion abroad, if it will ever happen, will be slower than expected. I hope.

There have been many real estate companies in China that have severely reduced their stock prices. People are saving themselves before the Chinese government does something.
If China spends money to buy 300 billion dollars, surely the yuan will depreciate and affect other sectors of the economy.
Maybe they'll let the crash happen. According to data of Evergrande Group, assets are equal to 2% of China's GDP, and the country's real estate industry contributes 14% of total GDP.
The Chinese government and this group are meeting to discuss a solution. This is a tough choice, maybe they will take time.

[oHnK]

Many people say the Evergrande case will end like the Lehman Brother case.  However, China's largest company has shown signs of bankruptcy with a default.  There are so many companies behind Evergrande that this sequence of problems will affect many of these companies.  China's economy will not be fine with such a large corporate default case, we often hear the term "too big to fail" and this is associated with the Evergrande case.  I hope this will not spread to become a severe global economic problem, so far the stock market in my country is red because of this issue and so is the crypto market today although it can't be directly linked but the current market trend is declining.

[Silberman]

The story would be the same again, either the government will have to bail them out to make sure people's deposits in the company as well as in the bank that they own can be repaid so ultimately taxpayers will have to bear the burden of all this by paying taxes and also taking hit of inflation, these big real estate firms in almost all the parts of the world are really going cash dry, especially due to COVID, there was a surge in construction material cost, which was supplemented by reduced demand for real estate has led to a great cash crunch for even the largest of the companies. Either government will bail them out or a corporate shark would take up the company for pennies to transform it.  

This is the problem. They know that the government will bail them out. That is the reason why they go for high-risk business. We all know what happened in 2008-09. Many of the banks went bankrupt, but the government bailed them out. And in a couple of years, the top officials were allotting them tens of millions of USD in annual bonus. Only the ordinary tax payer is losing here. Either the tax slabs will increase, or the purchasing power of the national currency will go down.. or in some cases, both will happen.

Exactly, those the very top know that they are so big that they can do whatever they want and that the government at the end is going to rescue them whether because they put the whole economy at risk or because they are their friends, however now the circumstances are completely different, if we see a similar crisis than the one that we saw in 2007, because the governments did nothing to try to avoid the same crisis from appearing again, I'm not so sure that they will be able to do the same as they are heavily indebted already precisely because of that crisis and the pandemic and this means that they are going to need to print a lot of money which will increase inflation even more and this will begin to affect heavily their citizens, which are unlikely to remain silent about this.

[Wind_FURY]

The effect from Evergrande is spreading and affecting the real estate market as well as the entire stock market in China. Sinic holdings Group, a real estate development company in China, has lost 87% of its stock value today.

Then the Central Planner of China will have no other choice in this situation. The government will, BRRR-print Yuan into existence, and BAIL EVERY COMPANY OUT if they need it. OR, there won’t only be a great economic crisis, but there will also be the Great Resignation of a leader. The choice is his, Bail out or Resign.

I don't think the Chinese government will save this company because if they buy dollars it will devalue the yuan. This will greatly affect other sectors of China's economy. They ignored Evergrande's call for help in July.

The CCP won’t save Evegrande, but it will make policy decisions to prevent Evergrande’s crash from spreading to other sectors of China’s economy. Or stop it from spreading to other companies in that sector. There will be capital injections from Bank of China, and lower Policy Rates. Everything will be OK next month. Buy the Dip, it’s an opportunity.

[ilovealtcoins]

The CCP won’t save Evegrande, but it will make policy decisions to prevent Evergrande’s crash from spreading to other sectors of China’s economy. Or stop it from spreading to other companies in that sector. There will be capital injections from Bank of China, and lower Policy Rates. Everything will be OK next month. Buy the Dip, it’s an opportunity.

I thought again, the Chinese government will save this company. Currently, Evergrande has paid a part interest to banks and shareholders. They raised money from the families of the group's employees. They seem to be very good at this.
Lehman Brothers Bank is a lesson from the US for China to decide to save Evergrande Groups. The consequences of letting a large economic group die will bring real collapse to the Chinese economy. It will take time and money to restore the world's second-largest economy.

[Wind_FURY]

The CCP won’t save Evegrande, but it will make policy decisions to prevent Evergrande’s crash from spreading to other sectors of China’s economy. Or stop it from spreading to other companies in that sector. There will be capital injections from Bank of China, and lower Policy Rates. Everything will be OK next month. Buy the Dip, it’s an opportunity.

I thought again, the Chinese government will save this company. Currently, Evergrande has paid a part interest to banks and shareholders. They raised money from the families of the group's employees. They seem to be very good at this.
Lehman Brothers Bank is a lesson from the US for China to decide to save Evergrande Groups. The consequences of letting a large economic group die will bring real collapse to the Chinese economy. It will take time and money to restore the world's second-largest economy.

For China, if there will truly be an “economic crash”, I believe it will be a “controlled crash”. I know we believe in decentralization as Bitcoiners, but the Chinese Central Planning also has its advantages.

[so98nn]

Thats insane amount of money! How could so big firm with accountants, managers, CA's, lawyers working for them 24x7x365 can let this happen? I mean I am really startled with the fact that such big companies could go bankrupt even though they have peeps working all around. How did they not see this one coming in the first place?

Moreover if that company is such huge empire then what about the employees working for them? They could end up loosing their jobs i see!

There is no wonder though after you know how Kingfisher went bankrupt in the past putting SBI bank at high risk. There more banks who still given the loans to that company and today all of them got defaulted by the Vijay Mallya.

Terrific to see how these billionaires can be so stupid.

[Lucius]

Thats insane amount of money! How could so big firm with accountants, managers, CA's, lawyers working for them 24x7x365 can let this happen? I mean I am really startled with the fact that such big companies could go bankrupt even though they have peeps working all around. How did they not see this one coming in the first place?

From what I've read (my local news portal), the real estate business seems to have been in crisis for some time when it comes to China - because the data says that there are currently as many as 90 million vacant apartments or houses in China, which is enough for comparison to accommodate the entire population of Germany or France. In other words, companies like Evergrande were building a lot more than they needed to, and now while it sounds incredible, the Chinese are tearing down those same buildings.

In addition, Evergrande did business in something that had nothing to do with real estate management (private wealth management), which is just an indication that they were greedy far beyond their means. The expected scenario is that the healthy parts of the company will be sold, while the rest will have to be taken care of by Chinese banks.

[(o)(o)ilikeboobs(o)(o)]

Thats insane amount of money! How could so big firm with accountants, managers, CA's, lawyers working for them 24x7x365 can let this happen? I mean I am really startled with the fact that such big companies could go bankrupt even though they have peeps working all around. How did they not see this one coming in the first place?

From what I've read (my local news portal), the real estate business seems to have been in crisis for some time when it comes to China - because the data says that there are currently as many as 90 million vacant apartments or houses in China, which is enough for comparison to accommodate the entire population of Germany or France. In other words, companies like Evergrande were building a lot more than they needed to, and now while it sounds incredible, the Chinese are tearing down those same buildings.

In addition, Evergrande did business in something that had nothing to do with real estate management (private wealth management), which is just an indication that they were greedy far beyond their means. The expected scenario is that the healthy parts of the company will be sold, while the rest will have to be taken care of by Chinese banks.

Banks such as HSBC, UBS... and investment fund BlackRock have joined in buying Evergrande's debts. This is the scenario as expected. They will buy to help avoid collapse, and next the Chinese government will take over this massive corporate reshuffle.
They need to avoid the breakdown from happening because otherwise the consequences will be enormous.