China may have a BIG problem with Evergrande. It's there Lehman . BUT at a larger World effect if they go under.
This could be adding pressure to grains and livestock today (extra pressure)
Thanks bcb!!
This could be huge.
It is the non-COVID, non-inflation risk that has been lurking in the global backdrop for months: A looming default by Chinese property developer Evergrande Group 3333, -10.24%.
On Monday, this somewhat obscure, overseas risk suddenly shook up financial markets from Asia to Europe and the U.S., where all three major benchmark stock indexes, the S&P 500 SPX, -2.05%, Dow industrials DJIA, -1.94% and Nasdaq Composite COMP, -2.59% appeared to be headed for the worst one-day drop in more than two months. Though it is certainly not the only reason U.S. stocks slid, Evergrande was a factor behind investors’ risk-off mood.
Read:
Evergrande fears send stock market tumbling: Here’s what investors need to know about the China property giant
On one level, Evergrande—which reportedly faces at least $83.5 million in interest payments due on Thursday, with a 30-day grace period — is raising concerns about a liquidity crisis among all Chinese and Hong Kong property companies, as markets quickly turn off access to dollar funding. In a more macro way, the firm’s woes are bringing to the fore China’s wide-scale regulatory crackdown across most of its businesses, starting with technology giant Alibaba Group Holding Ltd. 9988, -2.19%, which is rattling confidence in the world’s second-largest economy.
China’s crackdown on property developers, without a known endgame, is what’s sapping liquidity from thinly traded securities like Evergrande bonds, which are held in passive emerging-market-index exchange-traded funds and separately managed accounts at U.S., European and Asian money-management firms.
I don't think this has been posted. I found it very interesting.
I’ve been trying read more about this. I always come back to wondering how this could happen in a society so tightly managed. The macro economy is managed along with individual companies, although to a lesser degree than in the past.
Will this slow the relaxation of the Chinese economy and result in a reversal of the trend towards managed capitalism ?
How could the central planning committees allow this to come to such a point ? China doesn’t like to be embarrassed, I wouldn’t think the planners will allow a default.
I think that if you consider Hong Kong, Mcfarmer, that you will find that there has not been any real trend towards managed capitalism.
But doesn’t the existence of this company come from managed capitalism ?
Perhaps you are right about Managed capitalism. I should have considered "Managed." as opposed to Free capitalism.
I think that every company that exist in China exist for the CCP.
Back in the early 90s, a Chinese family was brought out to our farm to look around. The man was pretty high up in the ag department in China, and he marveled at how few people it took to farm that many acres and feed the number of cattle we had. When he entered my office and studied the charts that pretty much covered the walls, he looked at me and said (through an interpreter) - you aren't a farmer, you are an economist. I replied that, if we had someone in government who would do this for us, we could concentrate on farming. He gave me a funny look, smiled, and said - yes, that's what we are trying to get away from. He caught my humor - my wife shook her head about that. I couldn't even visit with someone from China who couldn't understand English without joking with him.
But, that shows, I think, what you are talking about, doesn't it? You can have a managed economy, or you can have a free economy - but not both at the same time. It's like analyzing a market for cycles or trends. I can build a model for either that might work fairly decent, but trying to build one model that will switch back and forth is the most frustrating thing I've ever tried. And, that Chinese man knew that to be true. Without allowing a market to be free, you won't have the necessary inputs to take advantage of all the benefits of a free market. But, the people in that free market will inevitably get into trouble. At what point do the central planners put on the brakes? There is no good answer.
We use the term “free” but is our economy truly free ?
I guess I think the difference is just the degree of control the two governments place on their respective economies.
Real unfettered capitalism I don’t think is what we want.
Safety regulations, environmental regulations among others are a necessary part of society and to various degrees curtail capitalism.
For some time I have felt long term the world‘s economies will settle into some sort of balance between socialism and capitalism. Somewhere between what we see in highly managed economies and what we in the West call capitalism.