Evergrande hired debt-restructuring company Houlihan Lokey which handled the collapses of Lehman Brothers, Enron, and Worldcomm (three of the biggest scandals in history). What could go wrong?
@@cf3661 That only means they are using the money to finance some other projects but not your house here in the USA 🇺🇸 we don’t do anything like that is insane 🧐
@@hashimkimwaga1864 ghost city might be true a decade ago, but since 2016 most of those ghost city are filled, but it is true that the demand is definitely decreasing because it is obvious that China gov have a hard crackdown on housing prices to boost its third child policy
Actually the problem isn't the company but the complicated legal BS in China that forces its citizens to all buy houses/apartments in order to function with all the rights in society. Government malfeasance and money printing are huge problems in China, as it is here in the states and elsewhere in all the "developed" countries
If you make a mistake YOU should pay the price. No government should EVER bailout any company no matter how big it is. It's the tax payer's money and should be spent on their needs and necessities.
Your comment makes no sense, Evergrande is a Chinese company. The world's rules do not apply in China. They do not care. The fools that own this debt will get shafted, and China will not care.
@@donjuan3912 This is all the doing of the CCP. The CCP plans ahead and they can see the property market bubble for a while now. Either the CCP bails out by either letting other companies to take over Evergrande assets or just turn it into state owned. The CCP might just let the bubble burst.
Problem is if the bubble bursts too rapidly, it ends up as a destructive explosion. Modern China has very little experience handling a capital economic downturn coming from within, and habitually overreacts to even perceived internal issues.
The problem is that once you get big enough, your problems becomes everyone's problem. Their failure won't happen in a vacuum/sandbox. China has stacked the leverage on real estate extremely high. The failure of Evergrande is a symptom of that leveraging in a slowing economy. As they fail, and flood the market with property, dragging down real estate values, many other developers and debt holders are going to go down the same way.
I still don’t understand why Americans aren’t more worried about the fact that their country is on the brink of bankruptcy. Their congress has to raise the debt ceiling every year or every other year. I don’t know how many times I have heard this news. The general public in the US seems to be more preoccupied with other nations debt than their own. How bizarre!
I can't believe they have to start paying for mortgage before the product is finished. There are so many things that can go wrong in this and allow the system to take advantage of the small investors
They say this won't spill over, but these so called mortgages are loans, so right now with evergrande making news people would just stop paying their mortgage cause they know they won't get a house with the current crisis, this means banks have given out loans they cannot recover. Food for thought
Guess countries will be just content with what they have and the people will just rummage on used and second product till the smoke clear or all foreign companieswho bail out had settled down for operation elsewhere to continue production. I thought the adage or saying "DO NOT PUT ALL YOUR APPLES IN ONE BASKET" was followed by these greedy businessman. They should be penalyze by their own government if their country be affected on the Evergrande fiasco. Also no bail out for investors.
95% of the debt is own in Chinese currency , and Evergrande has hard assets to cover the debt, Lehman had no assets. Us funds are now buying the bonds because they trade below recovery value, which means Evergrande is trading bellow book value. CNBC’s fud as usual to help institutions buy cheap Chinese equities before the run up !
@@peterfireflylund China has not touched to their interest rates , it is still at 4% , and their QE is way behind the US , they are in a much better position to deal with a slow down. Like in 2016 and 2018 they will act , China's bull market will start when the US bear market starts, Wall Street has set up their escape plan from the overbought US market by demonising China in the last 12 months. Last place you want advise from is CNBC.
Now is the time to show how to approach the real estate issue properly. Let's see if China - one of the oldest civilizations in the world - can handle the problem any differently than any other nation.
China lets the air out of the housing bubble and deal with it. almost everyone involved will be made whole, speculators/investors will get what's left.
Evergrande taps Houlihan Lokey which had “Lehman, Enron and Worldcom” as customers … hmmm … Evergrande must be that desperate to tap a company that failed in saving these top 3 biggest corporate bankruptcies in the US. It indeed doesn’t look good. 🤔 If I am Evergrande debt or bond holder, I am not sure if I will be happy that they have Houlihan Lokey on board. 😰
Chinese have an history of being the primary disruptive influence on the real estate market where they live. Here in GTA (Toronto) about 1/2 the population is Chinese and I'm looking forward to a major correction. If so, hopefully the locals who grew up in the area can once again afford property.
@@ilikespam8009 all the "locals" I know own at least three houses iln Vancouver. Old money, laundered money, stolen money, and who exactly are the "locals"???
This could potentially be the third financial crisis(if left unchecked) in as many decades. So we are all basically doomed to repeat this every decade because people/government/business cant use debt reponsibly?
@@bobbyosborne2375 China isn't capitalist. Nothing they do is unhindered. This is a crisis manufactured by the CCP. They used the leveraging of the real estate to cover their lackluster GDP. Then they put a stranglehold on lending similar to what caused the great depression. Now Xi Jinping, a Maoist, is about to deflate the whole economy to deleverage. No capitalist nation would or could do that. Capitalist nations traditionally use inflation to deleverage. Like Joe Biden is doing right now. China is about to give the whole world the finger and return to the policies of the pre-Nixon era.
Actually, os the destiny of every single country that was under comunism ideology in political aplication... Even when they HAD to use some "capitalistic methods"
This is the Chinese version of Aig not Lehman brothers.Its far worse than they are letting on and of course it will effect the markets which will stop the Chinese gravy train and that will have a significant effect on the western markets for sure.
Actually, a guy named Andrew Left of Citron Research flagged the problem with Evergrande as early as 2012. You can still find his report online. CNBC had a segment about him and his prediction not all that long ago.
If someone listens to Andrew left and short the stock from 2012, His account had been busted long time ago. Citron sucks, he seems to have not gotten the listen from GME.
@@baibeiye And yet his claims about Evergrande have turned out to be remarkably accurate, have they not? Which suggests that his prosecution a decade or so back was mainly about shutting him up by those in China with something to hide.
there is a reason why one company in whatever country may not monopoly / run many business especially run by debt to growth since if they collapse,they will bring whole system to grind.
Blown out of proportion, default was 19 billion, rest of the debt are backed by land assets. Lehman bros was debt instraments in the 500 plus billions on default, that’s a different problems China has faced this before with the insurance conglomerate AB insurance of bigger size debt, and it blew over just fine a few years ago. I’m willing to bet the Chinese looked at this very carefully and has the capacity to take the blow and not be hurt by it.
Laws do not matter in China. Their constitution literally guarantees freedom of speech and protest. We all know how much of that their citizens have in reality.
No surprise at all. The houses in China crumble down within 3 years, because of the poor materials/techniques they use when building new houses. So it is no wonder the housing crisis will catch up with them. There is absolutely no common sense building like that. Someone is pressuring the builders to build at a massive speed and they use as many short cuts as possible to satisfy the "person" driving them. It is catching up now. It cannot last. The Ghost Towns is common knowledge now of the masses of buildings crumbling down with no occupants. There is also a power shortage in China, so no elevators work in those high rise buildings. People (especially old people) are walking up all those flights of stairs daily now.
I had a laugh when you said the founder of evergrande was the richest man in china, i'm think, that was all smoke & mirrors & only based on paper, NOT cold hard cash or ownership ?
@@oscargaming466 Japan and the US central banks are pumping money every day, but inflation is negligible. Why? because the money is in stocks and bonds and houses. When people get money from the state, they buy shares, they don't rush to the supermarket to buy food, so inflation never happens, but S&P 500 may skyrocket.
@@oscargaming466 Japan and the US central banks are pumping money every day, but inflation is negligible. Why? because the money is in stocks and bonds and houses. When people get money from the state, they buy shares, they don't rush to the supermarket to buy food, so inflation never happens, but S&P 500 may skyrocket.
The really funny part is people are missing that Evergrande was targeted by the central government. The central government is intentionally crashing the housing market with its new debt restrictions. This in turn will bankrupt the provincial governments as they get the bulk of the revenue from real estate. This is a ploy by Beijing to increase its power over china. The provinces are weak and are dependent on the central government to maintain power. Real Estate developers/the rich are seen as demons who've destroyed china. The central government annihilates both its competition from the provincial governments and the wealthy. And they get to look like the good guys while doing so.
Since Evergrande is the largest developer and has been in business for over two decades, it is hard for me to believe that other property developers are not doing business in the same manner.
If u ask Indian channels, they will say all fine and market will not get affected by these issues and Nifty will touch 1 Lakh mark shortly. Even a crash is a correction for them. They are making fool of innocent investors.
This is a canary in the coal mine as far as china's real-estate market goes way too much speculation because it is the only way a Chinese citizen can invest.
After the 2nd world war , it has become mindset of almost every country-nation that " Bigger is Better " due to so many man made assumptions through multinational companies. Some serious Economist including Ernst F Schmacher ( 1911- 1977) gone for realistic approach of " Small is beautiful ". China's Champions have competence to handle this SMALL issue on MERIT. Not a problem at all.
Now we will see the difference between governments in western economies versus China. The Lehman Brothers collapse was managed in a way that transfered ownership of a million homes from families to hedge funds. Will China manage the Evergrande collapse to transfer real estate ownership to well connected insiders? In the US, the banks were bailed out instead of the home owners. The insolvent banks were given billions of zero interest government loans but demanded mortgage payments on time or else immediate foreclosure. The foreclosed homes were then owned by the Treasury Department (they bought the mortgages). The Treasury then auctioned off the homes to investors in a way that allowed only big hedge funds to bid ($50 million minimum & no flipping allowed. Up til then, the government routinely offered sale of foreclosed homes to anyone and listed them on their web site). Western institutions and government are controlled by billionaire thugs who deliberately manipulate the economy and rules in a way that enriches themselves in a zero sum game. Now we will see if CCP princelings are no different than rich western insiders.
Insolvent Banks were even given near zero interest loans which they immediately lent back to the government at a higher interest rate (RICO style corruption, but nobody will ever be charged)
You dont understand that one dept is the dept of a company and the other is the dept of a nation. You also don’t understand that nations dept is for almost all nations in dollars. But the US is the only one that can print dollars. So they basically can print their depths if they really need. The only downside they would face doing it is a bit of inflation.
If the company is insolvent, then although their might be a managed "fail" many people will be left with empty pockets in both China and with western bond holders. This will not be the last builder to fail, as many followed the Evergrande model. So watch many normal Chinese people lose everything. Investment products being worthless, unfinished properties, unpaid suppliers, contractors and staff. It is also looking like the founders have cashed in their shares and pocketed their money, so it will be interesting to see if the government tries to recover the assets of the founders or lets them quietly walk away. Then the question will be the repercussions for the government.
@@xiaoyan1625 Nope, None economist said that during the time period you have mentioned, at contrary investors and businesses were bullish on China in the last 30 years. But now the party is over, Evergrande, the well known chinese real estate bubble is about to explode big time, power shortage, Shanghai & H.K stocks lost 5 trillions $ in 2021 and it s just the beginning,, China can t afford buying oil and gas at their actual market price, this never happened before even when the barrel was at 140$, If you can t see all the big red flashing warnings, then you must be a hardcore CCP fan, or a bad investors living in a fantasy world and a future broke delusional individual. China is double done, they are going to taste the deep water.
@@junyuchen9548 Name dropping one out of thousand economists, edge funds, foreign investors, doesn t invalidate my statement about how bullish the western world was on China in the past 30 years. You see! you C.C.P totalitarian narrow minded peoples are lacking of common sense, this very mind set is your downfall.This attitude is so childish. I know you and others commenting in this thread are wu Mao, good luck, because more and more people will laugh at china downfalls in the next few months.
the "market" should regulate companies by not loaning to fraudulent ponzi schemes. This free market regulation is always sidestepped by central bank (non free market) credit counterfeiting. That's the real fuel for all these debt laden organizations from Evergrande to GE to Oracle to the US Government
Well CCP is probably going to do a semi bailout to maintain “social stability”,basically bailing out their domestic debts and flip the bird on foreign debts.
I dont know who advised people to buy a property before it is completed, but I would fire who ever said it was a good idea... Not A Chance I would do that....EVER!
No one is going to bailout Evergrande and those other bankrupt companies that will soon become household names, what is the genuine off-sheet balance of this company and others, the US debt ceiling debate adds to the reality that not only companies are bust countries in reality are in the same financial situation! The US has to borrow more money to make payments on its bonds, hello? This debt cycle is ending, no crypto is not the safe haven, it will also collapse! The debt based system has inflated a huge fiscal bubble that is going to burst!
This real-estate bubble is unhealthy state of affair. a lot more of these companies should be allowed to fail. it has resulted horrible waste of the resources and manpower, creation of ghost cities, poor- and low-quality building practices. most of houses are not used to create homes for living but for investment and speculation and just promote greed. fundament issue is that people cannot own property, there is not wealth creation if there is no possibility of owning your land and home.
Really well explained video. There is a question also, I hope you may answer this. What if FIs like Vinci or Skanska AB are allowed to have a stake of 10-15% of the project, would we still be talking about collapse?
The Honkong Real estate market has not only overcome the doom and gloom forcasted just 24 months ago..the volumn of Real estate transactions archieved in HK is the highest ever since 1997...What confidence the Business community and investors has shown.. Crisis bring oppurtunities... By the way US has US$28.8 Trillion National debt and is more than 100% of its annual GDP.....
National debt doesn't matter if govt can always pay up. Which US can since they can just print more money. Every new dollar printed results in theft from entire world. Entire world trades in USD, every dollar printed devalues every other dollar by increasing supply. So as long as US govt can steal from entire world it has nothing to worry about.
Evergrande is a big company but there are hundreds of other companies in China that are of equal or bigger size. If Evergrande fails, it is not a big deal in China. The workers who will lose their jobs will find other jobs and their lives will continue. The Chinese government will not bail out the company to protect the bondholders.
The quality of all these new flats is horrible, NOT built to last. At all. Crappy construction is as big a problem as the actual financial balloon. Go to China, visit apartment buildings 6-7 years old, they are a wreck, almost unlivable.
It is easy to see why Xi Jinping is taking such and aggressive stance in the Indo-Pacific region . It is to draw attention away from the deteriorating domestic situation inside China . When construction and all things related to it make up more than 25% of the country's GDP then people both inside and outside China should be very concerned ! The scale of this crisis might well dwarf any financial disasters that have gone before . The only answer to this problem is a government bailout , if this does not happen and Evergrande goes under the ramifications not just regarding Evergande but also all the outside companies that it deals with will create a terrifying scenario . Social unrest will result from this and we don't need need a crystal ball to see how that ends !
People have underestimated the seriousness of this problem , something that's going to come back and bite them ! The government have to step in or face a backlash that will destroy any credibility they have .
Increase infrastructure.. increase countrys gdp..high population asked to reduce by 1 child.. now future comes.. no one is buying houses.. or even cant afford one .. due to inflation countrys printing money.. without caring the people purchasing power...
Numerous large Global corporations have already moved their manufacturing operations out of China. Is it for political reasons or financial reasons or both..??? Millions of Chinese are now unemployed because of it. These corporations also take their supply chain networks with them. It has the domino effect. If large Global Corporations continue to move their manufacturing out of China it will create a financial bleeding artery China will not be able to financially recover from. Investors will move their assets elsewhere. Leaving China with a collapsed economy.
@@davidfromamerica1871 labor too expensive compared to china. Besides, with collapse of evergrande, china's workforce will remain steady because those who lost money will have to work longer and are desperate enough to accept low wages.
@Randal Gardner The Chinese Government will have one of their huge military parades to make all the Chinese people happy waving their little Chinese flags 🇨🇳 and all will be forgiven 😀
Too much supply and no demand? The exact opposite where I live and houses are unaffordable. And the prices will crash eventually and as long as you have good short term investments (not affected or gains value) to liquidate after the crash.., you can play the game of life still. If not, life will get tough.
Evergrande hired debt-restructuring company Houlihan Lokey which handled the collapses of Lehman Brothers, Enron, and Worldcomm (three of the biggest scandals in history). What could go wrong?
Bankcrupt
lol - another words how to save the assets of directors and senior managers
couldn't tell you...it's a mystery....
@Hrenml china numba one
Shoulda hired bernie madoff thats the only guy who knows how to run a successful pyramid scheme.
The ordinary folks had forcefully sold their lands at a cheap price
Paying for a home before is insane.
Is stupid is like paying for a car before you take possession of the car 🧐
People do it here in Canada. Before the shovel has broke ground. It’s stupid IMO.
@@cf3661 That only means they are using the money to finance some other projects but not your house here in the USA 🇺🇸 we don’t do anything like that is insane 🧐
Plus you never own the land, the state does. You lease it and then have to renew that lease decades later.
It is called preselling it happens all over the world.
When there is oversupply and declining demand you know a crisis is looming
Frankly there no over supply from a 1.2 bil populations at all as this property that already build n can stay they can rent it out .
@@tancolvis5240 guess you have never heard about 'ghost cities of china'
@@hashimkimwaga1864 ghost city might be true a decade ago, but since 2016 most of those ghost city are filled, but it is true that the demand is definitely decreasing because it is obvious that China gov have a hard crackdown on housing prices to boost its third child policy
@@Ilovecruise 20% of houses in China are empty. If thats not a complete over supply I dont know anymore
Hoe mutch bitcoin’s are in the world 18.000.000 piece, how mutch people are Ther 7.000.000.000 people. Good luck with you’r fiat paper shit.
Maybe I accidentally skipped the chapter in Marx and Engels about billion Dollar real estate empires being of benefit to the common good.
😂😆😂😂😆🤣
Actually the problem isn't the company but the complicated legal BS in China that forces its citizens to all buy houses/apartments in order to function with all the rights in society. Government malfeasance and money printing are huge problems in China, as it is here in the states and elsewhere in all the "developed" countries
If you make a mistake YOU should pay the price. No government should EVER bailout any company no matter how big it is. It's the tax payer's money and should be spent on their needs and necessities.
Your comment makes no sense, Evergrande is a Chinese company. The world's rules do not apply in China. They do not care. The fools that own this debt will get shafted, and China will not care.
@@donjuan3912 This is all the doing of the CCP. The CCP plans ahead and they can see the property market bubble for a while now. Either the CCP bails out by either letting other companies to take over Evergrande assets or just turn it into state owned. The CCP might just let the bubble burst.
Problem is if the bubble bursts too rapidly, it ends up as a destructive explosion. Modern China has very little experience handling a capital economic downturn coming from within, and habitually overreacts to even perceived internal issues.
The problem is that once you get big enough, your problems becomes everyone's problem. Their failure won't happen in a vacuum/sandbox. China has stacked the leverage on real estate extremely high. The failure of Evergrande is a symptom of that leveraging in a slowing economy. As they fail, and flood the market with property, dragging down real estate values, many other developers and debt holders are going to go down the same way.
@@donjuan3912 It is not just China it is happening right now around the world including USA .
Evergrande doesn’t sound like it will be grand for much longer.
Confirm collapse!
Europe too, with our shit politicians, they cant even make a normal deal with the Russians with gas prices
No corporate law, no banking restrictions, greedy investors, naive and corrupt government officials - what could possibly go wrong?
Don't put your money in the Bank of America's of the world. Imagine, 1.6 million flats prepaid...that's a looooot of people losing a whole Lotta homes
problem is how many company can government bailout .because lots of companies will get bankrupt in coming months
China to Evergrande: Bail your own ass out!
In China there's no such thing as "too big to fail"..
Can we pay China to house our homeless in all the empty apartments they've built up?
Typical americans jealousy...
@@ikgeek True. However, can you still house the homeless
Youre retired?
They don't even give the empty houses to their own citizen....
but those houses are not fit for living
I still don’t understand why Americans aren’t more worried about the fact that their country is on the brink of bankruptcy. Their congress has to raise the debt ceiling every year or every other year. I don’t know how many times I have heard this news. The general public in the US seems to be more preoccupied with other nations debt than their own. How bizarre!
I can't believe they have to start paying for mortgage before the product is finished. There are so many things that can go wrong in this and allow the system to take advantage of the small investors
They say this won't spill over, but these so called mortgages are loans, so right now with evergrande making news people would just stop paying their mortgage cause they know they won't get a house with the current crisis, this means banks have given out loans they cannot recover. Food for thought
Investors should never dictate how to spend money cuz they don't know how that's why they give you money
China is coming apart at the seams. The cracks are showing in every sector
Guess countries will be just content with what they have and the people will just rummage on used and second product till the smoke clear or all foreign companieswho bail out had settled down for operation elsewhere to continue production. I thought the adage or saying "DO NOT PUT ALL YOUR APPLES IN ONE BASKET" was followed by these greedy businessman. They should be penalyze by their own government if their country be affected on the Evergrande fiasco. Also no bail out for investors.
95% of the debt is own in Chinese currency , and Evergrande has hard assets to cover the debt, Lehman had no assets. Us funds are now buying the bonds because they trade below recovery value, which means Evergrande is trading bellow book value. CNBC’s fud as usual to help institutions buy cheap Chinese equities before the run up !
The assets are not likely to be worth much. The Chinese state can cover the losses by printing money... but that has other bad side effects.
@@peterfireflylund China has not touched to their interest rates , it is still at 4% , and their QE is way behind the US , they are in a much better position to deal with a slow down. Like in 2016 and 2018 they will act , China's bull market will start when the US bear market starts, Wall Street has set up their escape plan from the overbought US market by demonising China in the last 12 months. Last place you want advise from is CNBC.
"One of the most valuable property company"
That's an interesting description.
Now is the time to show how to approach the real estate issue properly.
Let's see if China - one of the oldest civilizations in the world - can handle the problem any differently than any other nation.
China lets the air out of the housing bubble and deal with it. almost everyone involved will be made whole, speculators/investors will get what's left.
Evergrande taps Houlihan Lokey which had “Lehman, Enron and Worldcom” as customers … hmmm … Evergrande must be that desperate to tap a company that failed in saving these top 3 biggest corporate bankruptcies in the US. It indeed doesn’t look good. 🤔
If I am Evergrande debt or bond holder, I am not sure if I will be happy that they have Houlihan Lokey on board. 😰
like buying a coffin for your company
You have to wonder why people would trust a company that has the Norse god of trickery and deceit in its name.
Chinese have an history of being the primary disruptive influence on the real estate market where they live. Here in GTA (Toronto) about 1/2 the population is Chinese and I'm looking forward to a major correction. If so, hopefully the locals who grew up in the area can once again afford property.
Long Live Chinese Toronto
Im hoping the locals who grew up in Vancouver can afford property once again.
uh, no, HALF the population ISN'T Chinese.
@@ilikespam8009 all the "locals" I know own at least three houses iln Vancouver. Old money, laundered money, stolen money, and who exactly are the "locals"???
@@Dwightstjohn-fo8ki goto local Lexus dealership in the morning and see type of peeps that are in for service. Stats does not reflect reality.
This could potentially be the third financial crisis(if left unchecked) in as many decades. So we are all basically doomed to repeat this every decade because people/government/business cant use debt reponsibly?
Unhindered capitalism at its finest.
@@bobbyosborne2375 China isn't capitalist. Nothing they do is unhindered. This is a crisis manufactured by the CCP. They used the leveraging of the real estate to cover their lackluster GDP. Then they put a stranglehold on lending similar to what caused the great depression. Now Xi Jinping, a Maoist, is about to deflate the whole economy to deleverage. No capitalist nation would or could do that. Capitalist nations traditionally use inflation to deleverage. Like Joe Biden is doing right now. China is about to give the whole world the finger and return to the policies of the pre-Nixon era.
Actually, os the destiny of every single country that was under comunism ideology in political aplication...
Even when they HAD to use some "capitalistic methods"
@@bobbyosborne2375 dude, check your facts... china is utterly comunist... even in the market
@@holoshrimping their market has capitalism baked into it. It's a little different than Soviet Russia circa 1985.
Let's mention the US to make it seem as this Chinese mess is not as big!!
As They Speed Up Construction They Will Get Sloppy
Expect "Structural Failures" Within 20 yrs ? All Over China ??
This is the Chinese version of Aig not Lehman brothers.Its far worse than they are letting on and of course it will effect the markets which will stop the Chinese gravy train and that will have a significant effect on the western markets for sure.
Actually, a guy named Andrew Left of Citron Research flagged the problem with Evergrande as early as 2012. You can still find his report online. CNBC had a segment about him and his prediction not all that long ago.
If someone listens to Andrew left and short the stock from 2012, His account had been busted long time ago. Citron sucks, he seems to have not gotten the listen from GME.
@@baibeiye And yet his claims about Evergrande have turned out to be remarkably accurate, have they not? Which suggests that his prosecution a decade or so back was mainly about shutting him up by those in China with something to hide.
there is a reason why one company in whatever country may not monopoly / run many business especially run by debt to growth since if they collapse,they will bring whole system to grind.
One city made for living other badlly built onlly for investers monney manipulation..what can go wrong
It is a problem only to American lenders.
Blown out of proportion, default was 19 billion, rest of the debt are backed by land assets. Lehman bros was debt instraments in the 500 plus billions on default, that’s a different problems China has faced this before with the insurance conglomerate AB insurance of bigger size debt, and it blew over just fine a few years ago. I’m willing to bet the Chinese looked at this very carefully and has the capacity to take the blow and not be hurt by it.
setting precedent means nothing in China, they'll say yes to this and no to another, there is no legal avenue to have them enforce that.
Suddenly that's a problem for you when Theranos, based in California defrauded investors of U$10 billion.
@@15seconds3 setting précédents mena a lot to them. They can kill legally, just look at what happened in Iraq and Afghanistan.
@@xiaoyan1625 Killing someone is not a precedent.
Laws do not matter in China. Their constitution literally guarantees freedom of speech and protest. We all know how much of that their citizens have in reality.
@@indianatarzan8001 You could literally replace USA for China and your little speech would describe the same thing.
Flagged as a potential risk back in 2018? Hmm!
No surprise at all. The houses in China crumble down within 3 years, because of the poor materials/techniques they use when building new houses. So it is no wonder the housing crisis will catch up with them. There is absolutely no common sense building like that. Someone is pressuring the builders to build at a massive speed and they use as many short cuts as possible to satisfy the "person" driving them. It is catching up now. It cannot last. The Ghost Towns is common knowledge now of the masses of buildings crumbling down with no occupants. There is also a power shortage in China, so no elevators work in those high rise buildings. People (especially old people) are walking up all those flights of stairs daily now.
Like the Miami condo or sinking millennium tower in San Francisco
It isn't the only one...
And the build quality isn't up to scratch either.
This is why China never package it as MBS and sell it like subprime loan.
Whoever is the ceo is now thinking is squid game true?
I had a laugh when you said the founder of evergrande was the richest man in china, i'm think, that was all smoke & mirrors & only based on paper, NOT cold hard cash or ownership ?
you know, money can be printed infinitely, so there's no danger of default. Think how much US government owes, and prints.
No it cannot.
Too much money flowing on the market will cause inflation
@@oscargaming466 Japan and the US central banks are pumping money every day, but inflation is negligible. Why? because the money is in stocks and bonds and houses. When people get money from the state, they buy shares, they don't rush to the supermarket to buy food, so inflation never happens, but S&P 500 may skyrocket.
@@oscargaming466 Japan and the US central banks are pumping money every day, but inflation is negligible. Why? because the money is in stocks and bonds and houses. When people get money from the state, they buy shares, they don't rush to the supermarket to buy food, so inflation never happens, but S&P 500 may skyrocket.
@@karljo8064 ofc I know
many powerful currencies print money every day
But you neglected "too much" in my sentence
People are likely to loose their hard earned money.
Causing a global pandemic is not enough for them so they'll cause a global recession too. Just got to love these people.
Loser spotted
@@xiaoyan1625 I see you have playlists of food recipes. Know of any bat recipes that doesn't cause pandemics?
@@coronayona8320 you must know bette than me as you seem pretty interested in this kind of stuff huh Corona?
@@xiaoyan1625 I don't, that's why I'm asking you since you're the ones eating them and causing pandemics.
They didn’t cause Corona; they didn’t manage it because they neither care about their own people nor care about its effect on the rest of the world.
CCP giveth and CCP taketh away.
The Chinese real-estate market is >50 trillion. This could be much worse than Evergrande.
The really funny part is people are missing that Evergrande was targeted by the central government. The central government is intentionally crashing the housing market with its new debt restrictions. This in turn will bankrupt the provincial governments as they get the bulk of the revenue from real estate. This is a ploy by Beijing to increase its power over china. The provinces are weak and are dependent on the central government to maintain power. Real Estate developers/the rich are seen as demons who've destroyed china. The central government annihilates both its competition from the provincial governments and the wealthy. And they get to look like the good guys while doing so.
@@dixonhill1108 oh wow
@@dixonhill1108 More the reason why we need to bring the CCP down.
When a short seller sounded the alarm and investors ignored the smoke! Sooner you will be burned!
Plain and simple poor management and taking on too many loans not repaying debt.
The world more concern about the US huge debt should it default than the Evergrande.
Yes absolutely correct ✅✅✅. Most of the countries peg their reserves in USD ($) only.
Fantasia has cash flow problems as well and stress is showing in other Chinese property developers. The whole sector is going to come apart.
Since Evergrande is the largest developer and has been in business for over two decades, it is hard for me to believe that other property developers are not doing business in the same manner.
If u ask Indian channels, they will say all fine and market will not get affected by these issues and Nifty will touch 1 Lakh mark shortly. Even a crash is a correction for them. They are making fool of innocent investors.
So now u know greed wont get u nowhere
This is a canary in the coal mine as far as china's real-estate market goes way too much speculation because it is the only way a Chinese citizen can invest.
After the 2nd world war , it has become mindset of almost every country-nation that " Bigger is Better " due to so many man made assumptions through multinational companies. Some serious Economist including Ernst F Schmacher ( 1911- 1977) gone for realistic approach of " Small is beautiful ". China's Champions have competence to handle this SMALL issue on MERIT. Not a problem at all.
Evergrande should punish china abuses to the pilipinos
Im Filipino, What abuse?
Ano po yan?
I don't understand.. the banks are not privately owned yet run into such crisis...
HOW IS THIS COMPARE WITH THE 25 TRILLION DOLLARS OF US AND STILL PRINTING THE GREEN TOILET PAPER.
Now we will see the difference between governments in western economies versus China. The Lehman Brothers collapse was managed in a way that transfered ownership of a million homes from families to hedge funds. Will China manage the Evergrande collapse to transfer real estate ownership to well connected insiders? In the US, the banks were bailed out instead of the home owners. The insolvent banks were given billions of zero interest government loans but demanded mortgage payments on time or else immediate foreclosure. The foreclosed homes were then owned by the Treasury Department (they bought the mortgages). The Treasury then auctioned off the homes to investors in a way that allowed only big hedge funds to bid ($50 million minimum & no flipping allowed. Up til then, the government routinely offered sale of foreclosed homes to anyone and listed them on their web site). Western institutions and government are controlled by billionaire thugs who deliberately manipulate the economy and rules in a way that enriches themselves in a zero sum game. Now we will see if CCP princelings are no different than rich western insiders.
Insolvent Banks were even given near zero interest loans which they immediately lent back to the government at a higher interest rate (RICO style corruption, but nobody will ever be charged)
没有区别，富人永远不会关心下层阶级
Liberation of tibet,xinjiang,inner mongolia,hongkong,macau,taiwan
China's debt vs American debt.... Wow.
Only 300 billions? not 30 trillions, tiny issue when compared to American debt
You dont understand that one dept is the dept of a company and the other is the dept of a nation. You also don’t understand that nations dept is for almost all nations in dollars. But the US is the only one that can print dollars. So they basically can print their depths if they really need. The only downside they would face doing it is a bit of inflation.
Very informative.
It's interesting we point at China while there debit is tiny compared to the USA $300 trillion in the derivative markets
What do you mean our debt was wiped clean
Up and down......
Guarantee corruption lol
The prelude of all chinese big companies… a lot will follow!!!!
evergrande don't need to pay , what can anybody dare to do ?
Lehman Brother only in United States... don't use this term to other countries as there is only one wall street
If the company is insolvent, then although their might be a managed "fail" many people will be left with empty pockets in both China and with western bond holders. This will not be the last builder to fail, as many followed the Evergrande model. So watch many normal Chinese people lose everything. Investment products being worthless, unfinished properties, unpaid suppliers, contractors and staff. It is also looking like the founders have cashed in their shares and pocketed their money, so it will be interesting to see if the government tries to recover the assets of the founders or lets them quietly walk away. Then the question will be the repercussions for the government.
Is the u.s friend not china.
China has never been so weal and in troubles.
Really? China is supposed to collapse multiple times in the last 30 or so years Lmao
@@xiaoyan1625
Nope, None economist said that during the time period you have mentioned, at contrary investors and businesses were bullish on China in the last 30 years.
But now the party is over, Evergrande, the well known chinese real estate bubble is about to explode big time, power shortage, Shanghai & H.K stocks lost 5 trillions $ in 2021 and it s just the beginning,, China can t afford buying oil and gas at their actual market price, this never happened before even when the barrel was at 140$,
If you can t see all the big red flashing warnings, then you must be a hardcore CCP fan, or a bad investors living in a fantasy world and a future broke delusional individual.
China is double done, they are going to taste the deep water.
@@freedomisdead9638 The Coming Collapse of China Paperback - July 31, 2001
Evergrande is in trouble, China is not.
@@junyuchen9548
Name dropping one out of thousand economists, edge funds, foreign investors, doesn t invalidate my statement about how bullish the western world was on China in the past 30 years.
You see! you C.C.P totalitarian narrow minded peoples are lacking of common sense, this very mind set is your downfall.This attitude is so childish.
I know you and others commenting in this thread are wu Mao, good luck, because more and more people will laugh at china downfalls in the next few months.
It's a joke to our mortgage backed securities. Lehman didn't actually owne assets .
There’re tons of property developers in China doing business. Why should we CARE this one? Is 10K big money? For others maybe not.
is the second largest.
not a little developer budy
It will ripple through Australia too. Iron orr prices will collapse
Sounds like some behemoths are far too big for "regulators" to regulate. Red flags appeared since 2018 and still this happened.
the "market" should regulate companies by not loaning to fraudulent ponzi schemes. This free market regulation is always sidestepped by central bank (non free market) credit counterfeiting. That's the real fuel for all these debt laden organizations from Evergrande to GE to Oracle to the US Government
A bailout is just kicking the corruption can down the road, they need to bite the bullet =)
Well CCP is probably going to do a semi bailout to maintain “social stability”,basically bailing out their domestic debts and flip the bird on foreign debts.
THE HOUSE ALWAYS WINS IN LAS VEGAS.
@@williammiao8862 hehe you were right
I dont know who advised people to buy a property before it is completed, but I would fire who ever said it was a good idea...
Not A Chance I would do that....EVER!
No one is going to bailout Evergrande and those other bankrupt companies that will soon become household names, what is the genuine off-sheet balance of this company and others, the US debt ceiling debate adds to the reality that not only companies are bust countries in reality are in the same financial situation!
The US has to borrow more money to make payments on its bonds, hello?
This debt cycle is ending, no crypto is not the safe haven, it will also collapse!
The debt based system has inflated a huge fiscal bubble that is going to burst!
i still don’t understand why should i care
This real-estate bubble is unhealthy state of affair. a lot more of these companies should be allowed to fail. it has resulted horrible waste of the resources and manpower, creation of ghost cities, poor- and low-quality building practices. most of houses are not used to create homes for living but for investment and speculation and just promote greed. fundament issue is that people cannot own property, there is not wealth creation if there is no possibility of owning your land and home.
USA Europe Middle East countries and African countries all has big debt problems so buckle up we’re going downhill fast
What do you do, when you find out the worlds most valuable developers, has……no value.
BIBLE: "THE GREAT DECEPTION"
Really well explained video. There is a question also, I hope you may answer this. What if FIs like Vinci or Skanska AB are allowed to have a stake of 10-15% of the project, would we still be talking about collapse?
The Honkong Real estate market has not only overcome the doom and gloom forcasted just 24 months ago..the volumn of Real estate transactions archieved in HK is the highest ever since 1997...What confidence the Business community and investors has shown..
Crisis bring oppurtunities...
By the way US has US$28.8 Trillion National debt and is more than 100% of its annual GDP.....
National debt doesn't matter if govt can always pay up. Which US can since they can just print more money. Every new dollar printed results in theft from entire world. Entire world trades in USD, every dollar printed devalues every other dollar by increasing supply. So as long as US govt can steal from entire world it has nothing to worry about.
Evergrande is a big company but there are hundreds of other companies in China that are of equal or bigger size. If Evergrande fails, it is not a big deal in China. The workers who will lose their jobs will find other jobs and their lives will continue. The Chinese government will not bail out the company to protect the bondholders.
Up next *BlackRock*
Tick… Tick… Tick… ☣️☢️☣️
@@H33t3Speaks
Tok tok tok
lol, nope.
Blackrock owns the US government. They will not be the losers.
@@douginorlando6260
I said dat bout bear sterns & aig
Nice explanation
Great journalism. They were awesome speakers!
Maybe they should have built multiple smaller towns instead of one huge city to avoid some risk.
there is a chinese man or korean that works in Mt eden corrections facillity auckland new zealand his name is not eric....
I think China should cut military spending for just one year to fully pay this debt
Evergrande is a private company why should they cut military spending to pay debts of private corporation
@@nizzam1 government bailout like America did with gm
@@BlackyBrownDestruction9337 so did the US military spending when it bailed out American companies ?
@@nizzam1 America is rich, they don't need to cut back the military. China isn't, it's just a solution for China
The quality of all these new flats is horrible, NOT built to last. At all. Crappy construction is as big a problem as the actual financial balloon. Go to China, visit apartment buildings 6-7 years old, they are a wreck, almost unlivable.
Tofu Dreg falling apart in hours.
It is easy to see why Xi Jinping is taking such and aggressive stance in the Indo-Pacific region . It is to draw attention away from the deteriorating domestic situation inside China .
When construction and all things related to it make up more than 25% of the country's GDP then people both inside and outside China should be very concerned ! The scale of this crisis might well dwarf any financial disasters that have gone before .
The only answer to this problem is a government bailout , if this does not happen and Evergrande goes under the ramifications not just regarding Evergande but also all the outside companies that it deals with will create a terrifying scenario . Social unrest will result from this and we don't need need a crystal ball to see how that ends !
People have underestimated the seriousness of this problem , something that's going to come back and bite them ! The government have to step in or face a backlash that will destroy any credibility they have .
Increase infrastructure.. increase countrys gdp..high population asked to reduce by 1 child.. now future comes.. no one is buying houses.. or even cant afford one .. due to inflation countrys printing money.. without caring the people purchasing power...
You guys made us to learn a lesson...thanks
Evergrande doesn’t have any entanglement with America I pray!
No... what you have is Americans investors who weakness was greed is caught up in this scam cycles.
Evergrade is not a listed company not same as US sub prime LBro evergrade can seek investor to delay payment n with new higher bonds rates .
..more debt then or push the debt somewhere else?
Where's the liquidity ?
Domino spiralling !
Numerous large Global corporations have already moved their manufacturing operations out of China. Is it for political reasons or financial reasons or both..???
Millions of Chinese are now unemployed because of it. These corporations also take their supply chain networks with them. It has the domino effect.
If large Global Corporations continue to move their manufacturing out of China it will create a financial bleeding artery China will not be able to financially recover from.
Investors will move their assets elsewhere.
Leaving China with a collapsed economy.
To where?
Good, could not happen to a better government.
@@iamjinping-putinthegreat1330
South Korea, Japan, Taiwan, India and Vietnam for starters.
@@davidfromamerica1871 labor too expensive compared to china. Besides, with collapse of evergrande, china's workforce will remain steady because those who lost money will have to work longer and are desperate enough to accept low wages.
@Randal Gardner
The Chinese Government will have one of their huge military parades to make all the Chinese people happy waving their little Chinese flags 🇨🇳 and all will be forgiven 😀
Too much supply and no demand? The exact opposite where I live and houses are unaffordable. And the prices will crash eventually and as long as you have good short term investments (not affected or gains value) to liquidate after the crash.., you can play the game of life still. If not, life will get tough.
that's why so many Chinese are putting their wealth in cryptocurrencies despite the ban in China.
So Sad..
the news is sobering enough without the theatrics
No worry, Biden will bail them out..