10 years ago analysts were warning that China’s largest property investment company, EverGrande, was a basket case of Frankenstein ideology spawned between the Communist Party and the market forces of Chinese Capitalism.
The analysts warned the insane amount of debt wracked up was utterly unsustainable and if it collapsed billions would be lost.
That was 10years ago.
Now EverGrande has $300billion in debt and the implosion is likely to cross a debt black hole threshold and drag China and the globe into an event horizon of recession at a time when Covid is still being fought.
I think if EverGrande implodes it will trigger a mass liquidation of external property holdings and businesses meaning the Chinese investor will dump property assets in the West to shore up the domestic Chinese economy.
We can see this with WasteManagement up for sale now (an asset the Regional Council should buy). If EverGrande spreads expect the contagion to hit property prices hard as a glut of sales extinguish demand.
Expect higher interest rates as house values plummet. Watch how quickly NZ Middle class kindness evaporates when they lose 40% of their fake housing wealth.
This type of economic carnage in the West would suit China’s diplomatic goals in the wake of AUKUS.
I have argued that China’s recent crackdowns on screen times, effeminate men and Chinese Tech Tzars is driven by a paranoid and frightened authoritarian State not the bold moves of an optimistic new SuperPower.
When the economic sugar rush of fake growth passes its first bloom, the dark tyranny of war quickly angers into those hollow promises.
Pandemic + economic strife = war.
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Who holds Evergrande’s debt Martyn? I suspect it is mostly western banks and speculators. If it is going to destabilise the Chinese economy they will bail it out like the US and Western central banks have been bailing out zombi companies since 2008; If not they will watch the western banks and investors suffer.
D J S
Or as per the Japanese banks since about 1989 crash, from which the stock market has still to recover from.
38,915 in 1989 and 30,500 today.
If there is a global melt down hopefully the NZ government picks up our own assets cheaply – good time to buy!
Land prices are bonkers, based on the idea that developers with deep pockets are buying up land in the middle of nowhere or unsuitable places, and ramming through consents due to our bovine councils and polluting and legally corrupt RMA system.
A builder was telling me that China construction bank was financing the construction of some apartment building in Auckland. He said, “if I went for a job, I would not get it, they only employ Chinese people.” Oh and I guess disgraced director of Mainzeal, Jenny Shipley spent some time/maybe still there on Chinese Construction bank. There is always a place at the table for those directors that blindly do what they are told and transfer loans out to China…
I wonder why so many companies hate employing Kiwi’s in their business now, is it because there are so many dodgy things going on in NZ business, that they don’t want any whistleblowing or scrutiny?
There’s divide and conquer but younger people are different. We have expectations that if we go to war that NZDF is prepared and prepared to fight for a good reason namely to punish those that undermine the structure of democracy.
What desperate politicians can not control they simply invade the consequences being abnormally high civilian casualties.
Any invasion renders the UN utterly ineffective so the post corona rules based order which NZDF rules of engagement are going to have to go sideways, not so much stronger or weaker but from a peace keeping force to a defensive one, the end game being a presence in every geography New Zealand has an interest in.
“There’s divide and conquer but younger people are different. We have expectations that if we go to war that NZDF is prepared and prepared to fight for a good reason namely to punish those that undermine the structure of democracy”. And which reality are you choosing to live in this week?
Considering the tsunami of hypocrisy that underpins the “modern” thinking you laud as so much more “democratic” than what went before, this would be a humorous utterance.
With the best will in the world, a set of “philosophies” based largely on revenge fantasy, and self , centeredness, the chances that the kind of pressures created by a situation theorised by this article, the fragmentation process will occur at a compounding acceleration.. Within weeks they will all be at each others throats.. The sudden, and imposed realisation that the NZDF is nothing but a speed hump to the armies that will be involved in any serious fight in the pacific region.. The only ones that will be getting “punished” are the ones foolish enough to try to “tut tut” the naughty boys and girls who aren’t being “nice” to them.. As an aside.. How could the UN relevant to a property bubble bursting in China, and the inevitable fallout from that? Easy answer.. Absolutely nothing… They don’t have the power to tell anyone to “stop that you naughty children” to a kindergarten class, let alone two of the most powerful economies on the planet…
Australia is getting nuclear powered subs…
You understand what that means for New Zealands relationship to with Australia and the consequences of those actions correct?
No one else s going to like us. Particularly no one is going to enjoy very much listening to nobodys on the internet whinge about this or that feelings got broken and hurt.
Probably Indonesia will start doing weird shit. They might even boom towards nukes of there own. Actually I jinx that.
Just try not to freak out okay champ. There enough loonies out the articulating there deep knowledge and understanding of internet, google and YouTube theories.
And as a result of the Evergrande melt down , and to curb emissions, China is easing off on it’s building boom .So they have less need for iron ore from Australia, and iron ore prices have plunged.China also recycles steel internally and can afford to cut more iron ore imports from Australia by buying it from it’s African interests, eg Guinea, with far less of the insults and hassle.
https://www.smh.com.au/business/companies/iron-ore-s-freefall-hits-australian-miners-as-china-curbs-steel-output-20210917-p58skq.html
Now do you understand why the Chinese have been getting ‘black’ money out of China and buying up property all around the Pacific Rim for the last decade or so?
Everyone who was anyone knew what was going to happen and has been smuggling money out of China as fast as they could, although Xi tried to clamp down on in recent years.
I think something like 5 out of 10 of Chinas most wanted apparently got citizenship in NZ and they were business people who ran off with money for the most part, not poor Chines pro democracy advocates. NZ immigration laws are bonkers and attract the worst and most individualist, self interested, candidates familiar with fake paper work, not the best, more honest applicants.
As usual NZ excels at Naivete
If you know who is on China’s most wanted list, how come NZ Immigration didn’t know? Or did they know and let the individuals have citizenship? Or did they not have the wit or resources to get intel on anyone who had changed names?
https://www.nzherald.co.nz/business/nz-citizen-fifth-on-chinas-most-wanted-fugitives-list/LFO3DROJS74HUCIEUCX5ZTVM24/
Four of China’s ‘most wanted’ for corruption believed to be hiding in Auckland
https://www.stuff.co.nz/world/asia/91996550/most-wanted-chinese-fugitive-believed-to-be-hiding-in-plain-sight-in-sydney
China isn’t known for it’s honest justice system, so who knows if these people were guilty of the charges or not, but the idea that NZ was considered an easy place to go, if you were on a criminal list, speaks volumes about getting citizenship here and who NZ attracted in large numbers.
I see Trump’s empire sure up by vast loans is very shaky . The banks that a few years ago were throwing money his way are now getting nervous. It will be a similar situation with other false phophets of get rich schemes.
In NZ the property bubble is getting ready to explode. The false sense of security many have felt with the increase value of their property matching the lose of income due to covid will soon vanish . This government has show it cannot move quickly so when the dam breaks many will be left with nothing . So many young people that are over extended have never experienced property values falling and will not reconize the signs until it is too late .
I hope I am wrong but I fear for the future and the young families that will suffer the fall out.
‘This government has show(n) it cannot move quickly’ Where have you been?
I have been here waiting for this government to move on child poverty /the housing situation with regard to renters or buyers / the stranded NZ citizens trying to get through MIQ . Those are just some of the problems not being fixed.
I first went to China in 1997. Before I got on the plane people kept telling me ‘China’s economy is overburdened with debt and soon it will collapse.”
Still waiting.
China may have embraced free trade and consumerism. It never became neo liberal Capitalist in the sense New Zealand did in the 1980s. Their government does not see anything wrong with intervening in the economy or in business.
What COULD bring about chaos is a power struggle within the Communist Party such as caused the Cultural Revolution. This would not be good for the Chinese or ourselves either.
In the USA the new administration is looking to up home buying.
“The Biden administration is close to announcing the nomination of a key regulator with broad powers to change the $11 trillion mortgage market and reshape the American dream of homeownership, sources tell NPR.
The administration has narrowed down the candidates to run the Federal Housing Finance Agency, or FHFA, according to sources who are familiar with the matter but are not authorized to speak publicly.
While not a household name, the agency has enormous power because it controls Fannie Mae and Freddie Mac, the two entities at the heart of the mortgage market. They largely decide who can qualify for a home loan and at what cost.”
https://www.npr.org/2021/09/18/1038353689/housing-fannie-mae-freddie-mac-fhfa-director
I predict there will be a complete (or at least partial) bailout by the Chinese Government (they’ll just print money), just like we did in the West (aka TARP). The EverGrande executives who speculated will be richly rewarded, just like the CEO’s of CitiGroup, Bank of America, Goldman Sachs, JP Morgan, Welles Fargo etc. Stock Markets will rebound to new all-time highs on the news.
https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
Even Jacindas propaganda rag is starting to ‘get’ how much like China we have become. Our ponzi is a cancer that needs lancing asap before we truly become a failed state. https://i.stuff.co.nz/stuff-nation/126416378/our-housing-situation-is-driving-inequality-and-its-dangerous
Who designed the flag? I love it – a copy is going up on my wall!
The silver lining is that whoever in NZ government called for NZ based banks to have higher liquidity, were right on the money!!! They finally did something right!
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