Video about a propped up ponzi scheme of a financial system, then advertises a propped up ponzi scheme of a financial system. Are we going the way of Disrupt TV now? Wall Street Millennial NFT next?
art is uncorrelated to the market because it's the original nft market and a money laundering ring of galleries that resale the same token over and over.
The Chinese housing bubble crisis isn't over, there's multiple developers that are struggling and the systemic failures will hit sooner or later. A big thing I noticed in the video is taking China's statistics at face value, which they probably shouldn't. Evergrande and other developers are struggling to finish the started construction because there is no financing for those, essentially the whole thing has been running on borrowed money. Taking the -3.5% housing value without looking into it also seems odd to me, as there's been some reports that local authorities will not allow reductions in prices of real estate as their income is highly dependent on land sales. Some developers are skirting this restriction by taking in goods as payment, essentially reducing the price in an indirect way. We can't really tell if there is a crash ongoing or going to happen, as China is a single-party dictatorship with extreme levels of propaganda and monitoring, they can do things to hide real statistics, alter sentiments to some extent but when the systemic risks hit it can be sudden and violent.
Don't underestimate the power of controlling the media message. If any negative opinions are immediately suppressed, and all economic news seems relatively calm, then no one panics. Panic is what causes most serious shocks, so things can move slowly in the desired direction if you completely control the narrative. This ends up being a net positive for a large number of people. There are two sides to every coin. You may not be willing to pay the price (anyone who is willing to give up a little liberty and all that) but very few systems have no (potential) advantages.
@@transcrobesproject3625 the controlled media environment is definitely why it has not yet blown up, but it only allows to stack the house of cards higher so the fall might be even more spectacular as correction is inevitable.
The reason why developers are collapsing is that CCP banned them from borrowing more money. There is no reason to believe these developers won't be bailed out by the government once they handover everything they own, including debts, to the government,
I don’t think China’s housing crisis is over, far from it. I think all they have done is postponed the worst effects of it for a little while longer. But I do find it interesting how the Chinese government prioritizes repaying the house owners over everyone else particularly over the investors and as a result they have at the very least significantly reduced the crisis if not avoided it altogether. Meanwhile, the US government doesn’t care about homeowners at all and prioritizes investors. As a result our economy crashed hard in 2008.
It's actually popping right now. THe housing crisis is still ongoing. owner of 300 projects that hasn't been completed are already defaulting on their homeloan, and that is because evergrande is using their remaining money to pay liabilities rather than completeing incomplete projects. The dominos are falling and in the next 2 years china probably won't "bounce" back to pre 2021. So china really haven't solved the Evergrande crisis. Contigon already spread to multiple cities and sector. Beijing is trying and so far they are not really succeeding.
Great video, but you're overlooking the most significant aspect of the collapse. It's not just that real estate constitutes 30% of China's GDP, but it represents 70% of their Central Bank's treasury assets, meaning the Yuan is backed largely by this real estate. If the sector collapses, there's no underlying value to the Yuan, which will create a currency collapse.
@@thomascrabtree It is artificially pegged, but that doesn't mean there's no value. Even with all the manipulation, their Central Bank has assets on their books, even if those assets are dwarfed by the Treasury's liabilities.
Even if Evergrande should survive, it's massive debts don't disappear. The consequences will work their way through the system for a long time. The general populace are not happy to be left with huge mortgages to repay for non-existent property, banks that steal your funds, construction related businesses that are unpaid but expected to keep working. And no spare money to invest in Masterworks - could it get any worse ?
yeah like he totally forgot their over 2 trillion rmb debt where will it go that's around 2% of all China's GDP itself surely this has some sort of an effect
@Kor It is. People not buying houses nor paying loans -> less land sales rights -> less income for local governments. Less construction -> less work for many subcontractors and companies -> more unenmployment -> less consumption. More real estate bankruptcies -> more debt and more unfinished buildings that are rapidly losing value. Look at Japan in the mid 90s for a similar (not equal) example.
@Kor You are right but for one thing. It is a huge issue. But it won't be a crash like many think. It will look a lot like Japan many parts of the economy hasn't recovered from the 1989. With the CCP total control of the economy can drag this out for many decades.
@KorYou missed my point, the CCP can not stand for the amount of economic disruption that is in store when the real estate market falls. It accounts for 30% of GDP considering 2008 was over building in a few cities and small portion of loans going bad. The Chinese market is multiples larger in scale. And my Japan reference was how the government have not allowed the economy to adjust and as a result it has been a 30 year sleep.
Don't forget land "sales" (actually leasing) makes up about 40% of local government revenue. So as appetite for sky high land sale wanes, local governments have to tighten their belts and engage in other shady ways to raise money. The local CCP government officials gets rated/promoted/punished based on their GDP growth which they've been juicing for years with mega infrastructure and housing projects, what will they do once the capital and demand dries up?
Fines and other shenanigans are already being implemented in some cities. Along with the lockdowns it's going to make the few remaining expats flee for their lives.
correct. and now when the EXPECTATIONS miss the reality things will simply have to be re calculated. interest rates, prices of assets, prices of labour etc - there is a mismatch the will need to be adressed another thing is .. DE GLOBALISATION. the pandemic , but also the mood of teh peole in the west , changed the political mood. it is seen in the US and in europe clearly with RESISTANCE towards immigration, with unhappy people seeing that more than a decade - and their lifes are not only not better, but often worse. they see their debts rising, crime rising, they see the general qulity of life falling. this is NOT a prosperous society when you see millions of drug addicts, homeless, livng paycheck to paycheck etc MAJOR re adjustments will happen in the west . and that means LES INCOME for chinese business. that sudden chang ein the trajectory - will also affect how assets, labour etc is priced in china what comes ot mind - is japan around 1990. with its sky high real estate prices and gold curse membership
@@LizardSpork Probably doesn't know the split of the amount of money Beijing pockets and the paltry remainder that local municipalities (big and small) get to keep. Zhu Rongji's decision to let the local governments create these LGVF in order to sell land rights kickstarted the housing boom. Now the Ponzi scheme is going to falter. All in the name of "capitalism with Chinese characteristics".
It won't be solved. Not just Evergrande but the whole Chinese real estate market and local government debt. Because the problem isn't slowing narkets or financial mismanagement but fundamental problem, oversupply. The problem started at demographic census 20 years ago. Chinese demography was getting older than expected 2 decades ago, in order to manipulate the statistics they altered the brith rate statistic. Most of Census Bureau officers are former Family Planning department officers. Those real estate developers (not just Evergrande) and local governments use that data to project housing needs and market forecast in the future. But then after the next census, the Census Bureau alter the data again slowly. If you can see at 3 Chinese censuses, there are missing 18 millions people at the 3rd census from the same age group born in the year of the first census. That's a really high infant mortality rate if it's true. Ofc, it's not true, because there's no baby to begin with at all. Since Chinese real estate market and local government use this data, they thought the market is still high, but in reality, there's not enough buyer. Local Government encourage real estate development because they get their tax revenue from the land lease contract sales (you can't own a land in China). Some local government GDP can have 90% of their GDP related to real estate. 60% to 70% of every housing price in China is paid to the local government. That's why there are so many tofu building because the margin is very low. Not only that, local government often give real estate developer loans through their local SOE banks for real eatate development funding. So local government is also high in debt (they can raise their own local bonds). there are 33 cities that have debt as big as the bankrupted Detroit with fewer income. Why do they do that? Local Governments have annual GDP target that have to be met by the CCP. The local party officials promotion and budget transfer from Beijing rely on those numbers. The Local CCP official can order you to turn on your machinery for example, even though you're not producing that much, so your electricity bills are the same (GDP is calculated by one of this method). Chinese GDP is highly manipulated with this practice just like their demographic statistics.
@Kor pffffttt...... cope harder wumao. If Evergrande can sell their towers at discounted price, there won't be a crisis. The problem os clear, no sales because no more buyers.
@Kor There are people who live in rural areas all over the world and it's nothing wrong with it. Also people in China rural area are poor enough to can't afford a flat in these buildings. They are also needed in these regions for agricultural proposes. According to WorldBank only 37% of people live in rural area of China, so that's a fine percent. Not everyone in the word needs or want or can to live at city. Some countries reports low numbers in rural areas, but they include these small town around cities as metropolitan zone, thus that's they report that. In reality it's still a pretty much rural zone, of course, developed. E.g. Germany, WorldBank - 22%. Also from an NOG: "Germany: 54 percent of the population lives in villages, communities and small towns."
The manufacturing industry in China has collapsed due to lockdowns, capital flight from China is skyrocketing, consumption in the West has virtually stopped, supply chains are broken in a cascading fashion, bank runs are occuring, natural disasters are engulfing the north and south, and food shortages are about to happen. Not quite sure how you can be optimistic about China's economy.
Also the Housing Crisis hasn't been avoided at all, pre-sale homebuyers are now stopping loan repayment for their non completed houses enmass and this crisis is now slowly infecting their banking industry too now.
The problem is still there. we're seeing signs that all is not good in china right now. and figures on economic growth are priduced buy a very dubious source; the Chinese government
LOL I'm old enough to remember when Japan fixed their property and banking problems. And then they were forced to fix it again. And again. And again. etc etc.
as if the fractional=fraudulent banking system was an inherently destibilising force .. hmmm who woudl have thought that giving the central bank a monopoly to produce the neccessary product and force it upon the populaiton could bring misery ? lets be honest here - private banks are just puppets of the central bank. yes, they siphon off profits - but that is simply the mechanims in place the root of the poblem - is STATE IMPOSED MONOPOLY of the central bank producing currency
You fail to mention how much the construction suppliers are also in debt and refused to build anything at credit anymore, well until the ccp is gonna force them to do business with the developers ...
If they're full of ghost city then it means it's all overpriced. Sure the buyers will get their apartments but that doesn't mean a real estate crash has been averted. What it means is that they bought a the speculative high.
This is no way settle….suppliers now don’t deal with credit with evergrande..they have to come up with cash..and a certain lawsuit from a major bond holder will cause trouble going forward
When they convict the Chairman and CFO for financial crimes and sentence them to death, I’ll start believing they are working toward resolution. PS - Year on and still a work in progress. PS2 - I most have missed the resolution to: - Agricultural bank mysterious closures - Contractors declaring bankruptcy or refusing to finish apartments without payments - people refusing to pay mortgage on frozen pre-sold apartments even with the negative outlook for their entire lives - seems like the pot is still boiling and regulators are still fighting over solutions
While I agree with your part on Evergrande, the part about china not having a economic crisis is something I have to disagree to, not too sure when this video was produced prior to being uploaded but you have to take account of other more recent situation in china, people across china have refused to pay for their mortgage which will affect their credit score and here is a fun fact, this credit score will also affect your children, some schools will most likely deny admissions if your credit score is too low. Money in banks have been disappearing and people protested only to be beaten up, tanks have also been sent to protect this banks. Entrepreneurs and the wealthy are basically trying to flee china because of the zero covid policy, speaking of which, the zero covid policy, it is basically the heart rate monitor of china's economy right now, when there is no lockdown, the economy slowly rises, when there is a lockdown, the economy suddenly drops to zero, and this happens over and over again, basically wiping out any "good" economic policies that was implemented to help restart the economy. This is just the one of very few reasons that was mentioned in this video of the many many other reasons that wasn't mentioned in this video about why I personally disagree with your statements about china not having a economic crisis.
This might all make sense if it wasn't for the World economic crash that is just around the corner. A crash like no other seeing as most countries wealth is basically made via debt, and most currency (we can't really call it money) created by banks via debt. This model always had a finite length. And we have reached the end. It will be very, very bad
This is very optimistic. With the smaller banks holding the bag and foreign investors holding the bag, nobody will want to invest in Evergand. There won't be any new buyers and they need the new buyers to help fund these projects. You didn't talk about the contractors. They haven't been being paid. Then we have 22 cities in China under lockdown so there won't be workers working on finishing these condos. Then if course there is the buyers who are boycotting paying their mortgage. They are doing this as a last resort and willing to ruin their credit cause they can't afford to pay the mortgage cause they aren't working cause if the lockdowns. This isn't over by a long shot.
Well the pre-sale homebuyers are still being left with the bag as well, pre-sale homebuyers have been going to the banks and the banks are telling them that the construction accounts are empty. So they will not see any repayment. And they are going so far as to start stopping loan repayments enmass, and the suppliers and Contractors are following suit.
Paying a mortgage on property that has not started, has had construction halted and or is unfinished? The banks have little control if the people stop paying mortgages. You can't evicted someone from a property that doesn't exist. And now the banks are limiting how much depositors can withdraw to prevent a run on the banks? This is far from over.
A fantastic video. They bit the bullet. Everyone knew that the property market is a bubble and one day it would have to pop. As you said it, it is the end of debt fuelled growth. The PRC will now experience slower rates of economic growth, maybe as slow as the USA. The economic playbook of the PRC is much like that of the USA and so new opportunities will come into existence slowly.
Don't be ridiculous. They haven't bit any bullet. The slapped a band aid on the wound and tried to keep the music going. China will be in for a big collapse when they realize that the real estate boom was just a mirage. People pay way more of their income to buy a home in the country and its way overinflated.
@@silversurfer8237 The scale of China's Japanification debt bubble dwarfs many of the G7 countries combined. Even in a controlled capital economy, you can't force people to buy overpriced and unfinished houses, have three children and work 12 hours a day indefinitely.
4.3 % growth? Imho the real number will be close to 2.5 - 3.2 Lockdowns are still rolling the main cities and new construction of housing (and presales) are definitely slowing, I don't think many consumers will rush to spend money in services and retail anytime soon.
What an optimisic report of Chinese finances. The problems with peoples faith that they will get their apartment finished, is that the money is not in a safe place. Evergrande 95% resumed construction... with what, the prepayment is not sitting in reserve it has gone to the 4 corners of wherever. And that is true with all the construction companies and prepayment. Guess thats why all the steel companies are filing for bankruptcy's, no one is working (hidden by the zero covid policy). China solved the Evergrande crisis... lol
I'm pretty sure the government stepped in itself and is injecting cash into the company to pay for construction. They are avoiding just openly admitting to it because they are tired of how common it's becoming so they are taking the middle ground. Bail out the company but then get rid of it and crucially if they actually did, make the rich founders give up tons of wealth so that hopefully the next person will be more careful. They could easily be bailing out other developers as well but using this big one as a public example. Also apartments in China are different by the way than the US. My wife is Chinese so I happen to know from personal knowledge that they only supply you with the raw concrete. No flooring, no drywall not even light fixtures and switches to turn them on and off. So they can probably get the building poured fairly cheaply. The value is in the land but if they already own the land (which they bought a lease on from the government) then the building itself is probably not crazy expensive
Way early to call this situation over for China, it is quite literally still developing and just a few weeks ago more builders have declared bankruptcy in China. The numbers and growth referenced are given to those companies by the Chinese government and it's widely believed that the numbers are falsified. Furthermore, this is still developing and they have absolutely not avoided it. Take a look at the latest trend where mortgage holders for unfinished buildings in China are stopping mortgage payments en mass. Also, those "special accounts" owned by provincial governments have been riddled with fraud and some are already empty. What we're seeing is a Ponzi scheme that the CCP is trying to plug as it turns upside down.
Who pays for something like a house with a prepayment? And even more they were paying the mortgage without delivery of the home... I swear this seems super gullible to me...
Is there a reason that you didn’t cover the protests that are currently happening in China at all? This feels like a poorly researched video with weak conclusions.
Lol, then go look at how they handled the protests for those “priority people.” Using hundreds of hired thugs beat up and haul away people trying to get their money back is hardly how you should regulate a company
How much of the vaunted GDP growth is accounted for by massive white elephant projects financed by, you guessed it, more debt? If I max out my credit cards in order to buy an expensive sports car does that make me a cool looking rich guy?
1st housing price drop is prevented by government decree. Developers beg to lower prices to improve sales but are not allowed. 2nd no one in the world believes China will have anything near 4% growth, that May forecast predates the devastating effects of the Shanghai lock down. 3rd the panic is spreading as hundreds of unfinished projects from many developers are causing a mortgage payment boycott by millions of people. The situation is so bad that Country Gardens, China's largest property developer and a formerly solvent business is on the verge of a default. I usually learn a lot from you, but this video seems like you made it before the summer and the events of the last 2 months. ???
correct. and now when the EXPECTATIONS miss the reality things will simply have to be re calculated. interest rates, prices of assets, prices of labour etc - there is a mismatch the will need to be adressed another thing is .. DE GLOBALISATION. the pandemic , but also the mood of teh peole in the west , changed the political mood. it is seen in the US and in europe clearly with RESISTANCE towards immigration, with unhappy people seeing that more than a decade - and their lifes are not only not better, but often worse. they see their debts rising, crime rising, they see the general qulity of life falling. this is NOT a prosperous society when you see millions of drug addicts, homeless, livng paycheck to paycheck etc MAJOR re adjustments will happen in the west . and that means LES INCOME for chinese business. that sudden chang ein the trajectory - will also affect how assets, labour etc is priced in china what comes ot mind - is japan around 1990. with its sky high real estate prices and gold curse membership
It is in all places where people are reconciled in all things, accordingly adjusted, and most of all at par with records and inventories. It provides the truth as well as the established standards and principles, while it infuses the standards of quality, quantity accordingly. It is a commitment that continuously evolves, and it reconciles, delivers the outcome of realization. It restores the details and so as the details of every sand, and from the sand its earth and its durability/strength. Strength knows strong, since both make vows to impart and apply what was expected, with what was evident, and with what is/was exceptionally applied, 70,80,90. Juliang, Xiexie, Xiu' Ci. Anos: cicenta, otsenta, noventa, calidad, numericos produkto.
@Shill of [insert_personal_Boogeyman] broke..whose broke? It is realization and numerous calculations designed to reconcile, since it is reconciliation, awareness and being well adjusted with the tests of time.
I was just at an American bank yesterday and I overheard someone eagerly trying to get money out of the country to Hong Kong for his parents to buy several houses. From what I heard there was a 14 business day period to verify the legality of the money leaving the country. This did not seem to sit well with the bank customer. Could be a one off, or a sign of a surge that has already begun in buying up property before a recovery.
lol, no, Chinese reseve bank assets who backed Yuan is mostly real estate, not other tangible or intangible items. it's like creating a reserve currency based on crisis and unsalable assets.
They are way over leveraged and there is always a price to pay when the economy no longer grows. The US and the world is going through a recession and China will suffer even more because they are the major exporters. Its only a matter of time that this contagion will grow out of control. The main problem is when there are unknown risks associated with one section of the economy affecting another in a chain reaction. That is what took down the US housing markets when the credit default swaps were understood in the 2008 economic crisis.
👆👆👆I'm just here to say thanks to them the generosity you have shown will be forever in my heart!! Thanks for the perfect job if the world defined be a better place to surely make a difference man you're the best sir...
I think this pandemic has taught people the importance of multiple streams of income, unfortunately having a job doesn't mean security rather having different investments is the real deal.
communism is best idea in the world, unfortunetly people who run these systems are greedy for power and money, therefore its never implemented the way it should be.
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Video about a propped up ponzi scheme of a financial system, then advertises a propped up ponzi scheme of a financial system.
Are we going the way of Disrupt TV now? Wall Street Millennial NFT next?
art is uncorrelated to the market because it's the original nft market and a money laundering ring of galleries that resale the same token over and over.
Nice scam sponsor bro
theyd be better off speculating in art than listening to your ignorance about china lol
Masterworks is a SCAM you dolt!
People are boycotting in China not paying mortgages.
Darren it is my understanding that the Government has told banks to give mortgage holders a payment holiday after protests
The Chinese housing bubble crisis isn't over, there's multiple developers that are struggling and the systemic failures will hit sooner or later. A big thing I noticed in the video is taking China's statistics at face value, which they probably shouldn't. Evergrande and other developers are struggling to finish the started construction because there is no financing for those, essentially the whole thing has been running on borrowed money. Taking the -3.5% housing value without looking into it also seems odd to me, as there's been some reports that local authorities will not allow reductions in prices of real estate as their income is highly dependent on land sales. Some developers are skirting this restriction by taking in goods as payment, essentially reducing the price in an indirect way. We can't really tell if there is a crash ongoing or going to happen, as China is a single-party dictatorship with extreme levels of propaganda and monitoring, they can do things to hide real statistics, alter sentiments to some extent but when the systemic risks hit it can be sudden and violent.
Don't underestimate the power of controlling the media message. If any negative opinions are immediately suppressed, and all economic news seems relatively calm, then no one panics. Panic is what causes most serious shocks, so things can move slowly in the desired direction if you completely control the narrative.
This ends up being a net positive for a large number of people. There are two sides to every coin. You may not be willing to pay the price (anyone who is willing to give up a little liberty and all that) but very few systems have no (potential) advantages.
@@transcrobesproject3625 the controlled media environment is definitely why it has not yet blown up, but it only allows to stack the house of cards higher so the fall might be even more spectacular as correction is inevitable.
@@jannekiljunen6784 corrections can happen slowly, and be disguised in the midst of other data.
The reason why developers are collapsing is that CCP banned them from borrowing more money. There is no reason to believe these developers won't be bailed out by the government once they handover everything they own, including debts, to the government,
Misleading title. More like "How China kicked the can on Evergrande".
It's not over yet.
@@Erik-ko6lh When do you think it will be?
I don’t think China’s housing crisis is over, far from it. I think all they have done is postponed the worst effects of it for a little while longer. But I do find it interesting how the Chinese government prioritizes repaying the house owners over everyone else particularly over the investors and as a result they have at the very least significantly reduced the crisis if not avoided it altogether. Meanwhile, the US government doesn’t care about homeowners at all and prioritizes investors. As a result our economy crashed hard in 2008.
It's actually popping right now. THe housing crisis is still ongoing. owner of 300 projects that hasn't been completed are already defaulting on their homeloan, and that is because evergrande is using their remaining money to pay liabilities rather than completeing incomplete projects. The dominos are falling and in the next 2 years china probably won't "bounce" back to pre 2021. So china really haven't solved the Evergrande crisis. Contigon already spread to multiple cities and sector. Beijing is trying and so far they are not really succeeding.
Great video, but you're overlooking the most significant aspect of the collapse. It's not just that real estate constitutes 30% of China's GDP, but it represents 70% of their Central Bank's treasury assets, meaning the Yuan is backed largely by this real estate. If the sector collapses, there's no underlying value to the Yuan, which will create a currency collapse.
China artificially pegs the RMB to the USD, there's never been anything backing it ever.
@@thomascrabtree It is artificially pegged, but that doesn't mean there's no value. Even with all the manipulation, their Central Bank has assets on their books, even if those assets are dwarfed by the Treasury's liabilities.
Yep. China insights and China observer covers this in detail.
Now the Yuan is also backed by Russian and Saudi oil.
@@Tempestelterna Basically China is collapsing like you lot have been predicting for the 78773th time ;)
Even if Evergrande should survive, it's massive debts don't disappear. The consequences will work their way through the system for a long time. The general populace are not happy to be left with huge mortgages to repay for non-existent property, banks that steal your funds, construction related businesses that are unpaid but expected to keep working. And no spare money to invest in Masterworks - could it get any worse ?
You took the words right out of my mouth as far as EverGrande’s enormous debt that is still present…
yeah like he totally forgot their over 2 trillion rmb debt where will it go that's around 2% of all China's GDP itself surely this has some sort of an effect
@Kor It is. People not buying houses nor paying loans -> less land sales rights -> less income for local governments. Less construction -> less work for many subcontractors and companies -> more unenmployment -> less consumption. More real estate bankruptcies -> more debt and more unfinished buildings that are rapidly losing value. Look at Japan in the mid 90s for a similar (not equal) example.
@Kor You are right but for one thing. It is a huge issue. But it won't be a crash like many think. It will look a lot like Japan many parts of the economy hasn't recovered from the 1989. With the CCP total control of the economy can drag this out for many decades.
@KorYou missed my point, the CCP can not stand for the amount of economic disruption that is in store when the real estate market falls. It accounts for 30% of GDP considering 2008 was over building in a few cities and small portion of loans going bad. The Chinese market is multiples larger in scale. And my Japan reference was how the government have not allowed the economy to adjust and as a result it has been a 30 year sleep.
Great video, just wish the ad for Masterworks was longer…
This is a basic stop gap that won't have much long term impact... its the beginning of the end.
Don't forget land "sales" (actually leasing) makes up about 40% of local government revenue. So as appetite for sky high land sale wanes, local governments have to tighten their belts and engage in other shady ways to raise money. The local CCP government officials gets rated/promoted/punished based on their GDP growth which they've been juicing for years with mega infrastructure and housing projects, what will they do once the capital and demand dries up?
Fines and other shenanigans are already being implemented in some cities. Along with the lockdowns it's going to make the few remaining expats flee for their lives.
correct. and now when the EXPECTATIONS miss the reality things will simply have to be re calculated. interest rates, prices of assets, prices of labour etc - there is a mismatch the will need to be adressed
another thing is .. DE GLOBALISATION. the pandemic , but also the mood of teh peole in the west , changed the political mood. it is seen in the US and in europe clearly with RESISTANCE towards immigration, with unhappy people seeing that more than a decade - and their lifes are not only not better, but often worse. they see their debts rising, crime rising, they see the general qulity of life falling. this is NOT a prosperous society when you see millions of drug addicts, homeless, livng paycheck to paycheck etc
MAJOR re adjustments will happen in the west . and that means LES INCOME for chinese business. that sudden chang ein the trajectory - will also affect how assets, labour etc is priced in china
what comes ot mind - is japan around 1990. with its sky high real estate prices and gold curse membership
@Kor You should learn the difference between "property tax" and "income from land sales".
@@LizardSpork Probably doesn't know the split of the amount of money Beijing pockets and the paltry remainder that local municipalities (big and small) get to keep. Zhu Rongji's decision to let the local governments create these LGVF in order to sell land rights kickstarted the housing boom. Now the Ponzi scheme is going to falter. All in the name of "capitalism with Chinese characteristics".
@@LizardSpork the land lease revenue is an indirect tax because everyone need a place to stay.
It won't be solved. Not just Evergrande but the whole Chinese real estate market and local government debt. Because the problem isn't slowing narkets or financial mismanagement but fundamental problem, oversupply.
The problem started at demographic census 20 years ago. Chinese demography was getting older than expected 2 decades ago, in order to manipulate the statistics they altered the brith rate statistic. Most of Census Bureau officers are former Family Planning department officers. Those real estate developers (not just Evergrande) and local governments use that data to project housing needs and market forecast in the future. But then after the next census, the Census Bureau alter the data again slowly. If you can see at 3 Chinese censuses, there are missing 18 millions people at the 3rd census from the same age group born in the year of the first census. That's a really high infant mortality rate if it's true. Ofc, it's not true, because there's no baby to begin with at all.
Since Chinese real estate market and local government use this data, they thought the market is still high, but in reality, there's not enough buyer. Local Government encourage real estate development because they get their tax revenue from the land lease contract sales (you can't own a land in China). Some local government GDP can have 90% of their GDP related to real estate. 60% to 70% of every housing price in China is paid to the local government. That's why there are so many tofu building because the margin is very low. Not only that, local government often give real estate developer loans through their local SOE banks for real eatate development funding. So local government is also high in debt (they can raise their own local bonds). there are 33 cities that have debt as big as the bankrupted Detroit with fewer income.
Why do they do that? Local Governments have annual GDP target that have to be met by the CCP. The local party officials promotion and budget transfer from Beijing rely on those numbers. The Local CCP official can order you to turn on your machinery for example, even though you're not producing that much, so your electricity bills are the same (GDP is calculated by one of this method).
Chinese GDP is highly manipulated with this practice just like their demographic statistics.
@Kor pffffttt...... cope harder wumao. If Evergrande can sell their towers at discounted price, there won't be a crisis. The problem os clear, no sales because no more buyers.
@Kor this is nonsense, there's hundreds of millions of oversupply housing units.
@Kor There are people who live in rural areas all over the world and it's nothing wrong with it.
Also people in China rural area are poor enough to can't afford a flat in these buildings.
They are also needed in these regions for agricultural proposes.
According to WorldBank only 37% of people live in rural area of China, so that's a fine percent.
Not everyone in the word needs or want or can to live at city.
Some countries reports low numbers in rural areas, but they include these small town around cities as metropolitan zone, thus that's they report that. In reality it's still a pretty much rural zone, of course, developed.
E.g. Germany, WorldBank - 22%.
Also from an NOG:
"Germany: 54 percent of the population lives in villages, communities and small towns."
3:01 not a single story looks level on that building.
It was built on leverage
The manufacturing industry in China has collapsed due to lockdowns, capital flight from China is skyrocketing, consumption in the West has virtually stopped, supply chains are broken in a cascading fashion, bank runs are occuring, natural disasters are engulfing the north and south, and food shortages are about to happen. Not quite sure how you can be optimistic about China's economy.
Also the Housing Crisis hasn't been avoided at all, pre-sale homebuyers are now stopping loan repayment for their non completed houses enmass and this crisis is now slowly infecting their banking industry too now.
Sorry, I cannot see how something this massive can simply right itself overnight.
The problem is still there. we're seeing signs that all is not good in china right now. and figures on economic growth are priduced buy a very dubious source; the Chinese government
LOL
I'm old enough to remember when Japan fixed their property and banking problems.
And then they were forced to fix it again. And again. And again. etc etc.
as if the fractional=fraudulent banking system was an inherently destibilising force .. hmmm
who woudl have thought that giving the central bank a monopoly to produce the neccessary product and force it upon the populaiton could bring misery ?
lets be honest here - private banks are just puppets of the central bank. yes, they siphon off profits - but that is simply the mechanims in place
the root of the poblem - is STATE IMPOSED MONOPOLY of the central bank producing currency
30% growth fueled by debt? building empty buildings - that sounds like a great idea what could possibly go wrong?
"solved" I like that. 😂 China economy ain't growing at all. China is lying
Art investing is a scam.
Not necessarily
The title should be "how China dealt with the evergrand crisis"
You fail to mention how much the construction suppliers are also in debt and refused to build anything at credit anymore, well until the ccp is gonna force them to do business with the developers ...
Kicking the can ?
Communism works!
As long as it embraces Capitalism.
"wealth management products" lmao
the sequel is coming soon...
President Xi: Evergrande who? Aren't they American?
If they're full of ghost city then it means it's all overpriced. Sure the buyers will get their apartments but that doesn't mean a real estate crash has been averted. What it means is that they bought a the speculative high.
This is no way settle….suppliers now don’t deal with credit with evergrande..they have to come up with cash..and a certain lawsuit from a major bond holder will cause trouble going forward
the government has the ability to just... dismiss.. a lawsuit from the bondholders
When they convict the Chairman and CFO for financial crimes and sentence them to death, I’ll start believing they are working toward resolution.
PS - Year on and still a work in progress.
PS2 - I most have missed the resolution to:
- Agricultural bank mysterious closures
- Contractors declaring bankruptcy or refusing to finish apartments without payments
- people refusing to pay mortgage on frozen pre-sold apartments even with the negative outlook for their entire lives
- seems like the pot is still boiling and regulators are still fighting over solutions
While I agree with your part on Evergrande, the part about china not having a economic crisis is something I have to disagree to, not too sure when this video was produced prior to being uploaded but you have to take account of other more recent situation in china, people across china have refused to pay for their mortgage which will affect their credit score and here is a fun fact, this credit score will also affect your children, some schools will most likely deny admissions if your credit score is too low. Money in banks have been disappearing and people protested only to be beaten up, tanks have also been sent to protect this banks. Entrepreneurs and the wealthy are basically trying to flee china because of the zero covid policy, speaking of which, the zero covid policy, it is basically the heart rate monitor of china's economy right now, when there is no lockdown, the economy slowly rises, when there is a lockdown, the economy suddenly drops to zero, and this happens over and over again, basically wiping out any "good" economic policies that was implemented to help restart the economy. This is just the one of very few reasons that was mentioned in this video of the many many other reasons that wasn't mentioned in this video about why I personally disagree with your statements about china not having a economic crisis.
This might all make sense if it wasn't for the World economic crash that is just around the corner. A crash like no other seeing as most countries wealth is basically made via debt, and most currency (we can't really call it money) created by banks via debt. This model always had a finite length. And we have reached the end. It will be very, very bad
Topic start from 3:00
This is very optimistic. With the smaller banks holding the bag and foreign investors holding the bag, nobody will want to invest in Evergand. There won't be any new buyers and they need the new buyers to help fund these projects. You didn't talk about the contractors. They haven't been being paid. Then we have 22 cities in China under lockdown so there won't be workers working on finishing these condos. Then if course there is the buyers who are boycotting paying their mortgage. They are doing this as a last resort and willing to ruin their credit cause they can't afford to pay the mortgage cause they aren't working cause if the lockdowns. This isn't over by a long shot.
Well the pre-sale homebuyers are still being left with the bag as well, pre-sale homebuyers have been going to the banks and the banks are telling them that the construction accounts are empty. So they will not see any repayment.
And they are going so far as to start stopping loan repayments enmass, and the suppliers and Contractors are following suit.
no
Evergrande is just the tip. The shaft and the balls are to follow. Contagion house of cards
I think your final statement of the video could be famous last words!
Paying a mortgage on property that has not started, has had construction halted and or is unfinished? The banks have little control if the people stop paying mortgages. You can't evicted someone from a property that doesn't exist. And now the banks are limiting how much depositors can withdraw to prevent a run on the banks? This is far from over.
Too early to make such a video. The crisis is hardly over. It's only getting started. And it's not just Evergrande.
The $6 billion they took from the bank. The one where the people lost out on their life-savings. Oh I get it.
A big lesson to those idiot foreign investors who invest in brutal despotic regimes like China, Russia, and Iran.
Can't they just execute their way out of trouble?
It’s not over bro
There is big reason to be skeptical of Masterworks, I don't think it is wise to take their sponsorships
trust the ccp numbers - right
3:02 video starts
A fantastic video. They bit the bullet. Everyone knew that the property market is a bubble and one day it would have to pop. As you said it, it is the end of debt fuelled growth. The PRC will now experience slower rates of economic growth, maybe as slow as the USA. The economic playbook of the PRC is much like that of the USA and so new opportunities will come into existence slowly.
Don't be ridiculous. They haven't bit any bullet. The slapped a band aid on the wound and tried to keep the music going. China will be in for a big collapse when they realize that the real estate boom was just a mirage. People pay way more of their income to buy a home in the country and its way overinflated.
The CCP wants to avoid a Japanification but it's going to happen anyways.
@@azmodanpc When you mention Japanification, that is today’s trend for most of the G7. Hopefully Australia & New Zealand can do better.
It wasn't that great of a video really, because the situation is more dire than the video leads to suggest.
@@silversurfer8237 The scale of China's Japanification debt bubble dwarfs many of the G7 countries combined. Even in a controlled capital economy, you can't force people to buy overpriced and unfinished houses, have three children and work 12 hours a day indefinitely.
4.3 % growth? Imho the real number will be close to 2.5 - 3.2 Lockdowns are still rolling the main cities and new construction of housing (and presales) are definitely slowing, I don't think many consumers will rush to spend money in services and retail anytime soon.
Maybe I missed it, but apartment buyers have to start laying the mortgage before they even move in. What idiot came up with that system?
Some guy in HK in the 70s... You could blame the British for allowing this to happen sin ce HK was under british control
Far from being solved
What an optimisic report of Chinese finances. The problems with peoples faith that they will get their apartment finished, is that the money is not in a safe place. Evergrande 95% resumed construction... with what, the prepayment is not sitting in reserve it has gone to the 4 corners of wherever. And that is true with all the construction companies and prepayment. Guess thats why all the steel companies are filing for bankruptcy's, no one is working (hidden by the zero covid policy). China solved the Evergrande crisis... lol
I'm pretty sure the government stepped in itself and is injecting cash into the company to pay for construction.
They are avoiding just openly admitting to it because they are tired of how common it's becoming so they are taking the middle ground.
Bail out the company but then get rid of it and crucially if they actually did, make the rich founders give up tons of wealth so that hopefully the next person will be more careful.
They could easily be bailing out other developers as well but using this big one as a public example.
Also apartments in China are different by the way than the US.
My wife is Chinese so I happen to know from personal knowledge that they only supply you with the raw concrete.
No flooring, no drywall not even light fixtures and switches to turn them on and off.
So they can probably get the building poured fairly cheaply.
The value is in the land but if they already own the land (which they bought a lease on from the government) then the building itself is probably not crazy expensive
Way early to call this situation over for China, it is quite literally still developing and just a few weeks ago more builders have declared bankruptcy in China. The numbers and growth referenced are given to those companies by the Chinese government and it's widely believed that the numbers are falsified. Furthermore, this is still developing and they have absolutely not avoided it. Take a look at the latest trend where mortgage holders for unfinished buildings in China are stopping mortgage payments en mass. Also, those "special accounts" owned by provincial governments have been riddled with fraud and some are already empty. What we're seeing is a Ponzi scheme that the CCP is trying to plug as it turns upside down.
Shares of a painting sounds like a scam
No.
What a crap!
The crisis is still ongoing. When was it solved?
The deposits will bail them out? What nonsense.
“China is not in a recession” are you sure about that? What they report and what the reality is are probably very different
He doesn't realize how bogus the economic data is
Hey from PERÚ
Who pays for something like a house with a prepayment? And even more they were paying the mortgage without delivery of the home... I swear this seems super gullible to me...
Big spenders!
That's messed up. The western bond holders should get their money back first and the people that prepaid for apartments should take the hit.
in the good old times - we would have sent the NAVY with cannons to remind the chinese to pay up
how things changed ..
This form of capitalism has never been done this way before, it's kind of exciting
They haven’t avoided a collapse yet.
Is there a reason that you didn’t cover the protests that are currently happening in China at all? This feels like a poorly researched video with weak conclusions.
Regular people got priority? Ppl focus way too much on the bad when China shows how you should run & regulate companies
Lol, then go look at how they handled the protests for those “priority people.” Using hundreds of hired thugs beat up and haul away people trying to get their money back is hardly how you should regulate a company
Source?
Except that ain't what happened
Fast forward one year from now, and you will see how badly this turned out for China.
Millions of people bought houses that never got finished. Been happening for years. Way before this drama
How much of the vaunted GDP growth is accounted for by massive white elephant projects financed by, you guessed it, more debt? If I max out my credit cards in order to buy an expensive sports car does that make me a cool looking rich guy?
If you wanna see what bubble is see japan in Soviet era
1st housing price drop is prevented by government decree. Developers beg to lower prices to improve sales but are not allowed. 2nd no one in the world believes China will have anything near 4% growth, that May forecast predates the devastating effects of the Shanghai lock down. 3rd the panic is spreading as hundreds of unfinished projects from many developers are causing a mortgage payment boycott by millions of people. The situation is so bad that Country Gardens, China's largest property developer and a formerly solvent business is on the verge of a default. I usually learn a lot from you, but this video seems like you made it before the summer and the events of the last 2 months. ???
China jumps out a whole again
Not bad but China insights and China observer covers this in detail.
correct. and now when the EXPECTATIONS miss the reality things will simply have to be re calculated. interest rates, prices of assets, prices of labour etc - there is a mismatch the will need to be adressed
another thing is .. DE GLOBALISATION. the pandemic , but also the mood of teh peole in the west , changed the political mood. it is seen in the US and in europe clearly with RESISTANCE towards immigration, with unhappy people seeing that more than a decade - and their lifes are not only not better, but often worse. they see their debts rising, crime rising, they see the general qulity of life falling. this is NOT a prosperous society when you see millions of drug addicts, homeless, livng paycheck to paycheck etc
MAJOR re adjustments will happen in the west . and that means LES INCOME for chinese business. that sudden chang ein the trajectory - will also affect how assets, labour etc is priced in china
what comes ot mind - is japan around 1990. with its sky high real estate prices and gold curse membership
Masterworks sucks. The fees are insane.
They are not ideal ,at least the Chinese real estate is busy Bulding the crisis
洗钱讲洗钱啦还要media RUclips ccp involved 不要做假假啦
It is in all places where people are reconciled in all things, accordingly adjusted, and most of all at par with records and inventories. It provides the truth as well as the established standards and principles, while it infuses the standards of quality, quantity accordingly. It is a commitment that continuously evolves, and it reconciles, delivers the outcome of realization. It restores the details and so as the details of every sand, and from the sand its earth and its durability/strength. Strength knows strong, since both make vows to impart and apply what was expected, with what was evident, and with what is/was exceptionally applied, 70,80,90. Juliang, Xiexie, Xiu' Ci. Anos: cicenta, otsenta, noventa, calidad, numericos produkto.
@Shill of [insert_personal_Boogeyman] broke..whose broke? It is realization and numerous calculations designed to reconcile, since it is reconciliation, awareness and being well adjusted with the tests of time.
I was just at an American bank yesterday and I overheard someone eagerly trying to get money out of the country to Hong Kong for his parents to buy several houses. From what I heard there was a 14 business day period to verify the legality of the money leaving the country. This did not seem to sit well with the bank customer. Could be a one off, or a sign of a surge that has already begun in buying up property before a recovery.
Wow
Will the new currency that china and Russia are creating help at all?
lol, no, Chinese reseve bank assets who backed Yuan is mostly real estate, not other tangible or intangible items. it's like creating a reserve currency based on crisis and unsalable assets.
how to scam viewers with art.
China and BlackRock crashing at the same time. Win win.
SOLVED?
Did BlackRock get wrecked?
They're an asset manager, not a hedge fund
BS!
This is by far your most inaccurate analysis
They are way over leveraged and there is always a price to pay when the economy no longer grows. The US and the world is going through a recession and China will suffer even more because they are the major exporters. Its only a matter of time that this contagion will grow out of control. The main problem is when there are unknown risks associated with one section of the economy affecting another in a chain reaction. That is what took down the US housing markets when the credit default swaps were understood in the 2008 economic crisis.
how disappointing, i was wanting to see blood
This video is Chinese propaganda….Bull
Beijing isn't even willing to talk about this
That's how government should work for the people not for the wealthy people, world should learn things like this from china.
wipe out I can hear it now gurgle gulp and sshhhh
You see how much salt is in the comments, the Evergrandes crisis and empty house thing were never as bad as the media as made out to be.
Sure, it's the media, not greedy developers or the corrupt Chinese government.
Think again buddy.
Lol Ukraine flag, you know it’s going to be a dumb take
Finally first
Congratulations ! Your secret is safe with us !
@@patriciapalmer1377 Thanks, cant leat that out
👆👆👆I'm just here to say thanks to them the generosity you have shown will be forever in my heart!! Thanks for the perfect job if the world defined be a better place to surely make a difference man you're the best sir...
I think this pandemic has taught people the importance of multiple streams of income, unfortunately having a job doesn't mean security rather having different investments is the real deal.
Where are other bots?
Lets support communism more!!!! What can goes wrong?
communism is best idea in the world, unfortunetly people who run these systems are greedy for power and money, therefore its never implemented the way it should be.
Lmao you know the good ol USA is no saint either right. They just love to spread "democracy" to third world nations who have a lot of oil 🤣
Bubble tea 🧋 anyone?