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Too big to fail combined with an autocratic government ostensibly built upon stability. Who dares push it into bankruptcy and risk the certain wrath of that gov

• paganel 5y ago
  To be fair the same happened to Freddie Mae and Fannie Mac, which were bailed out at the start of the 2008 financial crisis. Eventually they repaid their bail-out money and then some, but back then (2008-2009) that was not seen as a possibility. At a more general level, I'd say it's very tough to let companies like Evergrande/Freddie Mae&Fannie Mac go down the drain because you risk the whole system going down, no matter if you're a de facto autocracy (like China) or a not so perfect democracy, like the US.
  • yakak 5y ago
    If these companies have been accurately summarized in the media, I would consider these very different. The mortgage companies were holding loans on a lot of individual houses, etc with concrete utility that were in actual use, where replacement stock was unavailable. In Evergrande's case they seem to have giant projects that are earmarked as investment speculation as opposed to intended primary dwellings or immediately rentable. It is entirely possible that whole districts of buildings are never of enough utility to draw residents at any price above maintenance. A company can go broke with either mistake but if a government knows the need for the collateral mortgaged actually exists then bounds from the macroeconomic situation apply so their shoveling of money will have an end.