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  1. #1
    I am that guy RandomGuy's Avatar
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    Looks like they finally built too much. I think China is about to learn a very painful lesson in late-stage capitalism, i.e. real estate bubbles.

    ---------------------------------------
    A line of 60 uniformed security guards stretched across the entrance to ailing Chinese property giant Evergrande’s gleaming Shenzhen tower on Monday as dozens of angry investors demanded answers – and their money – from the company.

    The protesters, who claimed they had been “swindled”, represent just a fraction of an estimated 1.5m people who pumped cash into Evergrande to buy apartments which have yet to be built – and may never be.

    Evergrande, founded in 1996 by the well-connected billionaire Xu Jiayin, rode an urban property boom now running out of steam and is teetering under a $300bn debt burden. The firm was forced to deny an imminent bankruptcy but ratings agencies predict a default, while domestic banks and foreign creditors are on the hook, prompting fears of a "Lehman moment" for the world’s second-biggest economy.

    “Right now, there are an awful lot of people in China paying for a property from a company that looks like it's going down the plughole,” says Mark Williams, chief Asia economist at Capital Economics.

    While Evergrande’s crisis has grabbed the headlines, the ingredients of a Chinese property bust have been long in the making. As far back as 2016, Chinese president Xi Jinping warned of a potential crackdown with the phrase that “property is for living in, not for speculation”.

    That message belies the wall-to-wall billboards, television and even elevator advertising luring buyers to put their cash into property, a portrayed sure option in an under-developed financial market offering relatively few alternatives for investment. Amid higher savings rates and a population that has lived through an economic boom, cash-buying real estate years in advance is common and owning properties – the more the better – is a status symbol.

    Iris Pang, ING’s chief economist for China, says: “It is a culture deep in the mind of the Chinese, if not all Asians. Look at Hong Kong, look at Macau. Singapore is a little bit different because they have a very generous public housing policy. But across Asia home ownership is a kind of self recognition, a safety net for people's life or retirement.”

    A Beijing-fuelled property boom
    Strong demand has left average Chinese house prices at an eye-watering 18 times average incomes in a private property market which did not even exist until the eve of the millennium. But this has also been fuelled by Beijing regularly turning to property investment, a sector accounting directly for around 15pc of China’s economy, as a short-term fillip to growth during periods of economic turbulence. Companies have leveraged up with the blessing of the government.

    Despite vacancy rates of over 20pc , the tendency to overbuild in a country of party officials eager to show rapid regional growth – and gain their next promotion – is also behind the phenomenon of “ghost cities”: urban areas filled with half-finished concrete s s.


    (rest of story at: https://news.yahoo.com/china-propert...143429278.html )

  2. #2
    I am that guy RandomGuy's Avatar
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    .. and about the thread le: Oops.

  3. #3
    Veteran hater's Avatar
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  4. #4
    Veteran Isitjustme?'s Avatar
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    Looks like they finally built too much. I think China is about to learn a very painful lesson in late-stage capitalism, i.e. real estate bubbles.

    ---------------------------------------
    A line of 60 uniformed security guards stretched across the entrance to ailing Chinese property giant Evergrande’s gleaming Shenzhen tower on Monday as dozens of angry investors demanded answers – and their money – from the company.

    The protesters, who claimed they had been “swindled”, represent just a fraction of an estimated 1.5m people who pumped cash into Evergrande to buy apartments which have yet to be built – and may never be.

    Evergrande, founded in 1996 by the well-connected billionaire Xu Jiayin, rode an urban property boom now running out of steam and is teetering under a $300bn debt burden. The firm was forced to deny an imminent bankruptcy but ratings agencies predict a default, while domestic banks and foreign creditors are on the hook, prompting fears of a "Lehman moment" for the world’s second-biggest economy.

    “Right now, there are an awful lot of people in China paying for a property from a company that looks like it's going down the plughole,” says Mark Williams, chief Asia economist at Capital Economics.

    While Evergrande’s crisis has grabbed the headlines, the ingredients of a Chinese property bust have been long in the making. As far back as 2016, Chinese president Xi Jinping warned of a potential crackdown with the phrase that “property is for living in, not for speculation”.

    That message belies the wall-to-wall billboards, television and even elevator advertising luring buyers to put their cash into property, a portrayed sure option in an under-developed financial market offering relatively few alternatives for investment. Amid higher savings rates and a population that has lived through an economic boom, cash-buying real estate years in advance is common and owning properties – the more the better – is a status symbol.

    Iris Pang, ING’s chief economist for China, says: “It is a culture deep in the mind of the Chinese, if not all Asians. Look at Hong Kong, look at Macau. Singapore is a little bit different because they have a very generous public housing policy. But across Asia home ownership is a kind of self recognition, a safety net for people's life or retirement.”

    A Beijing-fuelled property boom
    Strong demand has left average Chinese house prices at an eye-watering 18 times average incomes in a private property market which did not even exist until the eve of the millennium. But this has also been fuelled by Beijing regularly turning to property investment, a sector accounting directly for around 15pc of China’s economy, as a short-term fillip to growth during periods of economic turbulence. Companies have leveraged up with the blessing of the government.

    Despite vacancy rates of over 20pc , the tendency to overbuild in a country of party officials eager to show rapid regional growth – and gain their next promotion – is also behind the phenomenon of “ghost cities”: urban areas filled with half-finished concrete s s.


    (rest of story at: https://news.yahoo.com/china-propert...143429278.html )
    So in this argument "late stage capitalism" produces too much housing?? Hope it comes here then as we have housing shortages due to NIMBY bull laws all over this country

  5. #5
    I am that guy RandomGuy's Avatar
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    Absolutely called it wrong then. I saw the reports of the empty speculative cities and made too much of it.

    The part that I didn't get:

    They had such a huge migration of people from the country to the cities that they could absorb all the building.

    That has ended. There is almost no one left in the rural villages that can go. Those that remain are too old for the grinding work of the cities.

    They are still building at the same pace they were years ago.

    There is only on way that ends.

  6. #6
    dangerous floater Winehole23's Avatar
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    CCP might not bail them out this time. Already brought Jack Ma to heel.


    https://www.afr.com/policy/foreign-a...0210826-p58m3c

  7. #7
    Got Woke? DMC's Avatar
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  8. #8
    Believe. daboom1's Avatar
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    RandomGay

  9. #9
    dangerous floater Winehole23's Avatar
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    hater has nary room to clown on bum predictions, tbh

    he’s pretty much the all-time great down here.

  10. #10
    dangerous floater Winehole23's Avatar
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    Also, champion own-horn tooter.

    In 3, 2, 1…

  11. #11
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    NEW DELHI: Trading was halted in shares of Chinese realtor Sinic Holdings on Monday after its shares crashed 87 per cent in Hong Kong. This is on a day when shares of China's second biggest realtor Evergrande plunged 11 per cent on the same exchange, as investors feared defaults in the Chinese real estate sector.

    Shares of Sinic holdings fell 87 per cent to hit a low of 0.50 Hong Kong cents. Sinic Holdings is an investment holding company, which along with its subsidiaries, is principal engaged in property development and property leasing, according to Reuters.

  12. #12
    I am that guy RandomGuy's Avatar
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    CCP might not bail them out this time. Already brought Jack Ma to heel.


    https://www.afr.com/policy/foreign-a...0210826-p58m3c
    They have signaled that some investors are going to have to take haircuts. The "Chinese government will backstop everything" assumption is going to be found to be wrong.

    My gut says the scope of the rot exceeds even what a totalitarian government can do. Lots of factors add to that. Hubris, inexperience in managing capital markets, etc.

  13. #13
    I am that guy RandomGuy's Avatar
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    Dow Jones tanks 614 points as doubts swirl over China's Evergrande
    https://www.foxbusiness.com/markets/...roperty-market

    U.S. stock markets tumbled Monday as concerns over China’s property bubble roiled global markets ahead of the Federal Reserve’s upcoming policy meeting and a debt ceiling debate in Congress.

    The Dow Jones Industrial Average fell 614 points, or 1.78%, while the S&P 500 index and the Nasdaq Composite index declined 1.7% and 2.19%, respectively. The Dow was down almost 972 points at its worst levels of the day.

    --------------------------------------

    China pumps $14bn in cash into market amid Evergrande crisis
    The move comes as the trouble facing China’s Evergrande Group fuels investor concern over the health of real estate and credit markets.
    https://www.aljazeera.com/economy/20...rgrande-crisis

    Hard to know what to make of it. Worth digging a bit.

  14. #14
    LMAO koriwhat's Avatar
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    China! Rot to the ground and burn in !

  15. #15
    I am that guy RandomGuy's Avatar
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    The Chinese property market
    As I say, we all know there's been something of a bubble going on here. But bubbles are fun, bubbles are profitable, it's when to get out which is the important decision.

    So, if the major market player - which Evergrande is to a great extent - is now revealed to be suffering from that Emperor's New Clothes Problem, what does this tell us about the market as a whole?

    Well, as with the market back in 2007 in the US, a certain set of things near inevitably follow from the observation. There will be a dumping of assets to try to keep things going, lending standards will rise leading to a shortage of financing for the sector. This will lead to more dumping to gain cash flow in that all consuming spiral we saw ourselves not so long ago. Prices will drop - dumping for cash flow again, the sector as a whole is going to get hit.

    But government could act on this, surely?

    But, perhaps, the Chinese government will step in to deal with this? Well, perhaps, they might. They're certainly going to try to manage the situation. But there has been enough indication recently that they desire this property bubble to bust. This has been one of the things putting pressure on Evergrande itself to curtail its activities.
    https://seekingalpha.com/article/445...e-to-be-out-of

  16. #16
    A neverending cycle Trainwreck2100's Avatar
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    China! Rot to the ground and burn in !
    yeah well, unfortunately for us, they make all our

  17. #17
    I am that guy RandomGuy's Avatar
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    Chinese mothers gave birth to 12 million babies last year, down from 14.65 million in 2019, marking an 18 per cent decline year on year. China also recorded a fertility rate of just 1.3 children per woman in 2020.
    https://www.scmp.com/economy/china-e...an-never-faced

    China facing demographic, inflation risks ‘Japan never faced’, Beijing urged to act to avoid ‘big surprise’

    China’s once-in-a-decade census released earlier this year highlighted the challenges ahead for a rapidly ageing population
    Manoj Pradhan’s book, The Great Demographic Reversal: Ageing Society, Waning Inequality, and an Inflation Revival, has caught the eye of Beijing policymakers

    ------------------------------------------------------

    Population growth sustains demand for real estate. If you build an economy on building housing, and the population is aging rapidly, with few children.

  18. #18
    I am that guy RandomGuy's Avatar
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    yeah well, unfortunately for us, they make all our
    For now.

    Chinese wages have risen to the point where places like Vietnam are more compe ive.

    And

    US manufacturers can pick up the slack as well. The gains from outsourcing are being re-thought from supply disruptions in the pandemic.

    Interesting to see if/how that plays out.

  19. #19
    A neverending cycle Trainwreck2100's Avatar
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    For now.

    Chinese wages have risen to the point where places like Vietnam are more compe ive.

    And

    US manufacturers can pick up the slack as well. The gains from outsourcing are being re-thought from supply disruptions in the pandemic.

    Interesting to see if/how that plays out.
    yeah but because supply chain hasnt been diversified enough yet we're still tied too close to them now should their bottom fall out.

  20. #20
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    For now.

    Chinese wages have risen to the point where places like Vietnam are more compe ive.

    And

    US manufacturers can pick up the slack as well. The gains from outsourcing are being re-thought from supply disruptions in the pandemic.

    Interesting to see if/how that plays out.
    Vietnam demographic challenges ahead
    https://www.worldlifeexpectancy.com/...lation-pyramid

    Mexico is the country best positioned to become our low end manufacturer

  21. #21
    I am that guy RandomGuy's Avatar
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    Vietnam demographic challenges ahead
    https://www.worldlifeexpectancy.com/...lation-pyramid

    Mexico is the country best positioned to become our low end manufacturer
    Same demographic problem, exacerbated by immigration. Net fertility is below replacement.

  22. #22
    I am that guy RandomGuy's Avatar
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    Vietnam demographic challenges ahead
    https://www.worldlifeexpectancy.com/...lation-pyramid

    Mexico is the country best positioned to become our low end manufacturer
    https://www.worldlifeexpectancy.com/...lation-pyramid

  23. #23
    I am that guy RandomGuy's Avatar
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    Vietnam demographic challenges ahead
    https://www.worldlifeexpectancy.com/...lation-pyramid

    Mexico is the country best positioned to become our low end manufacturer
    Cool website. Thanks.

  24. #24
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    Right, Mexico has a pretty good demography in addition to being next door to us. We are withdrawing from the world so that puts them in a great position.

  25. #25
    dangerous floater Winehole23's Avatar
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    Every ten years or so since 2001, capitalism fails and governments have to bail it out.

    Markets are freaking beause China might break the pattern, by not protecting investors from investment risk.

    Evergrande Group, the second largest property developer in China, and the property developer with the most debt in the world, owes banks, shadow banks, other companies, investors, its suppliers, contractors, and home buyers $305 billion, according to Bloomberg.


    It hasn’t been able to sell a single dollar bond since January 2020, and has no prospects of doing so as foreign investors have gotten the message.


    On August 31, it said that work was suspended on a number of real-estate projects after it delayed payments to its suppliers and contractors. It warned that it may default on its debts if it can’t raise new money.


    If it was difficult to raise new money before, it became impossible after that announcement – unless the government steps in, and that hasn’t happened yet.


    On September 7, Moody’s and Fitch downgraded Evergrande Group and a number of its en ies deeper into deep-junk, to ratings that indicate that a default is imminent with little recovery for investors in those bonds.


    Moody’s said that the downgrade reflects the company’s heightened liquidity and default risks given its large amount of debt that will mature over the next 6-12 months.

    Since Evergrande does not have enough cash to pay off the debt that matures over the next 12 months, it has to raise new money to pay off those old investors. If it cannot raise new money, either by issuing new bonds, or by borrowing from banks, or by selling assets that are not already leveraged to the hilt, it will default on those maturing bonds.
    https://wolfstreet.com/2021/09/15/wh...de-would-mean/

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