Evergrande Financial Panic - Corona is not the only Contagion China is exporting

[There'll be another time]

Chinese investors are infamous for driving up property prices in foreign cities by buying up swathes of apartments. Do we think that's going to get worse after the crash or might values come down as they try to liquidate their foreign assets?

If this is a dumb question it's because I am.

Well, for Chinese Investors buying up in foreign is driven by two things;

1. Laundering money to avoid paying taxes back home by converting them to assets (Although this may have changed recently I don't follow Chinese tax code that closely)

2. Prepping in case something goes wrong back in China/setting up shop to get the kids better education.

If we get a collapse we'll likely see an initial surge in prices as Chinese people desperately try to get that house before they get priced out or lose everything. It's going to be wild. Beijing may outright slap up a set of "no capital flight" rules and then shits going to go wild, as for when that's over I don't know.

The uptick in property prices isn't something I've got a finger in. It's possible the surge might convince people to sell, but I get the feeling it won't. The question will be without as many rich Chinese will the prices stagnant or continue to rise, albeit more slowly and I honestly don't know. Investors are fickle and could be scared into a crash by a Chinese collapse, or not.

 

[RussianParasite]

Well, for Chinese Investors buying up in foreign is driven by two things;

1. Laundering money to avoid paying taxes back home by converting them to assets (Although this may have changed recently I don't follow Chinese tax code that closely)

2. Prepping in case something goes wrong back in China/setting up shop to get the kids better education.

If we get a collapse we'll likely see an initial surge in prices as Chinese people desperately try to get that house before they get priced out or lose everything. It's going to be wild. Beijing may outright slap up a set of "no capital flight" rules and then shits going to go wild, as for when that's over I don't know.

The uptick in property prices isn't something I've got a finger in. It's possible the surge might convince people to sell, but I get the feeling it won't. The question will be without as many rich Chinese will the prices stagnant or continue to rise, albeit more slowly and I honestly don't know. Investors are fickle and could be scared into a crash by a Chinese collapse, or not.

I wonder how much buying power a lot of them would have in the event of an economic collapse. In theory, their currency should tank and become almost worthless pegged to the USD or not. Likely many of the wealthy Chinese already have a lot of foreign currency anyway, but those same ones also would already have real estate abroad I would guess.

It is interesting to think about how this would play out. A lot of pieces to the puzzle here.

 

[Meat Target]

I am a man of my delicious word.

Get on my level, skrubs.

Every day, I come to Happenings hoping for news of evil people getting bent. And every day, I am disappointed.

 

[Zbk3VmLfujjzjxBd43tL]

Chinese investors are infamous for driving up property prices in foreign cities by buying up swathes of apartments. Do we think that's going to get worse after the crash or might values come down as they try to liquidate their foreign assets?

If this is a dumb question it's because I am.

At least in the US, many of these cities infamous for the Chinese jacking up prices like West Coast cities or NYC are also decaying under the combination of bad governance and vaccine mandates causing even more police to quit alongside firefighters and EMS. Already in 2020 there was a huge exodus from these cities (albeit mostly to the suburbs around them). If they wanted anything for their investment, they'd have to get out now or else be stuck with it.

Personally I'm more worried about my own local land values since at least a few of the rats fleeing those sinking ships are coming here. Ideally a decline of property values in the cities would drive at least some back there.

 

[Enig]

Starting to wonder just how much of the national debt will vanish overnight if China implodes, hmmm...

 

[Sped Xing]

Starting to wonder just how much of the national debt will vanish overnight if China implodes, hmmm...

You think we'd default on our debts just because our creditors were poor? Or what?

 

[Fcret]

Starting to wonder just how much of the national debt will vanish overnight if China implodes, hmmm...

Realistically-speaking: none. Only a third of the US's debt is held by foreign governments and investors, and China isn't even number one on that list (the top US bag holder is Japan because they need the cushion that constant USD influx gives them to prop up their own weirdo system).

Nor should we want the US to tell Chinese investors to fuck off. The US paying its debts, even if it has to do so with printed money, is one of the reasons why USD is the world's reserve currency. Even if your USD is worth less tomorrow than it is today, you can take it anywhere in the world and buy commodities with it because so much of global trade is dollarized.

Now what might happen if the US is actually smart is a kind of bond buyback program - the US government offers to buy back bonds at face value to give Chinese investors some immediate cash flow without needing to wait for those bonds to mature with the benefit to the US being that they're no longer paying full interest on that debt.

 

[Michael Janke]

You think we'd default on our debts just because our creditors were poor? Or what?

it is pretty dumb
china would have to collapse so hard, it isnt china anymore. by that, i mean break up into several smaller countries because otherwise the new guys in charge will just demand payment

 

[Snekposter]

During the Cold War, the Soviets were absolutely convinced that NATO, particularly the United States, was more than willing to initiate a First Strike without warning. This paranoia fed into their reaction to Able Archer '83, where they thought a NATO wargame involving heads of state and the theoretical use of nuclear and conventional weaponry to be a disguise for an actual first strike and invasion.

Detour, but the psychology on both sides during the Cold War was absolutely fascinating. Soviet propaganda had done such a marvelous job hyping up the Communist world takeover that the West was absolutely terrified of the Red Army crashing through Fulda any minute. As a result, nuclear ordnance, both tactical and strategic, was on the table as the only feasible deterrent against the Soviet hordes. So Soviet fears of being nuked any minute were a result of the West being scared of the Hammer and Sickle flying over Carentan if we didn't nuke them. Never mind that the Red Army had been slowly decaying ever since the end of WW2, a process only accelerated by the 1967 conscription law changes and the following rise of dedovshchina necessary as a result of their massive demographic shortcomings thanks to all of the unborn children as a result of their massive WW2 casualties.

 

[contradiction of terns]

Since Evergrande's collapse is kind of dragging on, here's an article about how they're trying to avoid default. Keyword: trying.

Apparently they're looking to sell their headquarters to raise the cash to make more of their last minute interest payments.

 

[RainwaterDrop]

would economic collapse actually make china less of a threat, or would the government use it as a way to consolidate even more power into itself?

They are a totalitarian dictatorship run by a strongman who swings his dick around to show how powerful he is. Same guy who is stimulating "diplomats" that just shit the table and call it a power move, ultranationalistic sentiment in the populace and hostility to the West. Unless the Evergrande nigga has a kill switch on his heart that collapses the Three Gorges Dam the moment he dies, this won't be good!

Since Evergrande's collapse is kind of dragging on, here's an article about how they're trying to avoid default. Keyword: trying.

Apparently they're looking to sell their headquarters to raise the cash to make more of their last minute interest payments.

If they are that fucking needy, it's over already. 300 billion is more than the GDP of many countries out there, if they pulled a briefcase full of that cash out of their asses they would still be fucked with their reputation and the mess they are currently in!

 

[George Lucas]

Starting to wonder just how much of the national debt will vanish overnight if China implodes, hmmm...

Aside from not being how debt works, most of the US government’s debt (what I assume you’re referring to by national) is owed to US citizens.

 

[Garm]

Realistically-speaking: none. Only a third of the US's debt is held by foreign governments and investors, and China isn't even number one on that list (the top US bag holder is Japan because they need the cushion that constant USD influx gives them to prop up their own weirdo system).

Nor should we want the US to tell Chinese investors to fuck off. The US paying its debts, even if it has to do so with printed money, is one of the reasons why USD is the world's reserve currency. Even if your USD is worth less tomorrow than it is today, you can take it anywhere in the world and buy commodities with it because so much of global trade is dollarized.

Now what might happen if the US is actually smart is a kind of bond buyback program - the US government offers to buy back bonds at face value to give Chinese investors some immediate cash flow without needing to wait for those bonds to mature with the benefit to the US being that they're no longer paying full interest on that debt.

I think he was asking "legally where would the debt belong to if the current owners get yeeted."

If the communist party collapsed would the next government inherit those bonds or would we just go "well, that government doesn't exist anymore" and start erasing debts from the books.

 

[George Lucas]

I think he was asking "legally where would the debt belong to if the current owners get yeeted."

If the communist party collapsed would the next government inherit those bonds or would we just go "well, that government doesn't exist anymore" and start erasing debts from the books.

This isn’t even a question. Debts have to be repaid some way or another. The only way that a debt doesn’t get repaid is through some sort of settlement, like bankruptcy. Even if you die, your next-of-kin have to pay your debts. There are only a few exceptions to this and it’s all bullshit government Keynesian shit that fucks up the debt market anyway (see student loans).

When someone defaults, the person who is owed money now has the right to persue the collection of funds by any means as permitted by law. This includes telling everyone ‘Hey, these scoundrels didn’t repay me, so don’t do business with them!’ Now the defaulters’ lives are ruined because nobody trusts them. Another method is breaking down their door and threatening to kill their families, but that’s usually unecessary.

Thus any potential successor to the PRC government has a purely rational self-interest to repay debts (or settle) to the best of their abilities, so that trust can be maintained with bondholders. If the successor state does not repay the debts, then bondholders will view the successor as being just as untrustworthy (i.e. just as likely to default) as the previous government.

 

[contradiction of terns]

There are only a few exceptions to this and it’s all bullshit government Keynesian shit that fucks up the debt market anyway (see student loans).

Anyone who hates Keynesian economics is a decent chap in my book.

 

[Garm]

This isn’t even a question. Debts have to be repaid some way or another. The only way that a debt doesn’t get repaid is through some sort of settlement, like bankruptcy. Even if you die, your next-of-kin have to pay your debts. There are only a few exceptions to this and it’s all bullshit government Keynesian shit that fucks up the debt market anyway (see student loans).

When someone defaults, the person who is owed money now has the right to persue the collection of funds by any means as permitted by law. This includes telling everyone ‘Hey, these scoundrels didn’t repay me, so don’t do business with them!’ Now the defaulters’ lives are ruined because nobody trusts them. Another method is breaking down their door and threatening to kill their families, but that’s usually unecessary.

Thus any potential successor to the PRC government has a purely rational self-interest to repay debts (or settle) to the best of their abilities, so that trust can be maintained with bondholders. If the successor state does not repay the debts, then bondholders will view the successor as being just as untrustworthy (i.e. just as likely to default) as the previous government.

The question was about the US debt. If the US debt is held by private Chinese citizens then there isn't an issue as you point out. If the US debt is held the the People's Republic of China and that goes under, who gets the debt then? Unless the PRC bought US debt then resold it as its own in which case the scenario is as you presented it.

 

[Zbk3VmLfujjzjxBd43tL]

If the communist party collapsed would the next government inherit those bonds or would we just go "well, that government doesn't exist anymore" and start erasing debts from the books.

Almost always some country has to inherit that debt. It's worked like that for two hundred years, like it wasn't until 2014 that Britain even started paying off their World War I debt because before then they were paying off their debt from the Crimean War, Napoleonic Wars, and other 18th/19th century shit. IIRC the British still ARE paying back debts on the Napoleonic Wars. If China ceased to exist, then some post-Chinese country in East Asia basically has to legally be China for the sake of international law (and given how China works, some country would demand to become China and try and reunify with the others either diplomatically or by force).

 

[Sped Xing]

Even if you die, your next-of-kin have to pay your debts.

Maybe in ancien regime France, but not in 21st Century America. The only way to inherit debt is to choose to do so. For example, if your Mom owns a big house with lots of debt to the point it's under water, kicks the bucket, and leaves the house to you, you can either assume the debt or say "no thanks" on the inheritance.

However, if she lives in a crummy apartment and just had a shitload of credit card debt from her obsession with psychic palm readers, that's a mastercard problem, not a you problem. You cannot inherit more debt than the value of the estate, though I'm sure the bank will accept money you aren't legally obligated to pay. "Thanks, schmuck," they say.

None of this has anything to do with how governmental debt works, of course.

 

[Kujo Jotaro]

would economic collapse actually make china less of a threat, or would the government use it as a way to consolidate even more power into itself?

It would depend largely on how the populace of china reacted to the economic melt down, If they choose civil disobedience or even outright rebellion then China might just devolve into a bunch of warring states over night. If however they choose even more blind subservience(which is what we all know will happen deep in our hearts) they could emerge onto the world stage rearing and ready to go with anyone and everyone who could potentially be exploited or pillaged for resources.

What success they would have in any military campaign I could not say. Competing propaganda machines make something as difficult to judge as military force and capability doubly hard to judge. Mutual destruction also has to be taken into account when discussing modern warfare, the mere existence of mutual destruction puts a wrench in any prior conventional warfare strategies(do you really want to storm Omaha beach if the Nazi's have a get out of jail free card in the form of mutual destruction as soon as you approach the German boarder?).

I'm not sure if the Chinese can improve their espionage network's more than their current level's, but I can assure you if the Chinese state survived intact there would be continued espionage, and possibly an increase.

 

[Smoke Manmuscle]

If the rebel government on the mainland collapses I think Republic of China should sweep in and show why they are the rightful government.