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The Chinese government's approach to dealing with failing real-estate companies, including Evergrande, is distinct from typical Western bailouts. In China, the

The Chinese government's approach to dealing with failing real-estate companies, including Evergrande, is distinct from typical Western bailouts. In China, the strategy often involves allowing such companies to default in a controlled manner. Given that the major lenders and banks are state-owned , this essentially means that the government bears the loss through these institutions (what else can happen anyway??) . Asset management companies are then allowed to bid for any remaining valuable assets of the failed company. The state government has also issued directives to local governments, ensuring they take responsibility for the completion of housing projects for homebuyers. It's clear that there have been instances of questionable financial maneuvering by individuals behind these real estate companies, involving substantial sums of money being moved out of China through various, potentially illicit means. In Evergrande's case, critics point to dubious ventures, such as an automotive business that never produced cars, as potential vehicles for siphoning money to overseas entities. Additionally, the issuance of USD-denominated bonds—often purchased by shareholders—is another strategy that has been scrutinized. To address these challenges, the Chinese government has enforced exit bans and placed these individuals under strict supervision. They are often required to return these funds to China, potentially under threat of reduced prison sentences. This sounds not right... but yeah... it is China. And China does not have other means to use like US to extradite fugitives or request the money back even it got all the evidence... exit-ban and blackmailing are the only way China can go... As for Evergrande, while it's severely distressed, it continues to operate, largely as a 'zombie' company under state guidance, to resolve as much of its outstanding debt and obligations as possible. A full government bailout, in the Western sense, does not appear to be on the table. Regarding the broader crisis, I feel the situation is largely controllable due to the extensive tools at the disposal of the Chinese government. It's almost certain that the authorities have already devised a comprehensive plan and roadmap to navigate this crisis 1-2 years ago...

bradleyjg 3y ago
To address these challenges, the Chinese government has enforced exit bans and placed these individuals under strict supervision. They are often required to return these funds to China, potentially under threat of reduced prison sentences. This sounds not right... but yeah... it is China. And China does not have other means to use like US to extradite fugitives or request the money back even it got all the evidence... exit-ban and blackmailing are the only way China can go... This doesn’t sound so unreasonable to me. These guys knew what game they were playing. They could have not tried to scam the Chinese government in order to build a foreign fortune and live abroad as kleptocrats.
- misja111 3y ago
  Exactly, I was about to say the same. I find it a very good idea to hold executives personally accountable for mismanagement. I'm not a great fan of Chinese politics but the rest of the world could learn something from China here. (remember the credit crisis anyone?)
- wenyuanyu 3y ago
  To me, the use of exit bans and coercive measures to bring fugitives back to China does not seem unreasonable under specific circumstances. While employing these tactics for political reasons would be problematic, they serve as some of the only tools available to the Chinese government to act against corruption and embezzlement. These measures provide leverage and serve as a deterrent to prevent corrupt officials from fleeing China with substantial illicit gains [0]. This approach is not a secret; it is well-publicized within China and internationally. For example, the BBC reported on China's "Fox Hunt" operation in 2014, although the tone of the reporting has notably changed over time [1][2]. Despite China's extensive global connections, it faces significant legal constraints in its efforts to establish extradition treaties with major countries. Given the current international political climate, the prospects of forming such treaties appear to be minimal. In this context, what other options does China have at its disposal to combat corruption and hold individuals accountable? [0] https://en.wikipedia.org/wiki/Operation_Fox_Hunt https://en.wikipedia.org/wiki/Operation_Fox_Hunt [1] https://www.bbc.co.uk/news/world-asia-30358060 https://www.bbc.co.uk/news/world-asia-30358060 [2] https://www.bbc.co.uk/news/uk-northern-ireland-65537553 https://www.bbc.co.uk/news/uk-northern-ireland-65537553
  - nradov 3y ago
    The other option that China has at its disposal is to introduce multiparty democracy with the rule of law and guarantees of civil rights. Most other countries would then be happy to extradite suspects to China.
    - bradleyjg 3y ago
      If someone had the means and opportunity to make a clean break with PRC but instead choose to not only stay but work extensively and successfully, at least for a while, with the government—-well that guy seems like part of the problem.
seanmcdirmid 3y ago
They also trade it in the market, and anyone who tried to raise warning bells early is censored. Andrew Left got banned from trading in HK in 2016 because he said the company was doomed. We’ve known for a long time that Evergrande was in serious trouble, that was 7 years ago, and the Chinese government’s solution was to look for suckers who would listen to them rather than look at the numbers.
- wenyuanyu 3y ago
  It is like keep the ball rolling for as long as possible. Pretend everything is fine is what people do, for other governments as well...
- hnfong 3y ago
  The story that somehow the Chinese government tried to censor somebody in Hong Kong (pre-2019) for saying a non-state-owned-enterprise was doomed didn't seem quite right. So I looked it up. https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/enforcement-news/doc?refNo=16PR84 https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-ann... It looks like this Andrew Left claimed Evergrande was insolvent in *2012*. This seems more specific than "the company was doomed". I suspect the claims in 2012 was at least a bit of a hyperbole, since you'd have to hide it pretty well to keep being insolvent for 10 years. From what I read the trigger of the Evergrande blowup was over leveraged loans and a slowing property market, the situation would have been a bit different in 2012. This seems like a case of "predicted the last 9 of the 5 recessions". I'm not sure a company blowing up 10 years after he said it was doomed is much vindication except to the extent that maybe it was really a crappy company after all.
  - seanmcdirmid 3y ago
    Evergrande has been insolvent for a long time. The government kept patching it up, but anyone could tell just by looking at the data. So you know, if the numbers say your debt is waaaaaay over your asset (they’ve been leveraged since 2008 or so, most Chinese real estate companies, just that Evergrande was exceptionally so), but the government keeps you alive for 10 years anyways, is the trader wrong or you know, the government.
throwawaylinux 3y ago
> They are often required to return these funds to China, potentially under threat of reduced prison sentences. This sounds not right... but yeah... it is China. And China does not have other means to use like US to extradite fugitives or request the money back even it got all the evidence... exit-ban and blackmailing are the only way China can go... How is this different from western governments? Can the state even blackmail a person? Isn't that just called a deal or leniency for cooperation with prosecutors/regulators? And isn't it fairly routine for people charged with fraud and embezzlement to be prevented from leaving the country, particularly if they are had moved assets to foreign countries? I'm no communist party apologist, but using tools like surveillance, deals, and travel bans to recover proceeds of white collar crime doesn't seem so wrong to me.
- jacquesm 3y ago
  They also: - execute people https://www.bloomberg.com/news/articles/2021-01-29/china-finance-official-executed-in-bribery-case https://www.bloomberg.com/news/articles/2021-01-29/china-fin... - blackmail people by targeting the family members of those that have moved abroad aka collective punishment https://www.economist.com/china/2023/02/14/how-chinas-police-are-ensnaring-thousands-of-suspects-abroad https://www.economist.com/china/2023/02/14/how-chinas-police... - are on the take themselves in a way that makes all of this other stuff look like peanuts I take it that doesn't need a source link. - make people disappear https://www.bbc.com/news/business-64781986 https://www.bbc.com/news/business-64781986 It's not as if we're looking at a democratically run country where there is a failure of a private institution, there is absolutely no way that you can run something at the level of Evergrande without being 100% in bed with the authorities. The hypocrisy is at a level that is hard to imagine, you're essentially looking at two arms of the same thing where the one is labeled 'Evergrande' and the other is labeled 'CCP' and the one arm made the other look bad so there will be reckoning. Looking at this through the lens of a Western democracy in terms of the crimes committed isn't going to help.
  - throwawaylinux 3y ago
    > They also: As I said, I'm not a CCP apologist, I know they do bad things and I wasn't trying to say the west is equivalent. I was purely asking about the things listed (plea / cooperation deals and monitoring and travel restrictions) which by themselves don't sound bad.
cyanydeez 3y ago
Their housing market was a ponzi scheme, in that they took money to build developments, but used that money to market new development. Local authorities got their cuts by rezoning areas. Very little likely escaped the country. It's all in country fraud.
- busterarm 3y ago
  Where do you think those local authorities spent their money? They knew the local housing market was no good. Even the things that did get built were Tofu-dreg projects. The bought real estate in the US and Canada.
  - jncfhnb 3y ago
    Most of it they pumped back into the their own building and development market because of bad top level incentives. Hence the problem.
  - cyanydeez 3y ago
    Real estate in Canada? Just the way it's outlined makes it sound like some foreign led fraud as opposed to a mostly home grown corrupt practices. A similar thing happens in American suburbs where they expand cities with business malls and suburban development to enlarge the tax base but ignore O&M on infrastructure then sell more development to compensate. But in china, they were selling development with ever building them because it became an investment vehicle.
    - busterarm 3y ago
      You must not be familiar with what happened to the real estate market in Vancouver as a result of majority foreign investing from China...
busterarm 3y ago
> This sounds not right... but yeah... it is China. And China does not have other means to use like US to extradite fugitives or request the money back even it got all the evidence... exit-ban and blackmailing are the only way China can go... That's horseshit. China is widely known to operate police/spies all over the world to forcibly repatriate people that it considers Chinese citizens against their will...in blatant violation of the laws of those countries. The threat is "we'll come and get you, wherever you go, and if we have to nobody will ever hear from you again".
paxys 3y ago
You are sharing the official written policy, but the reality on the ground is very different in China. Most business happens under the table. Corruption and bribes are commonplace in every transaction. Books are all fudged to a high degree. Millions of people who put up large deposits and made monthly payments for under construction houses to developers like Evergrande are never getting anything back, and laws aren't going to help them. The central government has a tight grasp on maintaining its control but not much else. That's just how things work in China.
- CP3f6kMA 3y ago
  Any sources on this?
- keepamovin 3y ago
  I don't mean to burst your bubble, but... this picture of a "house of cards"-economy, with "swindles all the way down", riddled Swiss-cheese-style with corruption, while indeed a Western populist idyll visage of China these days (a sort of Western-denialists wet dream of impending Chinese doom), is inaccurate, and I think, dangerous for folks in the West to believe, if they truly hope to compete with "their biggest strategic adversary." Surely there is corruption, failure and incompetence, but if it was on the scale that comments like this yearn for, China would look more like Cambodia, or Myanmar, or even Thailand, than China. The simple truth is China would not have been able to achieve the scale of productivity and growth that it has (and if you doubt the scale, you must travel there in earnest, you will leave mind-expanded, if not fully blown), if it were truly like you merely wish it were. Sorry, but truth ain't always easy to hear.
  - lossolo 3y ago
    > Sorry, but truth ain't always easy to hear. It's copeium. The alternative is to admit that there could be another system, authoritarian, non-democratic, where there is no freedom, yet it's successful and have a chance to be the biggest economy in the world in a few decades. At this point, it's all about ideology.
    - 3y ago
fnordpiglet 3y ago
It’s interesting we hear the terms “bail out” when connected with how the US managed major institutional collapse. However from what I experienced on the street during these “bail outs,” Lehman, Bear, SVB, First Republic no longer exist. Their assets were salvaged and remaining functional assets acquired. The fed, treasury, and other institutions involved in the bailout ended up making handsome profits from the reperformance of the distressed assets they pulled into their balance sheets. The only bail out was for the global participants, not just banks but everyone with an asset that depends on the orderly function of the financial system even during periods of distress. “Tax payers” paid nothing, and benefited from the recovery from the disorderly Lehman collapse and the credit squeeze that caused. There’s a lot of speculation that the relatively mild inflation the US experienced post pandemic was due to all the QE and other moves the government and governmental bodies did, as well as pandemic stimulus. I’ve yet to see the effects clearly disentangled from the systemic breakdown of logistics during the pandemic which have only fairly recently ironed out. Certainly all the cheap cash caused some inflation, but what a small price to pay compared to what everyone faced. I think the issue with the situation in China is the assets held by these investment vehicles are never going to reperform. They’re piles of paper and empty buildings rotting with no present or future purpose. They’ve sucked up immense amounts of public money passed through the system in various ways into fake investments, and their value will simply evaporate leaving behind a desperate situation - cities and town throughout China burdened with useless infrastructure. It’s been brewing since at least 2007. But it doesn’t start and end with real estate - there are enormous infrastructure projects and bad international loans sprawling the planet that under scrutiny won’t stand up. Chinese credit spreads, where they are priceable, will have to blow up, and where they aren’t the opaque risks will sew structural and systemic lack of confidence. I hope China can navigate whatever unwinding has to happen, and I sincerely hope it doesn’t devolve into political and social instability fueling geopolitical strawman conflicts to distract from domestic problems. While I really wish China could find a way to let its people be actually free, I don’t think a multipolar world is necessarily a bad thing. An ascendant China as more than a factory floor for the west provides a good opportunity for trade and competition, spurring growth and innovation everywhere.
- geysersam 3y ago
  > There’s a lot of speculation that the relatively mild inflation the US experienced post pandemic was due to all the QE and other moves the government and governmental bodies did, as well as pandemic stimulus. How would stimulus and QE help prevent inflation? Can you point to someone doing that speculation?
itsoktocry 3y ago
>this essentially means that the government bears the loss through these institutions (what else can happen anyway??) How is this different than the US? Where the treasury and/or Fed step in to oversee acquisitions and provide loan guarantees?
goodbyesf 3y ago
> Given that the major lenders and banks are state-owned , this essentially means that the government bears the loss through these institutions (what else can happen anyway??) . All major banks ( 'too big to fail' ) are state owned. The only difference between china and the US is that china's state also directly runs the government whereas our state hires out the running of the government to popular clowns. It's essentially the difference between owner operated business vs employee run business. But fundamentally, it's the same thing. > To address these challenges, the Chinese government has enforced exit bans and placed these individuals under strict supervision. They are often required to return these funds to China, potentially under threat of reduced prison sentences. This sounds not right... but yeah... it is China. What is so special about china here? 'Exit bans' exist everywhere. If you commit serious financial crime and are deemed a flight-risk, your passport gets seized and you are banned from leaving the country. This happens in every country but for some reason when china does it, it's deemed 'special'. And getting a reduced sentence for cooperating with the government is the norm everywhere. If 4 people commit a crime, it's basic strategy of the prosecutor to offer 1 of the criminals immunity or reduced sentence to testify against everyone else. Once again, what's so special about china? It's amazing that basic standard legal process is consider special just because china does. > A full government bailout, in the Western sense, does not appear to be on the table. There is a full government bailout or not. Nothing 'western' about it as if there is a common 'western' strategy about anything. Governments all over the world do full bailouts, controlled or strategic defaults or stay out of the issue depending on the severity and systemic importance of the situation.
keepamovin 3y ago
Your faith in your government is commendable. But doesn't China indeed have ways to rendition fugitives? There have been some legitimate cases, so I don't know what you're talking about when you say it can't do so. Also, this will probably come across as callous or obtuse, or even deceptive or arrogant, so I'm sorry, but, no offence, yet you do sound a little bit concerned with the present situation, and your optimism, while seemingly bullet-proof does come off a little bit forced. I only mention this because I'm curious if you are want to share more about the zeitgeist there...are people worried? Bullish? Uncertain?
oneTbrain23 3y ago
China do have CIA-Gestapo-like agents operating abroad to kidnap those individuals. It is way more effective than the one used by Mossad or CIA. What we have heard of infamous Putin polonium was pale in comparisons to Chinese agents network. The closest to the strength and execution of these operations would be how NK dispensed the brother in Malaysia. CIA or FSB-KGB or Mossad cannot match how clean the ops carried out. Till today, vast majority still think it was done purely by NK and couldnt even pin down a single NK agent. While routinely, we get to know who did what on CiA/KGB/Mossad ops.

bradleyjg 3y ago

To address these challenges, the Chinese government has enforced exit bans and placed these individuals under strict supervision. They are often required to return these funds to China, potentially under threat of reduced prison sentences. This sounds not right... but yeah... it is China. And China does not have other means to use like US to extradite fugitives or request the money back even it got all the evidence... exit-ban and blackmailing are the only way China can go... This doesn’t sound so unreasonable to me. These guys knew what game they were playing. They could have not tried to scam the Chinese government in order to build a foreign fortune and live abroad as kleptocrats.

misja111 3y ago
Exactly, I was about to say the same. I find it a very good idea to hold executives personally accountable for mismanagement. I'm not a great fan of Chinese politics but the rest of the world could learn something from China here. (remember the credit crisis anyone?)
wenyuanyu 3y ago
To me, the use of exit bans and coercive measures to bring fugitives back to China does not seem unreasonable under specific circumstances. While employing these tactics for political reasons would be problematic, they serve as some of the only tools available to the Chinese government to act against corruption and embezzlement. These measures provide leverage and serve as a deterrent to prevent corrupt officials from fleeing China with substantial illicit gains [0]. This approach is not a secret; it is well-publicized within China and internationally. For example, the BBC reported on China's "Fox Hunt" operation in 2014, although the tone of the reporting has notably changed over time [1][2]. Despite China's extensive global connections, it faces significant legal constraints in its efforts to establish extradition treaties with major countries. Given the current international political climate, the prospects of forming such treaties appear to be minimal. In this context, what other options does China have at its disposal to combat corruption and hold individuals accountable? [0] https://en.wikipedia.org/wiki/Operation_Fox_Hunt https://en.wikipedia.org/wiki/Operation_Fox_Hunt [1] https://www.bbc.co.uk/news/world-asia-30358060 https://www.bbc.co.uk/news/world-asia-30358060 [2] https://www.bbc.co.uk/news/uk-northern-ireland-65537553 https://www.bbc.co.uk/news/uk-northern-ireland-65537553
- nradov 3y ago
  The other option that China has at its disposal is to introduce multiparty democracy with the rule of law and guarantees of civil rights. Most other countries would then be happy to extradite suspects to China.
  - bradleyjg 3y ago
    If someone had the means and opportunity to make a clean break with PRC but instead choose to not only stay but work extensively and successfully, at least for a while, with the government—-well that guy seems like part of the problem.

seanmcdirmid 3y ago

They also trade it in the market, and anyone who tried to raise warning bells early is censored. Andrew Left got banned from trading in HK in 2016 because he said the company was doomed. We’ve known for a long time that Evergrande was in serious trouble, that was 7 years ago, and the Chinese government’s solution was to look for suckers who would listen to them rather than look at the numbers.

wenyuanyu 3y ago
It is like keep the ball rolling for as long as possible. Pretend everything is fine is what people do, for other governments as well...
hnfong 3y ago
The story that somehow the Chinese government tried to censor somebody in Hong Kong (pre-2019) for saying a non-state-owned-enterprise was doomed didn't seem quite right. So I looked it up. https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/enforcement-news/doc?refNo=16PR84 https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-ann... It looks like this Andrew Left claimed Evergrande was insolvent in *2012*. This seems more specific than "the company was doomed". I suspect the claims in 2012 was at least a bit of a hyperbole, since you'd have to hide it pretty well to keep being insolvent for 10 years. From what I read the trigger of the Evergrande blowup was over leveraged loans and a slowing property market, the situation would have been a bit different in 2012. This seems like a case of "predicted the last 9 of the 5 recessions". I'm not sure a company blowing up 10 years after he said it was doomed is much vindication except to the extent that maybe it was really a crappy company after all.
- seanmcdirmid 3y ago
  Evergrande has been insolvent for a long time. The government kept patching it up, but anyone could tell just by looking at the data. So you know, if the numbers say your debt is waaaaaay over your asset (they’ve been leveraged since 2008 or so, most Chinese real estate companies, just that Evergrande was exceptionally so), but the government keeps you alive for 10 years anyways, is the trader wrong or you know, the government.

throwawaylinux 3y ago

> They are often required to return these funds to China, potentially under threat of reduced prison sentences. This sounds not right... but yeah... it is China. And China does not have other means to use like US to extradite fugitives or request the money back even it got all the evidence... exit-ban and blackmailing are the only way China can go... How is this different from western governments? Can the state even blackmail a person? Isn't that just called a deal or leniency for cooperation with prosecutors/regulators? And isn't it fairly routine for people charged with fraud and embezzlement to be prevented from leaving the country, particularly if they are had moved assets to foreign countries? I'm no communist party apologist, but using tools like surveillance, deals, and travel bans to recover proceeds of white collar crime doesn't seem so wrong to me.

jacquesm 3y ago
They also: - execute people https://www.bloomberg.com/news/articles/2021-01-29/china-finance-official-executed-in-bribery-case https://www.bloomberg.com/news/articles/2021-01-29/china-fin... - blackmail people by targeting the family members of those that have moved abroad aka collective punishment https://www.economist.com/china/2023/02/14/how-chinas-police-are-ensnaring-thousands-of-suspects-abroad https://www.economist.com/china/2023/02/14/how-chinas-police... - are on the take themselves in a way that makes all of this other stuff look like peanuts I take it that doesn't need a source link. - make people disappear https://www.bbc.com/news/business-64781986 https://www.bbc.com/news/business-64781986 It's not as if we're looking at a democratically run country where there is a failure of a private institution, there is absolutely no way that you can run something at the level of Evergrande without being 100% in bed with the authorities. The hypocrisy is at a level that is hard to imagine, you're essentially looking at two arms of the same thing where the one is labeled 'Evergrande' and the other is labeled 'CCP' and the one arm made the other look bad so there will be reckoning. Looking at this through the lens of a Western democracy in terms of the crimes committed isn't going to help.
- throwawaylinux 3y ago
  > They also: As I said, I'm not a CCP apologist, I know they do bad things and I wasn't trying to say the west is equivalent. I was purely asking about the things listed (plea / cooperation deals and monitoring and travel restrictions) which by themselves don't sound bad.

cyanydeez 3y ago

Their housing market was a ponzi scheme, in that they took money to build developments, but used that money to market new development. Local authorities got their cuts by rezoning areas. Very little likely escaped the country. It's all in country fraud.

busterarm 3y ago
Where do you think those local authorities spent their money? They knew the local housing market was no good. Even the things that did get built were Tofu-dreg projects. The bought real estate in the US and Canada.
- jncfhnb 3y ago
  Most of it they pumped back into the their own building and development market because of bad top level incentives. Hence the problem.
- cyanydeez 3y ago
  Real estate in Canada? Just the way it's outlined makes it sound like some foreign led fraud as opposed to a mostly home grown corrupt practices. A similar thing happens in American suburbs where they expand cities with business malls and suburban development to enlarge the tax base but ignore O&M on infrastructure then sell more development to compensate. But in china, they were selling development with ever building them because it became an investment vehicle.
  - busterarm 3y ago
    You must not be familiar with what happened to the real estate market in Vancouver as a result of majority foreign investing from China...

busterarm 3y ago

> This sounds not right... but yeah... it is China. And China does not have other means to use like US to extradite fugitives or request the money back even it got all the evidence... exit-ban and blackmailing are the only way China can go... That's horseshit. China is widely known to operate police/spies all over the world to forcibly repatriate people that it considers Chinese citizens against their will...in blatant violation of the laws of those countries. The threat is "we'll come and get you, wherever you go, and if we have to nobody will ever hear from you again".

paxys 3y ago

You are sharing the official written policy, but the reality on the ground is very different in China. Most business happens under the table. Corruption and bribes are commonplace in every transaction. Books are all fudged to a high degree. Millions of people who put up large deposits and made monthly payments for under construction houses to developers like Evergrande are never getting anything back, and laws aren't going to help them. The central government has a tight grasp on maintaining its control but not much else. That's just how things work in China.

CP3f6kMA 3y ago
Any sources on this?
keepamovin 3y ago
I don't mean to burst your bubble, but... this picture of a "house of cards"-economy, with "swindles all the way down", riddled Swiss-cheese-style with corruption, while indeed a Western populist idyll visage of China these days (a sort of Western-denialists wet dream of impending Chinese doom), is inaccurate, and I think, dangerous for folks in the West to believe, if they truly hope to compete with "their biggest strategic adversary." Surely there is corruption, failure and incompetence, but if it was on the scale that comments like this yearn for, China would look more like Cambodia, or Myanmar, or even Thailand, than China. The simple truth is China would not have been able to achieve the scale of productivity and growth that it has (and if you doubt the scale, you must travel there in earnest, you will leave mind-expanded, if not fully blown), if it were truly like you merely wish it were. Sorry, but truth ain't always easy to hear.
- lossolo 3y ago
  > Sorry, but truth ain't always easy to hear. It's copeium. The alternative is to admit that there could be another system, authoritarian, non-democratic, where there is no freedom, yet it's successful and have a chance to be the biggest economy in the world in a few decades. At this point, it's all about ideology.
  - 3y ago

fnordpiglet 3y ago

It’s interesting we hear the terms “bail out” when connected with how the US managed major institutional collapse. However from what I experienced on the street during these “bail outs,” Lehman, Bear, SVB, First Republic no longer exist. Their assets were salvaged and remaining functional assets acquired. The fed, treasury, and other institutions involved in the bailout ended up making handsome profits from the reperformance of the distressed assets they pulled into their balance sheets. The only bail out was for the global participants, not just banks but everyone with an asset that depends on the orderly function of the financial system even during periods of distress. “Tax payers” paid nothing, and benefited from the recovery from the disorderly Lehman collapse and the credit squeeze that caused. There’s a lot of speculation that the relatively mild inflation the US experienced post pandemic was due to all the QE and other moves the government and governmental bodies did, as well as pandemic stimulus. I’ve yet to see the effects clearly disentangled from the systemic breakdown of logistics during the pandemic which have only fairly recently ironed out. Certainly all the cheap cash caused some inflation, but what a small price to pay compared to what everyone faced. I think the issue with the situation in China is the assets held by these investment vehicles are never going to reperform. They’re piles of paper and empty buildings rotting with no present or future purpose. They’ve sucked up immense amounts of public money passed through the system in various ways into fake investments, and their value will simply evaporate leaving behind a desperate situation - cities and town throughout China burdened with useless infrastructure. It’s been brewing since at least 2007. But it doesn’t start and end with real estate - there are enormous infrastructure projects and bad international loans sprawling the planet that under scrutiny won’t stand up. Chinese credit spreads, where they are priceable, will have to blow up, and where they aren’t the opaque risks will sew structural and systemic lack of confidence. I hope China can navigate whatever unwinding has to happen, and I sincerely hope it doesn’t devolve into political and social instability fueling geopolitical strawman conflicts to distract from domestic problems. While I really wish China could find a way to let its people be actually free, I don’t think a multipolar world is necessarily a bad thing. An ascendant China as more than a factory floor for the west provides a good opportunity for trade and competition, spurring growth and innovation everywhere.

geysersam 3y ago
> There’s a lot of speculation that the relatively mild inflation the US experienced post pandemic was due to all the QE and other moves the government and governmental bodies did, as well as pandemic stimulus. How would stimulus and QE help prevent inflation? Can you point to someone doing that speculation?

itsoktocry 3y ago

>this essentially means that the government bears the loss through these institutions (what else can happen anyway??) How is this different than the US? Where the treasury and/or Fed step in to oversee acquisitions and provide loan guarantees?

goodbyesf 3y ago

> Given that the major lenders and banks are state-owned , this essentially means that the government bears the loss through these institutions (what else can happen anyway??) . All major banks ( 'too big to fail' ) are state owned. The only difference between china and the US is that china's state also directly runs the government whereas our state hires out the running of the government to popular clowns. It's essentially the difference between owner operated business vs employee run business. But fundamentally, it's the same thing. > To address these challenges, the Chinese government has enforced exit bans and placed these individuals under strict supervision. They are often required to return these funds to China, potentially under threat of reduced prison sentences. This sounds not right... but yeah... it is China. What is so special about china here? 'Exit bans' exist everywhere. If you commit serious financial crime and are deemed a flight-risk, your passport gets seized and you are banned from leaving the country. This happens in every country but for some reason when china does it, it's deemed 'special'. And getting a reduced sentence for cooperating with the government is the norm everywhere. If 4 people commit a crime, it's basic strategy of the prosecutor to offer 1 of the criminals immunity or reduced sentence to testify against everyone else. Once again, what's so special about china? It's amazing that basic standard legal process is consider special just because china does. > A full government bailout, in the Western sense, does not appear to be on the table. There is a full government bailout or not. Nothing 'western' about it as if there is a common 'western' strategy about anything. Governments all over the world do full bailouts, controlled or strategic defaults or stay out of the issue depending on the severity and systemic importance of the situation.

keepamovin 3y ago

Your faith in your government is commendable. But doesn't China indeed have ways to rendition fugitives? There have been some legitimate cases, so I don't know what you're talking about when you say it can't do so. Also, this will probably come across as callous or obtuse, or even deceptive or arrogant, so I'm sorry, but, no offence, yet you do sound a little bit concerned with the present situation, and your optimism, while seemingly bullet-proof does come off a little bit forced. I only mention this because I'm curious if you are want to share more about the zeitgeist there...are people worried? Bullish? Uncertain?

oneTbrain23 3y ago

China do have CIA-Gestapo-like agents operating abroad to kidnap those individuals. It is way more effective than the one used by Mossad or CIA. What we have heard of infamous Putin polonium was pale in comparisons to Chinese agents network. The closest to the strength and execution of these operations would be how NK dispensed the brother in Malaysia. CIA or FSB-KGB or Mossad cannot match how clean the ops carried out. Till today, vast majority still think it was done purely by NK and couldnt even pin down a single NK agent. While routinely, we get to know who did what on CiA/KGB/Mossad ops.