Thai government advised to prepare for financial fallout from China’s ‘Evergrande’ crisis

[Hawaiian]

On 10/7/2021 at 10:07 PM, bkkcanuck8 said:

Trump was unpredictable and that could have consequences, but US trade sanctions on China did as much damage to the US as it did to China (maybe even more).  China was still preferring Trump get re-elected though because whatever damage was done between the US and China paled on what was being done to international relations by the US - and that was a big benefit to the Chinese foreign policy.  Unpredictable yes, but still a net win for China.

China has repeatedly asked the U.S. to remove tariffs and sanctions and continues to do so.  I wonder why?

[placeholder]

Just now, Hawaiian said:

China has repeatedly asked the U.S. to remove tariffs and sanctions and continues to do so.  I wonder why?

Because it's hurting them. But this isn't a zero sum game. Both sides are getting hurt. Whether it's worth the current hurt for longer term gains is another question. 

[ourdon]

On 10/5/2021 at 8:34 PM, DaveSamutP said:

They'd no doubt have secret positions with such a large Sino entity. I have every expectation many Thais (private and institutions) have exposure to Evergrande directly.

 

There is also likely going to be contagion throughout the China banks and other real estate firms. 

 

Just yesterday, Fantasia, another big player, missed a payment. 

 

This is going to be big.

I have no doubt that this will have an economic tsunami like effect in Asia.  If you dig around, somewhere on this site it mentions that the Chinese are/were the predominant condo buyers in Thailand.  I've driven past miles of condo construction coming out of Da Nang in Viet.  I think the Chinese like sand on a beach has "got into everything".  When these real estate multi millionaires start defaulting on their obligations you're going to see  massive hits to economies that are just starting to recover from the devastation of the pandemic.  We may be watching the formation of the economic version of "The Perfect Storm".

 

In theory, this could and should be limited to Asia but the markets are more skittish than a ewe at the Highland games.  If someone farts loudly in Vladivostok there is a gas shortage in JoBurg three days later.  

This like the 2008 meltdown has simply been caused by greed.  I wonder how many innocent people will have their lives devastated because of it?

Edited October 11, 2021 by ourdon
Punctuation

[Nickelbeer]

China screws up and everyone pays. Fair dinkum??

[placeholder]

38 minutes ago, Nickelbeer said:

China screws up and everyone pays. Fair dinkum??

In 2008 and 2010 it was the USA and the EU that screwed up the world economy and everyone paid. Was that fair dinkum? This kind of recklessness is not A practice exclusive to the Chinese.

[Cherrytreeview]

2 hours ago, placeholder said:

In 2008 and 2010 it was the USA and the EU that screwed up the world economy and everyone paid. Was that fair dinkum? This kind of recklessness is not A practice exclusive to the Chinese.

Possibly, the most ridiculous comment i have ever read.

You compare a financial crisis to a global pandemic killing millions, closing economies for 2 years, impoverishing billions and creating a new endemic disease that will put strains on global health care systems for decades because of the debilitating effects it causes.

Do you even attempt a touch of reason or rationality before you post CCP propaganda?

[placnx]

On 10/7/2021 at 2:41 PM, Hawaiian said:

Xi really does not know what the response will be from the U.S. and its allies should he decide to invade Taiwan.  Even if a confrontation does not involve nuclear weapons the fallout could devastate China's economy and it's Belt Road Initiative would most likely come to a screeching halt.  Is Xi willing to take the gamble?

If you look at Xi's game up to now, he looks like a determined gambler. It's the others, who are now sidelined, who would not take the gamble to obstruct his path.

[placnx]

On 10/8/2021 at 11:27 AM, bkkcanuck8 said:

I don't know whether Biden can be trusted... I would not trust any American leaders assurances these days... but he could not be worse than Trump for the Asia-Pacific region - the US basically abandoned the region to China during Trump's presidency... Biden at least seems to be taking a greater interest in the region lately... though the damage done would take decades to repair with consistent foreign policy etc.  and I don't see that happening.

I'm not a fan of Trump, but actually the situation in the South China Sea developed during Obama's watch. The fake islands would be strategically significant in a Taiwan operation.

[placeholder]

48 minutes ago, Cherrytreeview said:

Possibly, the most ridiculous comment i have ever read.

You compare a financial crisis to a global pandemic killing millions, closing economies for 2 years, impoverishing billions and creating a new endemic disease that will put strains on global health care systems for decades because of the debilitating effects it causes.

Do you even attempt a touch of reason or rationality before you post CCP propaganda?

The topic of this post is  the possible economic consequences of the failure of a large, make that  huge, Chinese real estate developer cum conglomerate. Nothing in this article or the comment that I commented upon made any reference at all to the pandemic. And if you reference my earlier comments in this thread you'll find that I am no apologist for the CCP. Triggered much?

[placnx]

4 hours ago, ourdon said:

I have no doubt that this will have an economic tsunami like effect in Asia.  If you dig around, somewhere on this site it mentions that the Chinese are/were the predominant condo buyers in Thailand.  I've driven past miles of condo construction coming out of Da Nang in Viet.  I think the Chinese like sand on a beach has "got into everything".  When these real estate multi millionaires start defaulting on their obligations you're going to see  massive hits to economies that are just starting to recover from the devastation of the pandemic.  We may be watching the formation of the economic version of "The Perfect Storm".

 

In theory, this could and should be limited to Asia but the markets are more skittish than a ewe at the Highland games.  If someone farts loudly in Vladivostok there is a gas shortage in JoBurg three days later.  

This like the 2008 meltdown has simply been caused by greed.  I wonder how many innocent people will have their lives devastated because of it?

What's really been difficult has been the "just in time" model coupled with a lot of sourcing in China. There have been a lot of disruptions because of blackouts in China, port quarantines, and now Delta. Now companies in the US, EU, are overordering in order to build up an inventory surplus to get through future supply disruptions. This is gumming up the arrival ports.

 

We also have the shortfall in gas supply which is the Perfect Storm as you say.  

[placnx]

26 minutes ago, placeholder said:

The topic of this post is  the possible economic consequences of the failure of a large, make that  huge, Chinese real estate developer cum conglomerate. Nothing in this article or the comment that I commented upon made any reference at all to the pandemic. And if you reference my earlier comments in this thread you'll find that I am no apologist for the CCP. Triggered much?

Actually the pandemic has had a big role in the failure of Evergrandee.

[ourdon]

3 hours ago, placnx said:

What's really been difficult has been the "just in time" model coupled with a lot of sourcing in China. There have been a lot of disruptions because of blackouts in China, port quarantines, and now Delta. Now companies in the US, EU, are overordering in order to build up an inventory surplus to get through future supply disruptions. This is gumming up the arrival ports.

 

We also have the shortfall in gas supply which is the Perfect Storm as you say.  

Funny (not 555),  The JIT model of supply chain management was developed to end the costly manufacturers inventories.  It worked fine for years as long as the components were only separated by a relatively small distance chronologically and spatially. As we added more and distant components the model became more and more "wobbly" (a technical economist word).  The pandemic put a spear through its' heart.   Now as you say, manufacturers are trying to build up inventories  while still trying to operate under the JIT model.  We have the worst of two worlds.

 

We need to get the worlds best economists along with some chaos theory profs to design us a post pandemic model that works.  It will mean that everyone from Dubuque to Milan to Mumbai and Shanghai will also have to buy into the model.  Pissing contests between components cannot be tolerated.  We also need to do this prior to the end of 2020.

 

Local governments will not accept any reduction in their ability to throw spanners into the economic machinery.  We would have periods of conflict.

 

"Cinch yer saddle down tight boys, I think we're in for a hellava ride!"

 

 

Edited October 11, 2021 by ourdon
additional comment

[placeholder]

3 hours ago, placnx said:

Actually the pandemic has had a big role in the failure of Evergrandee.

But the topic here is about the economic consequences of Evergrande's collapse. Not the effect of the andemic on Evergrande. And even before the pandemic Evergrande was wildly overextended.

[bkkcanuck8]

5 hours ago, placnx said:

I'm not a fan of Trump, but actually the situation in the South China Sea developed during Obama's watch. The fake islands would be strategically significant in a Taiwan operation.

Well, to be quite honest, there have not been any good/great presidents this century...  Trump was just the worst by far.  As far as international defense alliances... where others made mistakes... he was completely absent.  (When I lived/worked in the US -- if I had the right to vote, I would have tended to chose Republicans at that time, though I would be more in line with John McCain Republican - now.. the party is completely a different beast.)

[bkkcanuck8]

4 hours ago, placnx said:

Actually the pandemic has had a big role in the failure of Evergrandee.

The pandemic just made the financial mess -- impossible to ignore...  It was not so much a big role, but really just the nail in the coffin... regardless of the pandemic there was always going to be a reckoning sooner or later....  The company in some ways was run like a ponzi scheme.  (taking new purchase money - paid in full for future development to cover work in progress on other work - while also taking more loans for development on property paid in full.

[placeholder]

9 minutes ago, bkkcanuck8 said:

Well, to be quite honest, there have not been any good/great presidents this century...  Trump was just the worst by far.  As far as international defense alliances... where others made mistakes... he was completely absent.  (When I lived/worked in the US -- if I had the right to vote, I would have tended to chose Republicans at that time, though I would be more in line with John McCain Republican - now.. the party is completely a different beast.)

Trump refused to join the trade agreement among pacific nations (to be fair, Clinton spoke out against it too) the name of which I've forgotten. Good news for China.

Edited October 11, 2021 by placeholder

[placnx]

16 hours ago, placeholder said:

But the topic here is about the economic consequences of Evergrande's collapse. Not the effect of the andemic on Evergrande. And even before the pandemic Evergrande was wildly overextended.

Evergrande has been overextended for years, but policy changes and the shortfall last year due to Covid pushed it over the brink. The problem is that several other large companies have problems, and the real estate sector in China is very big. As for here in Thailand, there is and will be spillover because Chinese investors will be unable to meet commitments since they have to deal with problems back in China first.

[placnx]

15 hours ago, bkkcanuck8 said:

Well, to be quite honest, there have not been any good/great presidents this century...  Trump was just the worst by far.  As far as international defense alliances... where others made mistakes... he was completely absent.  (When I lived/worked in the US -- if I had the right to vote, I would have tended to chose Republicans at that time, though I would be more in line with John McCain Republican - now.. the party is completely a different beast.)

I think that we are looking at four failed presidencies in this century of dysfunction.

[placnx]

15 hours ago, bkkcanuck8 said:

The pandemic just made the financial mess -- impossible to ignore...  It was not so much a big role, but really just the nail in the coffin... regardless of the pandemic there was always going to be a reckoning sooner or later....  The company in some ways was run like a ponzi scheme.  (taking new purchase money - paid in full for future development to cover work in progress on other work - while also taking more loans for development on property paid in full.

Yes, they apparently were paying some big dividends! It's a Chinese variant of the Ponzi scheme, looking big and glorious.

[placeholder]

1 minute ago, placnx said:

Evergrande has been overextended for years, but policy changes and the shortfall last year due to Covid pushed it over the brink. The problem is that several other large companies have problems, and the real estate sector in China is very big. As for here in Thailand, there is and will be spillover because Chinese investors will be unable to meet commitments since they have to deal with problems back in China first.

Well, for companies like these there is always something to precipitate a crisis. But what I have read doesn't assign the blame to Covid but rather the Chinese govt's tightening of credit restrictions last August otherwise known as 3 red lines.

[placnx]

3 minutes ago, placeholder said:

Well, for companies like these there is always something to precipitate a crisis. But what I have read doesn't assign the blame to Covid but rather the Chinese govt's tightening of credit restrictions last August otherwise known as 3 red lines.

Yes, the last straw was the 3 red lines, but rates offered on bonds were already quite high. Covid stagnated the property market last year

[spidermike007]

Thai government advised to prepare from the fallout, from having the least talented leader in a generation, presiding over a cabinet lacking any talent, experience or ability, during a worldwide pandemic.

 

That is far more hazardous than anything which may happen in China. 

Edited October 12, 2021 by spidermike007

[Hawaiian]

This is a step down from all of the tough talk from Xi and his foreign minister.  China's economy is much worse shape than they would like us to believe.