Our bailout actually worked well. The bailout was in part a loan which the government made $15 billion profit on by 2014. TARP also allowed over a million homeowners to modify their mortgages and avoid foreclosure.
It wasn't perfect, but it also wasnt the absolute grift people want it to be.
Because the government is Republican controlled and trying to look competent. They would not have allowed Obama to make such a deal. He would have looked too good.
At least get on Chinese media before saying this stuff. Fraud and misappropriation is the entire reason they did the "bailouts". It did nothing except give money to the government sanctioned gangs that run the banks. The provinces are being cut out of the loop after the tax allocation changes so they're powerless too.
Well, that is the risk of investing and speculation. China already hinted for like a year that they were going to crack down on real estate. However, big companies like Evergrande and lots of investors didn’t think the Chinese government would have the balls to go through with it because the real estate was so important and that they were “too big to fail.” They lost the bet.
Malinvestment to boost growth. Can be worse than. Consumption, as it costs money to maintain and doesn't improve the standard of living of your citizens.
The Chinese govts (Central & provincial) have massive direct as well as indirect stakes (via state owned lending) in hundreds of unsuccessful unprofitable firms up and down the country.
Maybe so, but TARP and the other bailouts were passed 18 years ago. I don't think we are talking about the long history of finance, we are talking about if it's accurate to say that a western country is willing to take ownership of the companies it bails out. To suggest that this is only a "recent development" downplays that it has been established practice for most of the life of anyone reading this comment chain.
China has hundreds of struggling state owned as well as private enterprises that are kept alive by shadow lending by state owned banks. Just for example, China has over 100 automobile brands - only half a dozen car makers are profitable.
In any Western economy, they would have gone belly up and/or consolidated. The Chinese govt keeps them alive with subsidies and floods the global market with the surplus.
The Chinese real estate market is in shambles primarily because of govt policies rather than corporate mismanagement.
I used to work in oil in the US. China has a large network of “kettle” refineries which are unprofitable. The idea- as the American Petroleum Institute explained it to us- was that they could 1. capture a large domestic market and 2. R&D processes and technologies. They were in ‘fake it til you make it’ mode and time was on their side.
The Chinese real estate market is in shambles primarily because of govt policies rather than corporate mismanagement.
False.
Govt policy AND corporate mismanagement.
In China only the state can own land, but one can lease for 99 years.
What the private builders did and some probably still do, is that they would get money from people to build houses, but instead of using all of that money to build, a large part of it was used to buy more leases, and that worked until the property bubble burst, and now there are many half finished buildings and the builders do not have the money to complete them, because they used it on buying leases.
Another part of the corporate mismanagement is that some builders use substandard parts and simply cheat when they build, making the buildings far weaker and of worse construction than they should be.
False. That's not corporate mismanagement, its a failure of regulation. The same development practices are common in plenty of developing countries. In India, they managed to end _Act,_2016)the practice with a national regulation governing (among other things) the management of cash deposits by home buyers. There was nothing stopping the Chinese govt from passing similar regulations.
More importantly, even the Chinese real estate developers that weren't massively overleveraged are also going bankrupt. The problem isn't a lack of liquidity - it is structural imbalance in the system.
The real estate sector accounts of almost 20% of China's GDP (doing from over 30%), employs millions of people and retains the savings of hundreds of millions of people. If the sector collapses, the pain will be deep and widespread. Meanwhile, the country of 1.5 bn people already has enough housing for more than 2 bn people.
It is Chinese govt's responsibility to manage the macro picture and consequently it alone is responsible for this perilious state of affairs.
If I remember most of those are more local government partially owned corps, not from top down. The central government is trying to force a bunch of the EV corps to go bankrupt.
So confidently incorrect. China has spent years keeping the builders afloat and has now realized it literally cannot do so anymore. This is more like pulling the plug after 5 years of throwing money at them to try and stop the implosion.
Unlike Trump right? Two large bailouts for the farmers 5 years apart. Government subsidies are present in every country, the walking away is the important part to not lose anymore taxes. You’re the one who’s confidently wrong
Your the only one talking about trump.... the question wasn't about what America has or hasn't done. Its about the presence of a bailout for the Chinese developers, there have been numerous bailouts of these developers. The state has just now decided to stop continuing after dumping a ton of money into that pit created by the states own policy.
So what am I confidently wrong about exactly other than something I haven't said or hinted at.
Your reply is to a comment that’s sarcastically comparing Trumps bailouts to China’s stepping away from a failed project. The start of this comment thread is about Trump lmao
Not really, it'll create less of an aftershock that Evergrande did back a few years ago. If anything China dismantled its housing bubble gradually and in steps in order to manage the pain and prevent a total catastrophe. Exactly what America should be doing with its AI bubble right now, but it'll never happen because billionaires control the government.
I agree it’s necessary, but I’m not sure about the “gradual” part though. It looks more like a hard shift toward banking and high-tech sectors after the sanctions.
How is this considered “gradual”? The title literally says “last” giant, in just 5 years. What happened to those middle-income people with the entirety of their assets tied up? This is not what a gradual defusing looks like.
A bubble being dismantled over the span of a few years is gradual. A non gradual approach is the bubble bursting.
What happened to those middle-income people with the entirety of their assets tied up?
If they didn't get into some kind of program run by the government or local governments aimed at them, they got screwed. A gradual dismantling doesn't mean no one will suffer, it means it will not cause a massive economic shock like the subprime crisis did back in 2008.
I’m interested in what happens to China’s middle class. When I visited there in 2017 and 2019 for work, the people I was working with owned multiple houses/apartments as way to park their family’s growing wealth. They were very surprised that I, then 35 or so, only owned like a third of one apartment in Sydney, actually. And extremely surprised to hear what my mortgage was.
There’s not really a stock market to invest in, and getting money out of the country is tightly controlled by the Party, so domestic real estate was the only option.
I hope those guys haven’t been fucked too hard by this. And it’s interesting to think where all the newly-minted middle class wealth will actually go now. Consumption can only increase to much!
You answered your question with the second paragraph. There is a stock market that has been growing and doing surprisingly well this year. But the issue is that it's not trustworthy enough to get any significant mass yet, the way the US has. That's primarily an issue of a lack of pension funds being invested in the stock market, which is now changing.
Tbf, it's less of an actual long-term strategy and more of an option of last resort, because it was the same government that cracked down on stock market speculation last time, which led to housing speculation. If China wants to continue its innovation and tech-related growth, it will need to raise private funding for new ventures because local governments won't have the money to sustain it without land sales.
Despite what advertisers will tell you online, gold is just as much of a speculative asset as anything else. It's a hedge bet, but a bet nonetheless. The issue is that, compared to stocks or housing, gold doesn't drive productivity growth otherwise Indian housewives would be the most powerful people in the world.
Jewelry is not intrinsically valuable. Its only worth what the market and current tastes will bear. In fact, China has recently gone through a jewelry crash. There was a substantial market in China for diamonds and other gems, but synthetics came on the market and people bought those in large quantities coupled woth the loss of interest in natural diamonds due to their cost and ethics. The synthetic gem market is now saturatued and now you can buy 20 carat stones for very little.
Gold on the other hand does carry a recognizable and fungible value, but have you seen the price of gold lately? Everyone buys gold when other investments look shakey. Its too late for someone in China to divest from their real estate and buy into gold without taking huge losses.
Real estate should never be a safe “investment”. Treating real estate as something where the number can only ever go up is a stupid and sometimes downright harmful approach that makes the our worldwide housing crisis worse. The only way to solve the housing crisis is to build more housing, but people who have all of their wealth in a home, expecting the value to go up will stop that housing for being built because of their idiotic financial decisions.
A few weeks ago I heard about “0 mileage used car” sales, where the dealers were declaring the cars used to move them to a different spot on their balance sheet and cutting the price to get it off the lot.
China has something like 250+ car companies. Of those only 3-5 are making money. There are massive parking lots full of unsold EVs and ICE cars. It would shock most people to see the size of these lots just full of unsold vehicles.
The problem is they could crush the current slate of cars both EV/ICE models. They have $10k EVs that are better than the most basic cars that America produces. Your average car payment would be around $167 a month with zero money down. The average car payment for Americans $748 for new and $532 used. You would have to be crazy not to see the writing on the wall.
It's a very apples and orange comparison. First, I wouldn't call Chinese homes cheap. They pay mortgages very differently there, with much higher down payments. Think 30% for a new home, where in the US we pay 10%.
Further, builders in China got ahead of themselves to the point where virtually all were selling homes that hadn't even been started yet. They then used that money to pay to build the homes from the last group of buyers. Repeat as needed. So many people who paid for homes will never get them.
The US does need more affordable housing, there's no doubt about that, but I wouldn't go about fixing that problem the way China did.
The US needs more housing, period. Our housing crisis is caused by a housing shortage. Building market rate housing <i>lowers<i> costs for everyone. Obviously we shouldn’t treat the building of housing as a pyramid scheme, but to say that we have nothing to learn from the Chinese way of building housing (which has led to a DECREASE in housing costs over the past 5 years) is simply untrue. The US and china have very different problems with their housing markets, but I would much rather have an oversupply than an undersupply.
I looked at some videos on YT on the condition of those "cheap" houses. Leaks from ceiling, columns breaking apart, foundations rising up, fake rebar, Styrofoam in walls, tiles falling of building exteriors etc. And this is for high rise buildings which should have higher quality of construction. I wouldn't buy a house in China.
Obviously on average the standards are gonna be a lot worse over there but the absolute dogshit being built in all these cancerous suburban sprawls across America are truly fucking awful and the prices they have the audacity to sell them for should be criminal
Lack of government bail outs is refreshing
China does the reverse of the Western nations
They demand an ownership stake in successful companies and walk away when things go bad
China spent 55B bailing out banks earlier this year…
And made those banks help them reinvest into infrastructure and buildings for the public.
Meanwhile where did our bailout money go? Into the pockets of our rich elites, and hopefully it’ll trickle down.
Our bailout actually worked well. The bailout was in part a loan which the government made $15 billion profit on by 2014. TARP also allowed over a million homeowners to modify their mortgages and avoid foreclosure.
It wasn't perfect, but it also wasnt the absolute grift people want it to be.
Yep, and always remind people. It would have been even more effective if Obama wasn’t forced to also do the tax cuts for the GOP to sign off on
Yeah this is true. Though they should have taken equity. Would have made a lot more than $15b.
Would Republicans allow that to happen ?
They are taking equity from companies now (e.g.Intel)
Because the government is Republican controlled and trying to look competent. They would not have allowed Obama to make such a deal. He would have looked too good.
Oh, I absolutely understand that maintaining consistency is not Republican strong point. Only keeping and maintaining power matters.
Between 2008 and 2012 there were over 11 million foreclosures. There was a lot left on the table.
"well" is an overstatement. They... helped us avoid a bigger recession, but the money went mostly into the pockets of the filthy rich.
At least get on Chinese media before saying this stuff. Fraud and misappropriation is the entire reason they did the "bailouts". It did nothing except give money to the government sanctioned gangs that run the banks. The provinces are being cut out of the loop after the tax allocation changes so they're powerless too.
Because all the poor Chinese people who bought evergrande apartments receive money back right?
Well, that is the risk of investing and speculation. China already hinted for like a year that they were going to crack down on real estate. However, big companies like Evergrande and lots of investors didn’t think the Chinese government would have the balls to go through with it because the real estate was so important and that they were “too big to fail.” They lost the bet.
Yes we know. All the people that bought evergrande apartments lost.
Malinvestment to boost growth. Can be worse than. Consumption, as it costs money to maintain and doesn't improve the standard of living of your citizens.
It might. The state gets a significant part of your stock when a the billionaire dies.
The Chinese govts (Central & provincial) have massive direct as well as indirect stakes (via state owned lending) in hundreds of unsuccessful unprofitable firms up and down the country.
The US took ownership stake in the companies they bailed out as well.
That’s a more recent bailout thing
In China though they don’t give you a bailout they just tell you some CCP members are sitting on the board once you get big
Idk what you mean by recent, but that is how most of the bailouts during the financial crisis went.
Bailouts have been a thing a lot longer than that
Maybe so, but TARP and the other bailouts were passed 18 years ago. I don't think we are talking about the long history of finance, we are talking about if it's accurate to say that a western country is willing to take ownership of the companies it bails out. To suggest that this is only a "recent development" downplays that it has been established practice for most of the life of anyone reading this comment chain.
And the general public mostly bears these costs.
General public always bear the costs lol, doesn't matter the government bail them out or not
Who do you think bear the costs of bail outs?
nope, in fact the real estate CEOs private wealth bears the cost https://www.bloomberg.com/news/articles/2021-10-26/china-urges-evergrande-founder-to-pay-debt-with-personal-wealth
the general public has to deal with the consequences tho: falling housing prices (the horror!)
What kind of flower-filled world are you living in?
He can personally cover $300+ billion in liabilities with his $7.8 billion net worth?
They don’t even teach simple maths these days?
I don’t think they aren’t bailing them out because they don’t want to and more of they can’t
That's probably actually better for the people than how the west does it.
The reality is quite the opposite.
China has hundreds of struggling state owned as well as private enterprises that are kept alive by shadow lending by state owned banks. Just for example, China has over 100 automobile brands - only half a dozen car makers are profitable.
In any Western economy, they would have gone belly up and/or consolidated. The Chinese govt keeps them alive with subsidies and floods the global market with the surplus.
The Chinese real estate market is in shambles primarily because of govt policies rather than corporate mismanagement.
I used to work in oil in the US. China has a large network of “kettle” refineries which are unprofitable. The idea- as the American Petroleum Institute explained it to us- was that they could 1. capture a large domestic market and 2. R&D processes and technologies. They were in ‘fake it til you make it’ mode and time was on their side.
If Chinese government is paying to buy me a car, I’m not complaining
False.
Govt policy AND corporate mismanagement.
In China only the state can own land, but one can lease for 99 years.
What the private builders did and some probably still do, is that they would get money from people to build houses, but instead of using all of that money to build, a large part of it was used to buy more leases, and that worked until the property bubble burst, and now there are many half finished buildings and the builders do not have the money to complete them, because they used it on buying leases.
Another part of the corporate mismanagement is that some builders use substandard parts and simply cheat when they build, making the buildings far weaker and of worse construction than they should be.
False. That's not corporate mismanagement, its a failure of regulation. The same development practices are common in plenty of developing countries. In India, they managed to end _Act,_2016)the practice with a national regulation governing (among other things) the management of cash deposits by home buyers. There was nothing stopping the Chinese govt from passing similar regulations.
More importantly, even the Chinese real estate developers that weren't massively overleveraged are also going bankrupt. The problem isn't a lack of liquidity - it is structural imbalance in the system.
The real estate sector accounts of almost 20% of China's GDP (doing from over 30%), employs millions of people and retains the savings of hundreds of millions of people. If the sector collapses, the pain will be deep and widespread. Meanwhile, the country of 1.5 bn people already has enough housing for more than 2 bn people.
It is Chinese govt's responsibility to manage the macro picture and consequently it alone is responsible for this perilious state of affairs.
If I remember most of those are more local government partially owned corps, not from top down. The central government is trying to force a bunch of the EV corps to go bankrupt.
So confidently incorrect. China has spent years keeping the builders afloat and has now realized it literally cannot do so anymore. This is more like pulling the plug after 5 years of throwing money at them to try and stop the implosion.
So what you're saying is that the lack of a government bailout this time around is unusual or, one might even say, refreshing?
Unlike Trump right? Two large bailouts for the farmers 5 years apart. Government subsidies are present in every country, the walking away is the important part to not lose anymore taxes. You’re the one who’s confidently wrong
Your the only one talking about trump.... the question wasn't about what America has or hasn't done. Its about the presence of a bailout for the Chinese developers, there have been numerous bailouts of these developers. The state has just now decided to stop continuing after dumping a ton of money into that pit created by the states own policy.
So what am I confidently wrong about exactly other than something I haven't said or hinted at.
Your reply is to a comment that’s sarcastically comparing Trumps bailouts to China’s stepping away from a failed project. The start of this comment thread is about Trump lmao
Redditors’ idiocy on the other hand is not refreshing at all.
This particular developer must not have the right friends in high places.
Regular people just won’t get the house they paid for, not biggie /s while the money is already spent by the gvmt as they sell the land to developers
But they did though???
This will create one hell of a big aftershock once the company finally hit the dirt.
That’s what Reddit said 3 years ago
I feel for all the people they fleeced
Not really, it'll create less of an aftershock that Evergrande did back a few years ago. If anything China dismantled its housing bubble gradually and in steps in order to manage the pain and prevent a total catastrophe. Exactly what America should be doing with its AI bubble right now, but it'll never happen because billionaires control the government.
I agree it’s necessary, but I’m not sure about the “gradual” part though. It looks more like a hard shift toward banking and high-tech sectors after the sanctions.
How is this considered “gradual”? The title literally says “last” giant, in just 5 years. What happened to those middle-income people with the entirety of their assets tied up? This is not what a gradual defusing looks like.
A bubble being dismantled over the span of a few years is gradual. A non gradual approach is the bubble bursting.
If they didn't get into some kind of program run by the government or local governments aimed at them, they got screwed. A gradual dismantling doesn't mean no one will suffer, it means it will not cause a massive economic shock like the subprime crisis did back in 2008.
I guess we can agree to disagree.
What did they do for all of the investors who got screwed over? Were they compensated in any way?
If real estate in China is not a safe investment, that puts more pressure on the foreign cities that already have many Chinese buying up homes.
I’m interested in what happens to China’s middle class. When I visited there in 2017 and 2019 for work, the people I was working with owned multiple houses/apartments as way to park their family’s growing wealth. They were very surprised that I, then 35 or so, only owned like a third of one apartment in Sydney, actually. And extremely surprised to hear what my mortgage was.
There’s not really a stock market to invest in, and getting money out of the country is tightly controlled by the Party, so domestic real estate was the only option.
I hope those guys haven’t been fucked too hard by this. And it’s interesting to think where all the newly-minted middle class wealth will actually go now. Consumption can only increase to much!
Xi casually announced that “real estate shouldn’t be treated as an investment” as China’s real estate bubble popped.
Yeah the Chinese middle. Lass got hosed, but they won’t complain.
Yeah, it was like seeing JP before the bubble. Everyone was so optimistic. Not sure how it’s like these days though.
You answered your question with the second paragraph. There is a stock market that has been growing and doing surprisingly well this year. But the issue is that it's not trustworthy enough to get any significant mass yet, the way the US has. That's primarily an issue of a lack of pension funds being invested in the stock market, which is now changing.
Tbf, it's less of an actual long-term strategy and more of an option of last resort, because it was the same government that cracked down on stock market speculation last time, which led to housing speculation. If China wants to continue its innovation and tech-related growth, it will need to raise private funding for new ventures because local governments won't have the money to sustain it without land sales.
Can chinese people not just buy gold and jewelry to park money?
They do but that has its own drawbacks.
Despite what advertisers will tell you online, gold is just as much of a speculative asset as anything else. It's a hedge bet, but a bet nonetheless. The issue is that, compared to stocks or housing, gold doesn't drive productivity growth otherwise Indian housewives would be the most powerful people in the world.
Jewelry is not intrinsically valuable. Its only worth what the market and current tastes will bear. In fact, China has recently gone through a jewelry crash. There was a substantial market in China for diamonds and other gems, but synthetics came on the market and people bought those in large quantities coupled woth the loss of interest in natural diamonds due to their cost and ethics. The synthetic gem market is now saturatued and now you can buy 20 carat stones for very little.
Gold on the other hand does carry a recognizable and fungible value, but have you seen the price of gold lately? Everyone buys gold when other investments look shakey. Its too late for someone in China to divest from their real estate and buy into gold without taking huge losses.
Real estate should never be a safe “investment”. Treating real estate as something where the number can only ever go up is a stupid and sometimes downright harmful approach that makes the our worldwide housing crisis worse. The only way to solve the housing crisis is to build more housing, but people who have all of their wealth in a home, expecting the value to go up will stop that housing for being built because of their idiotic financial decisions.
What will pop first, housing market in China or AI in the US
Housing market in China has already popped, bruh
I wonder when they finally do the same for electric cars.
Doubtful, as infrastructure is built for them it should only increase
Are they insolvent as well?
A lot of them are selling at losses but they don't care because they can't cut production and the subsidies still keep coming.
A few weeks ago I heard about “0 mileage used car” sales, where the dealers were declaring the cars used to move them to a different spot on their balance sheet and cutting the price to get it off the lot.
China has something like 250+ car companies. Of those only 3-5 are making money. There are massive parking lots full of unsold EVs and ICE cars. It would shock most people to see the size of these lots just full of unsold vehicles.
It’d be nice if they could export to the Americas, but they can’t. They’ve actually gotten really good at making EV’s.
The problem is they could crush the current slate of cars both EV/ICE models. They have $10k EVs that are better than the most basic cars that America produces. Your average car payment would be around $167 a month with zero money down. The average car payment for Americans $748 for new and $532 used. You would have to be crazy not to see the writing on the wall.
Reddit: we want cheap houses in the West!!!!!
Also Reddit: cheap houses in China? BADDDD.
It's a very apples and orange comparison. First, I wouldn't call Chinese homes cheap. They pay mortgages very differently there, with much higher down payments. Think 30% for a new home, where in the US we pay 10%.
Further, builders in China got ahead of themselves to the point where virtually all were selling homes that hadn't even been started yet. They then used that money to pay to build the homes from the last group of buyers. Repeat as needed. So many people who paid for homes will never get them.
The US does need more affordable housing, there's no doubt about that, but I wouldn't go about fixing that problem the way China did.
The US needs more housing, period. Our housing crisis is caused by a housing shortage. Building market rate housing <i>lowers<i> costs for everyone. Obviously we shouldn’t treat the building of housing as a pyramid scheme, but to say that we have nothing to learn from the Chinese way of building housing (which has led to a DECREASE in housing costs over the past 5 years) is simply untrue. The US and china have very different problems with their housing markets, but I would much rather have an oversupply than an undersupply.
I looked at some videos on YT on the condition of those "cheap" houses. Leaks from ceiling, columns breaking apart, foundations rising up, fake rebar, Styrofoam in walls, tiles falling of building exteriors etc. And this is for high rise buildings which should have higher quality of construction. I wouldn't buy a house in China.
As with everything: depends where you are. China is a gigantic country, they don't have one house template built by the same company.
Obviously on average the standards are gonna be a lot worse over there but the absolute dogshit being built in all these cancerous suburban sprawls across America are truly fucking awful and the prices they have the audacity to sell them for should be criminal
Everything is just Groverhaus now
guy does not know anything about economics. Extremely cheap products with no demand is equally as bad
Didn’t this same thing happen a while ago
“Last” Giant, they say