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One dollar of Evergrande's debt -- that is, a promise to pay one dollar -- is not worth anywhere near a dollar. So besides the sketchiness of having lots of Chi
by cjensen 5y ago
One dollar of Evergrande's debt -- that is, a promise to pay one dollar -- is not worth anywhere near a dollar. So besides the sketchiness of having lots of Chinese company paper on their "asset" books, there's the whole question of how they are valuing said paper.
In other words, when they say they have $1 dollar of assets for every $1 of issuance, is the asset an Evergrande promise to pay $1? Or is it an amount of stuff they can liquidate easily to obtain $1?
It's the former, of course. And the "auditors" they used checked and said "yep, they have the right amount of promises to pay from distressed Chinese companies that, if those companies actually pay, it will be enough money."
- brundolf 5y agoMakes me wonder if there's a financial "weapon" a country could use in geopolitical conflict where they intentionally create an inscrutable bubble in another's economy, and then once it's grown big enough they suddenly pull off the veil and let the whole thing collapse Not that this one sounds intentional, but it makes you think
- colinmhayes 5y agoThey said the debt isn't with Evergrand. That being said, there's no way to verify that, and when Evergrande falls apart it's likely the entire chinese bond market will.