Evergrande situation

[PercT4b]

Now we all have seen that Bitcoin reacted really well to the recent events, especially China's cryptos ban and Evergrande's crisis.


The second topic is the one I want to particularly focus on (crypto ban looks ridiculous and useless, so I don't wanna focus on that), because the Chinese central bank warned everybody of a possible "storm" that could occur in these weeks.


Do you think that we can consider this crisis solved or should we really expect another little bearish move?

[avikz]

I would request you to watch this video to understand the gravity of the situation,

https://youtu.be/6wdXUsfgq58

But as far as bitcoin is concerned, I don't think there will be any negative impact at all. Rather, bitcoin may see new highs because of such huge debt Evergrande is going to default. But some small banks in China will definitely face capital crunch unless the Chinese government bails them out.

[Hydrogen]

Some may find this piece informative.

Goldman Flags $8.2 Trillion Threat Worse Than China Evergrande

Sep 30, 2021

The real worry concerning the China Evergrande default drama is the inevitable where-there’s-smoke-there’s-fire paranoia that accompanies debt stumbles.

The most worrisome such blaze, say analysts at Goldman Sachs, is surging local government debt levels that President Xi Jinping’s men have done their best to hide. The default troubles at the globe’s most indebted property development seem like small embers compared to the $8.2 trillion worth of local government financing vehicles outstanding.

And that’s just the LGFVs we know of. The data that Goldman’s Maggie Wei highlights is as of the end of 2020. Clearly, the tally is higher now—perhaps markedly. Ten months ago, these shadowy investment schemes had reached 53 trillion yuan, up from 16 trillion yuan, or $2.47 trillion, in 2013. They now amount to roughly 52% of China’s gross domestic product, topping the official amount of outstanding government debt.

In other words, as scary at the $300 billion Evergrande story might be, Xi’s government has much bigger problems on its hands. The most acute: keeping GDP this year from falling too far below the 6% Beijing hoped to produce without adding to the nation’s bubble troubles.

The forces behind local governments sitting on financing-vehicle debt worth twice the size of Germany’s GDP date back to 2008. Even before the Lehman Brothers crisis, Communist Party dynamics encouraged municipal borrowing binges. The way local officials got attention in Beijing—and rose to national prominence—was producing above-average GDP rates.

https://www.forbes.com/sites/williampesek/2021/09/30/goldman-flags-82-trillion-threat-worse-than-china-evergrande/

It appears china has an outstanding $8.2 trillion LGFV (local government financing vehicles outstanding) bubble to rival the united states student loan or housing bubbles.

China's economy is still rolling along despite chinese banks defaulting and needing to be bailed out. Coupled with many catastrophic articles published about large chinese enterprises failing across the board.

The united states war in the middle east is claimed to have costed more than $12 trillion by some sources. If china pursues war against hong kong, taiwan and neighboring territories. What would the cost be? Military technology in a modern age is so overwhelmingly expensive, it could carry the potential to make war too expensive an option to pursue, without eventually bankrupting warring nations.

With the individual cost of sophisticated missiles rivaling the cost of a lamborghini. At a certain point, launching lambos at foreign countries would have to become economically unfeasible, is it fair to say.

[Darker45]

This has already been discussed weeks ago in this exact same section of the forum. Here is the thread created by
paxmao: Chinese construction Mega-Bankruptcy. Evergrande about to crash for 355B. You might want to read some of the most insightful responses there.

Anyway, this Evergrande situation is more like a serious symptom of an even more serious economic illness in China. The country has been secretive and seems to be running smoothly from the outside. That's the image the country could easily project because the ruling party has really no credible opposition. But they can only control the damage for some time. Sooner or later, signs will really come out.

[NeuroticFish]

outstanding $8.2 trillion LGFV (local government financing vehicles outstanding) bubble to rival the united states student loan or housing bubbles.

Global economy looks most of the times like a castle built of playing cards and waiting for just a little gust to make it crumble. It doesn't necessarily means that'll happen now, but the risk is always there.

Anyway, this Evergrande situation is more like a serious symptom of an even more serious economic illness in China.

That's correct. I just hope that "western" banks were not too greedy and aren't that much tied to Chinese economy, because if they are, we have a perfect storm.

If china pursues war against hong kong, taiwan and neighboring territories. What would the cost be?

Somehow the wars' seem to postpone an economic crisis. Yes, they'll be accounted for, but at a later time. And this is something many unfortunately may prefer.

That's the image the country could easily project because the ruling party has really no credible opposition. But they can only control the damage for some time. Sooner or later, signs will really come out.

The more informed somebody is, the more he knows that China's reality is not the one from the image they try so hard to publish.
That's why I do expect the banks didn't go for China head first; although they tend to do extremely foolish moves just because they're too greedy.

[Betwrong]

Maybe I'm missing something, but to me it looks like a government bailout is pretty much possible, considering that China's GDP was around 102 trillion Yuan (16 trillion USD) in 2020, and estimated to be even higher this year.

I think this "Chinese Communist Party mouthpiece", the Global Times



should shut the f*ck up, and the Chinese government should deal with the situation.

[paxmao]

Now we all have seen that Bitcoin reacted really well to the recent events, especially China's cryptos ban and Evergrande's crisis.

..

You got it all wrong. A ban in China means nothing since it has been clamping bitcoin trading and even some mining operations and the market already knows that. Regarding Evergrande, bitcoin can only go up as it is a protection against crisis, particularly those created by massive defaults. Bitcoin has simply responded to the crypto exchanges clampdown in South Korea, which is actually a relevant actor.

The Evergrande crisis is perfect and is something the market should actually appreciate positively for crypto.

Some may find this piece informative.

...

It appears china has an outstanding $8.2 trillion LGFV (local government financing vehicles outstanding) bubble to rival the united states student loan or housing bubbles.
...

My interpretation of this data is quite different. Firstly, the fact that there is debt does not mean there is a bubble. A bubble is created when stuff is bought for the only reason of selling it more expensive to someone else. You may argue that there might be a credit risk, but these loans against vehicles are quite different from loans against houses particularly coming from the gov. which would endure even massive defaults or print a bit of cash.

[so98nn]

The resistance to the China ban was a success. Or may be bitcoin never cared about it or may be this was big plot of the crypto billionaires by spreading the FUD in the market then crashing it and then invest their millions of dollars. We are in the market which is pseudo-anonymous so many possibilities are there for the current scenario.

These cycles are always happening all year around. I see it as very normal trend in bitcoin world now.

If the bitcoin started with the bullish trend now then it’s the right time to think about next ATH target.

Since the world is slowly getting to started with economic crashes and at the same time business and individuals are looking for the refugees all over to invest and grow. Bitcoin is stomping ground for this and this will push it further.

[DrBeer]

Today, in addition to the well-known problems with Evergrande, another one has been added - the construction company Fantasia was unable to pay out about $ 300 million, and also put the second developer in China, Country Garden, at risk. The chain reaction has begun ...
PS Just 1 month ago, Fantasia, in a report to investors, cheerfully reported that the company has excellent liquidity, that there are no problems, and there are no hints of problems either, and there are not even hints of any problems on the horizon...

[goldkingcoiner]

As some people in this thread have already mentioned, I don' think the whole evergrand fiasco will have a large (or even medium) effect on bitcoin. It seems to me that the whole ordeal is being artificially blown of out proportion out of political reasons.

I would not trust any information coming out of China in the first place. China is very well known to lie whenever it suits them and Evergrand may just be some sort of scheme or state strategy. 

[hello_good_sir]

Now we all have seen that Bitcoin reacted really well to the recent events, especially China's cryptos ban and Evergrande's crisis.


The second topic is the one I want to particularly focus on (crypto ban looks ridiculous and useless, so I don't wanna focus on that), because the Chinese central bank warned everybody of a possible "storm" that could occur in these weeks.


Do you think that we can consider this crisis solved or should we really expect another little bearish move?

I think that in terms of the stock market, expect a lot more bearishness to come.

This is not the worst by any means. There are many other firms that are waiting in line to fail.

Plus, Evergrande has not been bailed out or survived all of their future payment deadlines... Keep that in mind.

[McCludel]

In my opinion the Evergrande situation is far from solved, we will see how it develops during the coming weeks / months.

Chinese government is apparently opting for a "soft bailout", for example purchasing Evergrande's stockholdings in other sector unrelated companies or subsidizing directly home buyers who have already paid for their homes but will not be receiving them. 

The question is if the problem is exclusive to Evergrande or if it affects generally to the other Chinese real estate developers, which is probably the case.

[poldanmig]

As some people in this thread have already mentioned, I don' think the whole evergrand fiasco will have a large (or even medium) effect on bitcoin. It seems to me that the whole ordeal is being artificially blown of out proportion out of political reasons.

From some news I've read, it says that now the impact of the Evergrande crisis, which is at risk of bankruptcy, has been felt in the world and recently it's even been reported that several other Chinese companies are also starting to experience a crisis and of course this triggers panic among investors in China, this can trigger a global economic crisis because Evergrande is a large company that has many branches and also various business sectors in various countries, I think if evergrande conditions continue to deteriorate, of course it will have an impact on the stock market and bitcoin, because now bitcoin is starting to be more integrated in global financial markets, so it is more responsive to changes in investors risk appetite that drives global sentiment.

[mindrust]

It is a nothing burger. The markets didn't care about it at all and most importantly, bitcoin did fine. If you are dumb enough to lend money to China, that's your problem. The rest of the markets won't give a flying damn about it.

[Wind_FURY]

Now we all have seen that Bitcoin reacted really well to the recent events, especially China's cryptos ban and Evergrande's crisis.

THEN that’s all we need to know. It’s showing everyone, both HODLers, and HATErs, that Satoshi’s thesis is working in practice. The billionaires are HODLing as a hedge to what I believe will be hyper-inflation. Will Jerome Powell be a Volker? I believe there’s no man in the Fed today who would do what Volker did.

[tyz]

Maybe I'm missing something, but to me it looks like a government bailout is pretty much possible, considering that China's GDP was around 102 trillion Yuan (16 trillion USD) in 2020, and estimated to be even higher this year.

I think this "Chinese Communist Party mouthpiece", the Global Times

should shut the f*ck up, and the Chinese government should deal with the situation.

If there is a domino effect, then the Chinese government will certainly put up a bailout umbrella if it has not already been activated. Evergrande has 300 billion in debt, according to official figures. Part of this can certainly be covered by the assets. The rest would then be no problem for the government to settle. In Europe, there was a much larger bailout in 2010-2014. The problem is rather the shadow banking system, where nobody knows who is involved and whether the debts are in reality much higher. A comparison with Lehman is wrong in my opinion, because the situation is different.

[ChiBitCTy]

For many this all has not been much of a surprise at all.  My former manager at a large financial firm I used to work for sent me an article one day that was titled something like "the ghost cities of china".  The article predicted exactly what's going on today.  China has had these major real-estate issues for years now and the writing has been on the wall.  How will this all play out? Who knows, China lies about everything, so it's hard to truly know whats going on over there. 

[electronicash]

For many this all has not been much of a surprise at all.  My former manager at a large financial firm I used to work for sent me an article one day that was titled something like "the ghost cities of china".  The article predicted exactly what's going on today.  China has had these major real-estate issues for years now and the writing has been on the wall.  How will this all play out? Who knows, China lies about everything, so it's hard to truly know whats going on over there.  

there are serious problems besides that evergrande debts and  ghost cities of china. the growing threats on the expansions thay build and taiwan conflict which could cause war. but all thes also affecting other nations as this all started with money printing.

if china prints their currency too thru the CBDC, the debts of other countries to china will also starts to bubble up. all countries with trade relations to china has to keep printing money from now on.
this will lead to BTC domination.

[fiulpro]

Some may find this piece informative.

Goldman Flags $8.2 Trillion Threat Worse Than China Evergrande

Sep 30, 2021

The real worry concerning the China Evergrande default drama is the inevitable where-there’s-smoke-there’s-fire paranoia that accompanies debt stumbles.

The most worrisome such blaze, say analysts at Goldman Sachs, is surging local government debt levels that President Xi Jinping’s men have done their best to hide. The default troubles at the globe’s most indebted property development seem like small embers compared to the $8.2 trillion worth of local government financing vehicles outstanding.

And that’s just the LGFVs we know of. The data that Goldman’s Maggie Wei highlights is as of the end of 2020. Clearly, the tally is higher now—perhaps markedly. Ten months ago, these shadowy investment schemes had reached 53 trillion yuan, up from 16 trillion yuan, or $2.47 trillion, in 2013. They now amount to roughly 52% of China’s gross domestic product, topping the official amount of outstanding government debt.

In other words, as scary at the $300 billion Evergrande story might be, Xi’s government has much bigger problems on its hands. The most acute: keeping GDP this year from falling too far below the 6% Beijing hoped to produce without adding to the nation’s bubble troubles.

The forces behind local governments sitting on financing-vehicle debt worth twice the size of Germany’s GDP date back to 2008. Even before the Lehman Brothers crisis, Communist Party dynamics encouraged municipal borrowing binges. The way local officials got attention in Beijing—and rose to national prominence—was producing above-average GDP rates.

https://www.forbes.com/sites/williampesek/2021/09/30/goldman-flags-82-trillion-threat-worse-than-china-evergrande/

It appears china has an outstanding $8.2 trillion LGFV (local government financing vehicles outstanding) bubble to rival the united states student loan or housing bubbles.

China's economy is still rolling along despite chinese banks defaulting and needing to be bailed out. Coupled with many catastrophic articles published about large chinese enterprises failing across the board.

The united states war in the middle east is claimed to have costed more than $12 trillion by some sources. If china pursues war against hong kong, taiwan and neighboring territories. What would the cost be? Military technology in a modern age is so overwhelmingly expensive, it could carry the potential to make war too expensive an option to pursue, without eventually bankrupting warring nations.

With the individual cost of sophisticated missiles rivaling the cost of a lamborghini. At a certain point, launching lambos at foreign countries would have to become economically unfeasible, is it fair to say.

I do think that with the Crisis lurking right around the corner, the people would have a hard time trusting the normal currencies. The fiat might become obsolete in many Nations.

We might see people flocking to invest in cryptocurrencies like Bitcoins. At the end of the day, they might work exactly how they worked in the pandemic, despite the whole crisis people were still earning, making money, therefore I do think it might not be such a bad news for Bitcoins, if it was able to take the hit from China, we might already be looking at something made stronger by endless attacks from banks, governments and everything else as well.

Nothing to worry about it, it's not going to affect bitcoin since it's not crypto related. Plus it's not really our problem since it's China's internal problem and no matter how I look at it, I always see that it can only affect China alone so it's much better.

The fact is, the Chinese government is long set to release their own token, their own so called crypto, which is nothing but fiat2.0, they have been giving hints about banning bitcoins and other cryptocurrencies since ages therefore I do think that, this step was due from their side, they already were giving hints, so it should not be a shock to us.

[Kittygalore]

Why would anyone watch out for China and their forecast that a storm's brewing in the crypto market? They're out of the game, they're doing that just to make sure that they're own bitcoin's grow and they can buy more, they don't have stake in it besides the fact that they're manipulating the market to grow their bitcoin portfolio.