The chickens are finally coming home to roost with the decades of bullshit in commercial real estate worldwide without proper regulation. This isn’t unexpected to anyone with half a brain looking at the industry, which means it obviously completely blindsides major institutional investors who never even consider anything more than quarterly numbers in a vacuum. The pandemic exposed the systemic issues so quickly they couldn’t just brush it under a rug with misinformation.
Considering quarterly numbers in a vacuum… sounds strangely familiar. Feels like we’ve done this many times before, but we still keep on repeating the same mistakes.
That’s the problem with investors, if they’re not making more money than last year they find a way to fuck the rest of us. Either they pressure companies to lay off workers, they pressure the government to cut taxes, lower pesky labour and environmental regulations, or just handover cash in the form of a subsidy or bailout.
Either way they get our money somehow and enshittify our lives. If there’s no hell we’ll need to invent a special kind of justice for these people.
I don’t know if I can really blame the investors themselves for enshittification… I mean, sure, it’s done for their sake but is it their call? They want a return on the investment, but how much say do they have in the companies that actually do the shitty things?
Then again if I gave money to someone and said “go bring me some milk” and they got me milk, but also murdered everyone they saw along the way, I would definitely not be hiring them again and probably could be in trouble despite not asking for or wanting the murders. If the investors don’t pull out when the company is doing shitty things to make them money, they are definitely evil themselves.
Sorry I was just watching a video that was explaining that most companies are run by a handful of people who basically each represent several of the largest shareholders combined. I suppose I was imagining these people making the actual decisions and hiring the board and pushing the direction of the company and the lobbying efforts as the “investors”.
You’re right I don’t mean we should commit war crimes against grandpa because he has a pension fund lol
Probably won’t hurt the investors, they’ll get paid. But all the individual contractors who worked for the company are very unlikely to actually see payment.
The company owes $300B on $245B of assets. Unsecured creditors are among the last on the list to be paid back, and at least some of those are contractors who did work for the company and haven’t been paid yet.
The thing with debt is that every time someone (or something) that owes a world-changing amount of it suddenly goes kaput, it becomes pretty clear how much of the debt system is made up.
If Evergrande owes banks, they’ll just write off the debts and pretend it never existed. If they owed companies, they’ll recoup “lost” money from assets and loans from someone else.
Most of the debt system is arbitrary and totally nonexistent. This wont be the collapse of the chinese economy like ““china waters”” claimed it would be; for a capitalist country masquerading as a classless economic system they’re doing capitalism a lot better than most of the world right now.
Until it gets down to paying small businesses and individual contractors, then all of a sudden the money is all gone and I don’t even recognize you, señor.
I don't think you quite understand that in this case, it's millions upon millions of working and middle class people who put most of their life's savings into this.
Even here the system will be rigged in favor of big investors vs small investors vs people who bought an asset and will get squat. Because working class who gave them money upfront to purchase an appt or house will be the last one in the collectors queue.
But your response is accurate to the “claim” that investors will be hurt. Media is so messed up that they don’t even mention the customers that will get the worse impact than investors.
Take that comment as an example. You’re too stupid to follow the thread, too stupid to realize how stupid you sound, too ignorant to understand the loser is you.
But points for recognizing there is a loser in this thread. Next step is realizing you are them. Next step is keeping your stupid to yourself rather than removing everyone’s doubt.
That’s pretty funny coming from the guy whose comment history is primarily room temperature IQ hot takes and telling people exasperated by your dimness to fuck off. It’s sadly common to encounter stupid, angry people online, but your dedication to the art puts you at least five short buses ahead of your peers.
Unless I’m mistaken this is a Chinese company trading on the Chinese market. Unless someone was specifically looking to be in the Chinese real estate market (which was very hot about a decade ago iirc), they wouldn’t have a lot of exposure. I think the Chinese market has been in the shitter recently, so I’m not sure who’s holding them right now
Retirement funds (pension funds and 401k target date funds, which is where most of the money is these days I believe) skew very conservatively. They spread their money across markets (so like 5% tech, 8% utilities, 7% municipal bonds, whatever). They might have a chunk in a bucket of “foreign” markets, but even those would be spread across multiple industries. I’d be surprised if any of those funds had more than a fraction of a percent in a single company like this.
Target date funds get their name from the fact that they’re investing with the expectation that you’ll retire at 65, and the closer that date gets, the more conservative the investments become. People who are retiring soon will have even less exposure to this, and people who are retiring in 20 years will never know this happened.
The real question is whether there’s going to be a ripple effect but it’s not looking like that yet.
It trades on Hong Kong Stock Ex so not a traditional Chinese market, but technically a Chinese one nonetheless. Honestly considering how many tech stocks are traded in retirement funds today, Evergrande probably once seemed like a relatively conservative investment.
Rule of thumb is about 1/3 go to foreign investment for a typical retirement account in the US. But you’re right, it should be a very small part of the average portfolio.
They should start a couple utopian city experiments in those ghost suburbs they built way outside cities. Offer housing and a vision and put some academics in charge so we can learn something.
Think of how U.S. conservatives are disgusted by any idea of a progressive experiment. That is how the conservative Chinese gov’t would respond as well.
The problem is that those ghost cities aren't actual cities. The housing is largely worthless and uninhabitable, crumbling before it's even finished, often only "finished" to look that way from afar. You can't actually do anything with it other than tear it down.
Oh I see, didn’t realize the construction quality was terrible:( So it was a sham the whole time? I thought they just didn’t think through the locations which made the housing useless (no work within reasonable commute).
It looks to me like there are a fair amount of finished homes with fine construction that are vacant due to this whole thing. Many weren’t completed but many were.
Let’s see if China have a capitalism with American characteristics and is going to rescue the company with public money, or if they’re going with a more theorical one and left it going broke.
To turn over to a trustee one’s assets and accounts, in order that the several amounts of one’s indebtedness may be authoritatively ascertained, and that the assets may be applied toward their discharge.
In America, the company would be handed a fat check.
I think it’s something like: CCP controls what investments citizens make. CCP wants to expand infrastructure and build up a lot of properties. The company gets overfunded. CCP also implements one child policy for like, idk four decades. Not enough people to live in all the properties they built that never relied on market demand.
is a symptom of a deeper malaise in the Chinese real estate market.
Its even worse than that because retail investors in China use real estate as their primary investment vehicle. Where as someone in the USA might put money in a 401k for retirement or a brokerage account for investing, those don’t exist (in the reliable way) in China. So many regular people’s nest egg is tied up in real estate. So this isn’t just the real estate market getting wiped out, its millions of working class people’s life savings just evaporated.
Goddamn. Thanks for the perspective. This is much more horrible than I thought. It sounds like vulnerable working class people are going to be hurt the worst.
Correct me if I’m wrong. I know that Canadian home prices are bonkers, especially in large cities like Vancouver or anywhere in the GTA (are the Quebecois also having this trouble?). However, the problem with Evergrande isn’t just failure of this company reduces home prices (which is where lots of Canadian savings resides), but Evergrande had taken deposits for tens of thousands of homes it never built or never completed.
So while the value/sale price of a home in Canada may be falling. At the end of the day it still does have value monetarily, and still serves a vital function of housing a family.
China’s situation with Evergrande means the money paid for the house by the owner simply evaporated with no possibility of a refund and the house doesn’t exist because it was never built (or never completed). So to me the China situation looks significantly more dire.
Nah, they way things are, if the canadian housing market falls, the whole economy will shit the bed. The GDP is currently driven by the housing market, the nations finances are literally built on a house of cards.
It’s mental. A rundown shoebox in my neighborhood is upward of 600k even with interest rates as they are now.
We are holding on our apartment as long as possible, wishing that we don’t have to move until kindergarten is done for our youngest. The moment we are forced to move, it will cost us easily 1k$/month more for a lot less space.
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