How Evergrande Became China’s Biggest Financial Headache
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Published 2022-01-27
#Asia #TheBreakdown #BloombergQuicktake
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All Comments (21)
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Who knew building ghost cities would not be profitable?
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If I owe 300 Billion dollars, the lender is in trouble not me.
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Building multiple, low-quality properties sold to rich investors as an asset only to be sold later for profit and your average commoner can’t afford to buy them. What can possibly go wrong?
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China is fully aware of the Evergrande's financial mess for a long time. They had ignored the corruption of the Chinese property developers for the sake of economic growth. To the 1.5 million Chinese who bought unfinished properties, it's highly unlikely China central government will bail you out. So the road ahead for these people is to continue paying mortgage or declare bankrupt.
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Another example of a business building its foundation on an infinite money fountain. The problem with that, is that there is no such thing as infinite money. As a business you should always be prepared for what happens when a revenue source dries up.
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Virtually every business failure story is about trying to expand too quickly, and taking on too much debt. As much as people extol the idiom "If you're not growing, you're dying" you never hear about a business failing because it stayed small, stayed profitable, and never took on any debt.
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Those suppliers that waived Evergrande's debts are probably not too happy with their decision.
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The whole sector is a bubble.
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The CEO of Lowy could play a James Bond film vilain. He would look totally legit.
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*PHONE RINGS* -"Sir, he bought Evergrande stocks" - Bogdanoff : "DUMP IT"
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Much akin to the 1920s when people were buying on margin. That ended great.
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"Debt-fueled strategy..." whew, enough said!
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Lol I love how these companies can borrow billions and then get bailed out when they fail with no consequences.
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When I was on the bullet train from Shanghai, I noticed how fast they were building every where. Even my mom's home city looks completely different, massive round abouts and roads I never thought would ever be built.
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9:37 ... I would love to know who Lulu Yilun Chen sold $11 million worth of Evergrande shares to. Who would buy shares in a sinking ship???
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At some point this mirage bubble must reach bursting point for reality to strike home.
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Tips for business owners: crisis often comes from overconfidence rather than conservatism.
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The Chinese government actually forced the CEO to sell his yacht and artworks to pay for the company debt. Image that happening in US lol
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That company was the first of many who have gotten into financial trouble there and I feel bad for the people who purchased property unseen and that is terrible and a disaster in the making.
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This is what annoys me. I remember those protests. Our media made it seem like it was people rising up against the gov. When in reality they were protesting a company.
