Evergrande Financial Panic - Corona is not the only Contagion China is exporting

[mindlessobserver]

At some point corporations and governments decided to treat houses as consumables and that everyone needed one. This attitude has supercharged the economy but they are profoundly huge bubbles which burst.

Property is the best way to get into the middle class. Or at a minimum insure your children manage to get into the middle class. If you own land and your own house you don't have to pay a huge chunk of your disposable income on rent. You can instead use that money to invest and grow wealth. The house is also an asset that you can use as collateral for access to lower interest loans. Maybe a small business start up loan as an example. And when you die, your kids can sell it and use all of that stored equity to further your families well being.

The real scam is these college degrees. Telling kids to rack up massive college debts instead of buying the house is the real disaster. At least with out of control home loans there is something THERE to unwind the debts. The bank can sell it, eventually, to help make good on the losses.

Unless you are evergrande and you build shitty apartments out of Styrofoam that will fall apart in 5 years.

 

[Garm]

Property is the best way to get into the middle class. Or at a minimum insure your children manage to get into the middle class. If you own land and your own house you don't have to pay a huge chunk of your disposable income on rent. You can instead use that money to invest and grow wealth. The house is also an asset that you can use as collateral for access to lower interest loans. Maybe a small business start up loan as an example. And when you die, your kids can sell it and use all of that stored equity to further your families well being.

The real scam is these college degrees. Telling kids to rack up massive college debts instead of buying the house is the real disaster. At least with out of control home loans there is something THERE to unwind the debts. The bank can sell it, eventually, to help make good on the losses.

Unless you are evergrande and you build shitty apartments out of Styrofoam that will fall apart in 5 years.

I understand that buying a house is the best way into the middle class. The government likes companies building housing because it requires a large amount of resources and labor, making the economy look good.

My theory is that instead of a stable economy our monetary policy has instead created an economy that lurches from bubble to bubble. The last big "boom" for the entire country was real estate and housing. And our government is trying to recreate that because they don't know what else would work.

And I agree college is a scam.

 

[Gar For Archer]

Property is the best way to get into the middle class. Or at a minimum insure your children manage to get into the middle class. If you own land and your own house you don't have to pay a huge chunk of your disposable income on rent. You can instead use that money to invest and grow wealth. The house is also an asset that you can use as collateral for access to lower interest loans. Maybe a small business start up loan as an example. And when you die, your kids can sell it and use all of that stored equity to further your families well being.

The real scam is these college degrees. Telling kids to rack up massive college debts instead of buying the house is the real disaster. At least with out of control home loans there is something THERE to unwind the debts. The bank can sell it, eventually, to help make good on the losses.

Unless you are evergrande and you build shitty apartments out of Styrofoam that will fall apart in 5 years.

Seriously, if you have a good job and are ready to settle down for at least 4-5 years, buying a house/condo/apartment is objectively the right call. Rent is a black hole, once you pay rent that money is just GONE. If you’re putting money into a mortgage though, that $1000-2000 you’re paying every month is still your money, you’re just exchanging it from one form to another. Even if you move before you’ve paid off your mortgage, you can just rent out the property and have your tenants pay your mortgage for you. It literally pays for itself.

Buying a property certainly isn’t for everyone. But if you have a stable income and good job prospects, at least $30-50k in the bank, and aren’t planning on leaving the area in the near future, you should definitely be looking to buy your own place.

 

[Sped Xing]

If you're smart, you get away with being homeless until you can withdraw your IRA.

 

[RainwaterDrop]

China Evergrande Scrapes Together More Cash From Tech Company Stake Sale

News said they managed to cobble together another payment, but at this rate there's no way this is going to last long. They can't jettison assets forever.

Right now they are like a forgotten soldier in the trenches, shot in the gut. Just bleeding out but trying to make it out before they are gone. While miracles can happen and save them from this, just like the proverbial soldier, odds are they will just bleed out in the middle of the chaos!

An excellent risk department, of course. Finest risk management work I've seen in a long time. Same goes for the bondholders by the way. It's a very profitable time for all involved.

Oh no, wait, they're losing a bunch of money. Not us though..

Their coal shortages are apparently hurting truck drivers in South Korea of all things, while this is mostly their problem there will be spillovers once the bubble pops and the dragon gets it's kneecaps smashed. I hate the CCP but this will surely hit more than just China!

 

[Simple Moving Average]

Their coal shortages are apparently hurting truck drivers in South Korea of all things, while this is mostly their problem there will be spillovers once the bubble pops and the dragon gets it's kneecaps smashed. I hate the CCP but this will surely hit more than just China!

You are entirely correct, it will affect the things you've mentioned and many more. Trade accordingly.

Isn't it wonderful? So much money just there for the taking if you know what to do and how to do it.. having a great time over here, I sincerely hope you guys are too.

 

[Gay_Frog]

You are entirely correct, it will affect the things you've mentioned and many more. Trade accordingly.

Isn't it wonderful? So much money just there for the taking if you know what to do and how to do it.. having a great time over here, I sincerely hope you guys are too.

Are you talking about Vietinam and another asians/african countries getting the investing that China have/had?

 

[RodgerDodger]

Evergrande is literally a Ponzi scheme, that's how. It's all bluster and empty promises, and then you reel in new suckers to pay back the previous investors and make it look like your company is super-profitable. This spurs market excitement, and the cycle repeats: you draw in more and more suckers that give you more and more money expecting outrageous returns. But it's all bullshit.

(Also worth noting, because it's hilarious, is that they're only in this little debt because Xi stepped in and said no company was allowed to be in this much debt ever. If that hadn't happened, they'd still be digging the hole as we speak.)

I was just about to post this. Evergrande will collapse because it's structured as a ponzi scheme. They need to sell the next round of speculative vaporware homes, and collect that money in order to begin building the homes they've already sold and spent the money from. But they can't sell that next round of property because nobody believes they will be built.

 

[Standardized Profile]

Seriously, if you have a good job and are ready to settle down for at least 4-5 years, buying a house/condo/apartment is objectively the right call. Rent is a black hole, once you pay rent that money is just GONE. If you’re putting money into a mortgage though, that $1000-2000 you’re paying every month is still your money,

Most of it is interest, taxes, insurance, maintenance, and HOA/POA fees. A little bit of it is your money, but it's not actually money as it's not liquid. And there's a huge opportunity cost in locking money away in property instead of investing it in something productive. Not to mention the risk of concentrating so much wealth in a single asset, the price of which could be driven to near-zero if the neighborhood becomes undesirable. Given the downsides of owning property, and the transaction costs of buying and selling a home, 4-5 years is a very short timeframe to make home ownership profitable. I wouldn't do it unless I had no other choice.

 

[Simple Moving Average]

Are you talking about Vietinam and another asians/african countries getting the investing that China have/had?

Also, partially. But it's much bigger than that. PM me if you want. Just got back from a wedding and quite busy the next few days so not sure if I'll be able to answer in time to help you make a bit of money as well.. but most of my orders have been in the books for quite a while so I feel safe enough leaving things as I've set them up. Been right enough so far..

 

[Kujo Jotaro]

Property is the best way to get into the middle class. Or at a minimum insure your children manage to get into the middle class. If you own land and your own house you don't have to pay a huge chunk of your disposable income on rent. You can instead use that money to invest and grow wealth. The house is also an asset that you can use as collateral for access to lower interest loans. Maybe a small business start up loan as an example. And when you die, your kids can sell it and use all of that stored equity to further your families well being.

The real scam is these college degrees. Telling kids to rack up massive college debts instead of buying the house is the real disaster. At least with out of control home loans there is something THERE to unwind the debts. The bank can sell it, eventually, to help make good on the losses.

Unless you are evergrande and you build shitty apartments out of Styrofoam that will fall apart in 5 years.

That's all contingent on you owning your own home, something the majority of debt slaves don't achieve until they're well into their 40's or 50's. Most Americans encourage their children to move out(regardless of whether or not they're going to college) as soon as possible, which just completely wipes any type of generational wealth that could've be generated.

Looking to the future, populations are in decline across the west and parts of the east, homes in a sane market only hold value proportional to their use case. Even if there is a durth of homes on the market now, in a generation or two that will not be the case.

Life expectancy is also rising, but that doesn't mean that people are living full, and active lives until the day they croak. Increasingly what is occurring is that the elderly need to sell their homes to fund nursing care, or to buy a place at an assisted living facility(which by the way they can never recoup the value on because they don't technically own the apartment).

TL;DR - If you really want to achieve generational wealth for your progeny you need to supply them with ample resources, which includes a place to live until they can afford to buy their own outright.

 

[mindlessobserver]

That's all contingent on you owning your own home, something the majority of debt slaves don't achieve until they're well into their 40's or 50's. Most Americans encourage their children to move out(regardless of whether or not they're going to college) as soon as possible, which just completely wipes any type of generational wealth that could've be generated.

Looking to the future, populations are in decline across the west and parts of the east, homes in a sane market only hold value proportional to their use case. Even if there is a durth of homes on the market now, in a generation or two that will not be the case.

Life expectancy is also rising, but that doesn't mean that people are living full, and active lives until the day they croak. Increasingly what is occurring is that the elderly need to sell their homes to fund nursing care, or to buy a place at an assisted living facility(which by the way they can never recoup the value on because they don't technically own the apartment).

TL;DR - If you really want to achieve generational wealth for your progeny you need to supply them with ample resources, which includes a place to live until they can afford to buy their own outright.

Well, yeah. I agree with the doom posters that the western economy is regressing back to Feudalism where the majority of the population owns nothing, and is instead dependent on a ruling class that owns everything with a few exceptions.

The family will be critical to holding onto land and assets. As an example, when I bought my house I made sure it also came with land. That was definitely done with ultra long term economic trends in mind, as well as short. Short term I wanted to stop paying rent. Long term I wanted to make sure my family will have a viable place to live a hundred years from now.

We are getting a tad off topic though.

 

[Ancient Pioneer]

wars invigorate public morale and you can bet the U.S. would give China a hell of a fight in that case!

The US has been at war for nearly 20 years straight and is suffering extreme levels of exhaustion over it. Getting into an actual conflict with China would be a 50/50 flip between widespread revolt and civil war including possible secession. There is no stomach for any boots on the ground stuff and I would suspect trying to force it would be absolute insanity by the D.C. crowd, they may be idiots but they can sense the extreme anger over "forever wars" and have been very deliberate to keep everything out of sight and out of mind. When Obama tried invading Syria over crossing his red line with the "muh babies muh chemical weapons" he punted it to Congress who quickly made the thing disappear, it wasn't even considered, I think the polling on the issue at the time was something RIDICULOUSLY low like 7%. Trump purposefully ensured that involvement with ISIS was limited to special forces, support teams observing and operating artillery far from the front lines and air support missions, which is honestly impressive considering how much fury Obama got over the red line stuff. The Afghanistan collapse has only deepened the rage and lack of enthusiasm for military adventure.

 

[Fcret]

I'm going to go full contrarian from the rest of the thread - do not buy houses right now if you live in America. The US's population is plateauing and the baby boomers are going to be offloading their homes soon for retirement money. The market is overheated atm because millennials finally have enough money to start buying houses but there were never enough houses in the country to satisfy the demand of two boom generations.

Rent is a black hole but it'll also keep you from ending up underwater on a mortgage. Hold off for another year or three for when we start to see housing really come down in price. You do not want to end up on the hook for a mortgage that's three times what your property is actually worth.

 

[Super-Chevy454]

I'm going to go full contrarian from the rest of the thread - do not buy houses right now if you live in America. The US's population is plateauing and the baby boomers are going to be offloading their homes soon for retirement money. The market is overheated atm because millennials finally have enough money to start buying houses but there were never enough houses in the country to satisfy the demand of two boom generations.

Rent is a black hole but it'll also keep you from ending up underwater on a mortgage. Hold off for another year or three for when we start to see housing really come down in price. You do not want to end up on the hook for a mortgage that's three times what your property is actually worth.

I guess that might apply for some parts of Canada as well. The Chinese community who bought houses in Vancouver or replace older houses by replacing it with some "McMansions" where are very costly and those who wants something affordable have to go more inland in the Fraser Valley.

 

[Michael Janke]

I was just about to post this. Evergrande will collapse because it's structured as a ponzi scheme. They need to sell the next round of speculative vaporware homes, and collect that money in order to begin building the homes they've already sold and spent the money from. But they can't sell that next round of property because nobody believes they will be built.

this calls into question the actual power of the chinese government.
how the hell did a company end up anywhere close to 300 billion dollars in debt without someone either looking into it way sooner, or someone being payed off to look the other way. imagine having an elephant in the room and everybody pretending it doesnt exist?
when evergrande defaults, expect the board of directors to get executed and a bunch of high level authorities within the chinese government to get thrown in jail.
edit: there are other companies that structured themselves to let a company like evergrande exist. i wonder what will happen to all those other companies. i'd pull my money out of china if i were smart. also, watch out for any companies that are or were very tied into evergrande.

 

[Michael Janke]

Israel

AKA, Tevin.

 

[contradiction of terns]

Fears Evergrande's collapse could be worse for China than expected - and why Australia is more at risk than anywhere else in the world

Also, a super quirky article about the ramifications of the Evergrande collapse on gold prices/investment. Thought the stonk market Kiwis might enjoy it.

Will Evergrande Make Gold Grand?

 

[Zbk3VmLfujjzjxBd43tL]

this calls into question the actual power of the chinese government.
how the hell did a company end up anywhere close to 300 billion dollars in debt without someone either looking into it way sooner, or someone being payed off to look the other way. imagine having an elephant in the room and everybody pretending it doesnt exist?
when evergrande defaults, expect the board of directors to get executed and a bunch of high level authorities within the chinese government to get thrown in jail.
edit: there are other companies that structured themselves to let a company like evergrande exist. i wonder what will happen to all those other companies. i'd pull my money out of china if i were smart. also, watch out for any companies that are or were very tied into evergrande.

That's been China's culture for millennia, because nobody wants to be the one who takes the blame for shit going sideways. If you're some mid-level CCP goon, and you notice "hey, this Evergrande corporation looks shady", you can't report it because then you're "killing the goose that laid the golden egg" so to speak. The corporation gets fucked, but then you get fucked since you didn't report it earlier. If you don't get fucked, you're still fucked because you just imploded a bubble in your area which means your economic development score the CCP grades you on goes way down and you're screwed (unless the CCP feels like letting you be a hero). You might not even be allowed to report it since Evergrande can complain to your boss and then YOU are the one getting purged for corruption or whatever.

Back in the day, this shit would happen with entire armies where some general claims he's raised an awesome army of 200,000 trained men that's totally going to stomp the barbarians attacking China and this army exists on paper for years and then when it comes time to actually lead the expedition the army doesn't actually exist. This is how Chinese culture works, and the only way it gets solved is when the Chinese get sick of shit like that happening and start chopping heads. And yes, Chairman Xi is going to send a lot of people to prison, potentially even the firing squad, over Evergrande.

 

[Falcos_Commisar]

Seriously, if you have a good job and are ready to settle down for at least 4-5 years, buying a house/condo/apartment is objectively the right call. Rent is a black hole, once you pay rent that money is just GONE. If you’re putting money into a mortgage though, that $1000-2000 you’re paying every month is still your money, you’re just exchanging it from one form to another. Even if you move before you’ve paid off your mortgage, you can just rent out the property and have your tenants pay your mortgage for you. It literally pays for itself.

Buying a property certainly isn’t for everyone. But if you have a stable income and good job prospects, at least $30-50k in the bank, and aren’t planning on leaving the area in the near future, you should definitely be looking to buy your own place.

This