Black Monday

[BlackPeter]

Evergrande is possibly a good indicator of the extent of potentially toxic, wounded and not far off
unrecoverable terminal lending which persists in the Chinese goldfish bowl .. plenty of previous warnings
on what lurks within the depths of their financial system IMO

I don't think that there is anything special about the Chinese system in that regard. Remember that the US had their Evergrande (aka Lehman Brothers) already 15 years ago - and they could not have handled the economic fallout at that stage worse than they did, even if they would have tried. It was America causing the GFC in 2007 / 2008.

Since that time nobody (neither the Americans nor the Chinese nor anybody else running big economies) seems to have learned from that last big crash ... Accelerated debt accumulation combined with money printing is speeding up - all over the world.

So, yes, I agree - we are likely to approach at some stage the next big (or even bigger) crash than the GFC, but I don't think there is any merit in blaming whoever provides the last straw to break the camels back. This is not a problem with the Chinese system, this is a problem with the world wide economic system and the prevalence of greed over caution and decency - everywhere where it matters.

[winner69]

Evergrande must be OK …BlackRock been buying in lately

No worries

[Balance]

Western economists, analysts & media have been blowing the trumpet of economic doom on China for the last 20 years!

The Chinese economic walls have not crumbled, and instead it's the US which provided the economic doom in 2008!

Why?

Simple - China is a centralised planned economy backed up by trillions of dollars of reserves, and real savings by the Chinese population. Huge cushions there to engineer soft landings.

Don’t forget that China (along with Germany) is one of the key countries to bail the world out of the Asian Financial Crisis & Global Financial Crisis.

It’s the US & Western economies where the next financial crisis will emerge imo - economies built on printed money created out of thin air.

[alokdhir]

Western economists, analysts & media have been blowing the trumpet of economic doom on China for the last 20 years!

The Chinese economic walls have not crumbled, and instead it's the US which provided the economic doom in 2008!

Why?

Simple - China is a centralised planned economy backed up by trillions of dollars of reserves, and real savings by the Chinese population. Huge cushions there to engineer soft landings.

Don’t forget that China (along with Germany) is one of the key countries to bail the world out of the Asian Financial Crisis & Global Financial Crisis.

It’s the US & Western economies where the next financial crisis will emerge imo - economies built on printed money created out of thin air.

Its not just thin air mate ...its based on technological advantage ...Just for example ...Only two OS available in world for all the mobiles of the world and both come from USA . China has labour and hardware but no software so could not compete on cell phone front with Apple etc as Google wont supply OS to very nice phones of Huawei ...previously a world leader company now almost in oblivion due to technological disadvantage .

So IMO China still needs USA more then people think . Also China is the biggest holder of useless paper bonds u refer to ...as that was part of the quid pro quo to let the factories running and workers getting wages .

Also how much immigration happens into China and how much outside and to where ...mostly western countries for reasons well known .

If big businesses can get threatened like Alibaba and Tencent bringing their stock investors to tears not because companies not doing well but suddenly regulatory risks become too hot to handle ...such things dont happen in western world ...IMO

So its not as simple as it seems ...both have flaws and advantages and both need each other for world to function well .

When one starts thinking in a dominant manner or only for their own benefit ...this balance of give and take breaks and both loose big along with World economy

[Balance]

Its not just thin air mate ...its based on technological advantage ...Just for example ...Only two OS available in world for all the mobiles of the world and both come from USA . China has labour and hardware but no software so could not compete on cell phone front with Apple etc as Google wont supply OS to very nice phones of Huawei ...previously a world leader company now almost in oblivion due to technological disadvantage .

So IMO China still needs USA more then people think . Also China is the biggest holder of useless paper bonds u refer to ...as that was part of the quid pro quo to let the factories running and workers getting wages .

Also how much immigration happens into China and how much outside and to where ...mostly western countries for reasons well known .

If big businesses can get threatened like Alibaba and Tencent bringing their stock investors to tears not because companies not doing well but suddenly regulatory risks become too hot to handle ...such things dont happen in western world ...IMO

So its not as simple as it seems ...both have flaws and advantages and both need each other for world to function well .

When one starts thinking in a dominant manner or only for their own benefit ...this balance of give and take breaks and both loose big along with World economy

I am not debating the relative merits of Western vs Chinese economies at all.

I am simply pointing out why Evergrande & China will not be the catalyst for the next financial meltdown or crisis.

[alokdhir]

I am not debating the relative merits of Western vs Chinese economies at all.

I am simply pointing out why Evergrande & China will not be the catalyst for the next financial meltdown or crisis.

That part I fully agree ...for many reasons but mainly China CCP wont let anything happen which tarnishes image in their opinion ...So stopping ANT IPO is ok but letting big companies default may not be as that may show Chinese economy not doing as well as being shown etc

[Balance]

That part I fully agree ...for many reasons but mainly China CCP wont let anything happen which tarnishes image in their opinion ...So stopping ANT IPO is ok but letting big companies default may not be as that may show Chinese economy not doing as well as being shown etc

https://www.nzherald.co.nz/business/...ARTMKJ3WO4KPU/

paywalled

This is a good read if you can access it.

Pertinent excerpt : "Ultimately, the fate of such bonds, and almost all other offshoots from the malaise in Chinese property, depends on Beijing. The Chinese state owns almost all of the country's large financial institutions, meaning that if Beijing orders them to bail out Evergrande or other distressed property companies, they will follow orders.

In some overseas markets the idea that Evergrande's distress may presage a "Lehman moment" — recalling the chaos that followed the collapse of US investment bank Lehman Brothers 13 years ago — has gained traction. But given Beijing's influence and vested interests, the analogy does not easily fit.

"Unless China's regulators seriously mismanage the situation, a systemic crisis in the country's financial sector is not on the cards," says He Wei, an analyst at Gavekal, a research company.

Indeed, the main cause of Evergrande's crisis and the downturn in the broader property sector is Beijing itself. The "three red lines" that the Xi government announced last year stipulate that developers must keep debt levels within reasonable bounds."

[alokdhir]

https://www.nzherald.co.nz/business/...ARTMKJ3WO4KPU/

paywalled

This is a good read if you can access it.

Pertinent excerpt : "Ultimately, the fate of such bonds, and almost all other offshoots from the malaise in Chinese property, depends on Beijing. The Chinese state owns almost all of the country's large financial institutions, meaning that if Beijing orders them to bail out Evergrande or other distressed property companies, they will follow orders.

In some overseas markets the idea that Evergrande's distress may presage a "Lehman moment" — recalling the chaos that followed the collapse of US investment bank Lehman Brothers 13 years ago — has gained traction. But given Beijing's influence and vested interests, the analogy does not easily fit.

"Unless China's regulators seriously mismanage the situation, a systemic crisis in the country's financial sector is not on the cards," says He Wei, an analyst at Gavekal, a research company.

Indeed, the main cause of Evergrande's crisis and the downturn in the broader property sector is Beijing itself. The "three red lines" that the Xi government announced last year stipulate that developers must keep debt levels within reasonable bounds."

Fully agree . Beijing is Omnipotent and has absolute power over all matters and they think much beyond business even in business matters .

Secondly in hindsight and maybe for future even western bosses will not let Lehman type dominos effect downfalls happen ...maybe more controlled falls or corrections as they have also realised collateral damage is just too much . That can be seen from unprecedented responses of western central banks to covid crisis . Market meltdown lasted exactly few weeks as they just wont let that happen anymore ...it damages the psyche of investors so much that it takes years to build confidence back to get the economies running Normally .

Every time a mistake catches up with any central bank ...they just throw more money at it as its just not feasible to let borrowers suffer as whole world is living on borrowing ...Poor future generations ...only way out of this debt fuelled consumption cycle in which whole world is participating is long years of high INFLATION to trivialise the debt amounts . Here also governments cant let Inflation effect poor so asset prices which poor dont or wont cry about keep inflating . We are in a very messy financial quicksand in the whole world

[Panda-NZ-]

We can all become Japan - 300% debt to gdp.

Their mistake was not letting in a moderate amount of inflation though. Theres no reason inflation should be below 2%.

[Balance]

The rich gets ever richer and the poor gets ever more marginalised.

Not much one can do but to take care of one’s own.