2 hours ago
(This post was last modified: 1 hour ago by C C.)
BACKGROUND: Largest bankruptcy and property crisis in China's history. Founder judged.
PETER ZEIHAN (geopolitics)
https://youtu.be/TU7KVw9j060
VIDEO EXCERPTS: The news is that the Chinese government sentenced the former chairman of the real estate company Evergrande to life imprisonment. Because that’s what happens when you do exactly what the government tells you to do, when it doesn’t work out.
[...] There aren’t a lot of investment options for Chinese citizens. Foreign investment is sharply restricted because the Chinese know that their own system provides very poor returns. And if they opened their accounts to the world, that the money would just flow out in the tens of trillions.
And at home, everything is driven by throughput and employment rather than profitability. So if you invest in a specific company, your chances of actually getting a return are minimal because those companies are able to access subsidized loans from the government at negative real interest rates. And if you’re an investor, you get a negative real return.
[...] the Chinese citizens know that investing in the stock market in China is a fool’s errand. So the bottom line is that the Chinese government is now trying to get this money somewhere else.
They have something like 22 trillion dollars equivalent in deposit accounts. It’s just that Chinese citizens don’t know what to do with their money because they don’t want to put it in the stock market. They now know that housing is a trap. So it’s just sitting in a deposit account in their local bank.
And so the Chinese state has reduced deposit rates to below 1%. So this money isn’t really earning anything. They’re trying to force the Chinese citizens to invest in the stock markets. But [after the disaster of Evergrande] the Chinese citizens at the moment are smart enough to realize that that is a fool’s errand.
The only other possible way for it to go would be out of the country and go somewhere else where it could be more productive and be, you know, safer. But the Chinese keep that locked down.
So I always find it very amusing that people on the outside want to get their money into China to make money. But the people who are in China are desperate for any way to get the money out...
China’s real estate system is failing ... https://youtu.be/TU7KVw9j060
https://www.youtube-nocookie.com/embed/TU7KVw9j060
PETER ZEIHAN (geopolitics)
https://youtu.be/TU7KVw9j060
VIDEO EXCERPTS: The news is that the Chinese government sentenced the former chairman of the real estate company Evergrande to life imprisonment. Because that’s what happens when you do exactly what the government tells you to do, when it doesn’t work out.
[...] There aren’t a lot of investment options for Chinese citizens. Foreign investment is sharply restricted because the Chinese know that their own system provides very poor returns. And if they opened their accounts to the world, that the money would just flow out in the tens of trillions.
And at home, everything is driven by throughput and employment rather than profitability. So if you invest in a specific company, your chances of actually getting a return are minimal because those companies are able to access subsidized loans from the government at negative real interest rates. And if you’re an investor, you get a negative real return.
[...] the Chinese citizens know that investing in the stock market in China is a fool’s errand. So the bottom line is that the Chinese government is now trying to get this money somewhere else.
They have something like 22 trillion dollars equivalent in deposit accounts. It’s just that Chinese citizens don’t know what to do with their money because they don’t want to put it in the stock market. They now know that housing is a trap. So it’s just sitting in a deposit account in their local bank.
And so the Chinese state has reduced deposit rates to below 1%. So this money isn’t really earning anything. They’re trying to force the Chinese citizens to invest in the stock markets. But [after the disaster of Evergrande] the Chinese citizens at the moment are smart enough to realize that that is a fool’s errand.
The only other possible way for it to go would be out of the country and go somewhere else where it could be more productive and be, you know, safer. But the Chinese keep that locked down.
So I always find it very amusing that people on the outside want to get their money into China to make money. But the people who are in China are desperate for any way to get the money out...
China’s real estate system is failing ... https://youtu.be/TU7KVw9j060