3 ms·
You realize that they've already repeatedly said they'd "bail out" people and groups affected by this? They just weren't willing to reward Evergrande's reckless
by VortexDream 5y ago
You realize that they've already repeatedly said they'd "bail out" people and groups affected by this? They just weren't willing to reward Evergrande's reckless behavior by giving them more money. Something the US should've done (so much for free market capitalism as a principle).
- deleted 5y ago[deleted]
- candiddevmike 5y agoI don't think it's clear yet if they plan to bail out everyone or just Chinese-based people and groups. From my understanding, evergrande had a lot of international investors.
- Kinrany 5y agoRegardless of whether China does it, bailing out the debtees and letting the debtor fails is what other countries should do in the future.
- littlestymaar 5y agoThat doesn't bring better incentives that bailing the debtor out: it still encourage to lend money recklessly.
- Kinrany 5y agoThis creates at least one agent that will directly suffer the consequences of the default they caused. Of course one can create two companies, make the first borrow from the second, make the second hide the money and default, get the first bailed out and pocket the hidden stash. But they'll be easier to go after.
- littlestymaar 5y ago> This creates at least one agent that will directly suffer the consequences of the default they caused Iif you think of companies as “agents”. But they are not, the agent causing the default is the human in charge. And those aren't often suffering a lot from their mistakes…
- Kinrany 5y agoSure, but it's easier to sue them if the company goes bankrupt.
- randlet 5y agoDoesn't removing the risk from debtees still encourage reckless investing/lending? edit: apparently littlestymaar and I are operating on the same wavelength this morning.
- dustintrex 5y agoChina applies different disincentives: it's virtually certain a lot of Evergrande top brass will end up in jail over this.
- thedudeabides5 5y agoIt’s not that simple. Sometimes that’s what you want to do and you trigger a lehman. No one really knows where the trigger line for systemic with these things is. Hence the weird financial regulations like Dodd-frank in US, MiFID in EU etc
- lettergram 5y agoI’m thinking they’re more likely to bail out the institutional investment (not the Chinese). They need continued investment from foreign powers.
- hericium 5y ago> You realize that they've already repeatedly said they'd "bail out" people and groups affected by this? I wouldn't be surprised if this would only cover domestic bond owners.