Those silly commies don't understand that you have to bail out capitalists when they fail.
this post was submitted on 12 Mar 2024
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China need to up their can-kicking game
But what about the poor billionaires 😢
So are they poor or rich? Make up your mind!
See definition 6
I am aware, yes. I should add an /s at the end next time.
No, people need to learn how to recognize sarcasm again.
I disagree. Especially on the internet, it can often be very difficult to say what is sarcasm and what is not. This is mostly because of the wildly diverse opinions that people have.
Oh the horrors of billionaires not getting their treats 😢
Based China
It's actually quite funny how people foresaw the downfall of the Chinese economy following Evergrande, and it just kinda carried on as normal because the Chinese govt refused to bail them out.
No doubt some people are gonna get burned by that policy too, but they made the right choice by not rewarding a company that clearly had significant financial management issues.
Meanwhile here in italy when a major company fails and goes bankrupt because of shitty management, corruption and greed, we first "save" it with public funds, then sell it to someone else to profit off of it
A massive corporation going out of business sucks in the short term: people lose their jobs, among other financial woes. But if you keep bailing out failing corporations, you harm your economy in the long run because you're keeping a company artificially on life support using budget funds. The company will continue to fail and lose money, setting your country back years in terms of productivity and innovation, and your economy will fold inwards.
Not only that company but any other one is going to be incentivized to be irresponsible with their accounting and financial practices. What's going to happen if Google or Microsoft broke? Are they going to be rescued too?
Property developers in China, unlike banks in the US, are not the backstop of the economy. They are not too big to fall: it's just that their distressed assets need to be managed to minimize losses to their customers.
General Motors isn't the backstop of the economy and they were rescued too.
Normalize not bailing out failing big businesses, hope we can bring that custom over here.
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The commies can't keep getting away with ... checks notes ... running a free market!
watch market socialism with a government aggressively enforcing a strict bounded free market actually do capitalism better then capitalism
“We will scale up the building and supply of government-subsidized housing and improve the basic systems for commodity housing to meet people’s essential need for a home to live in and their different demands for better housing,” - but what about the profit motive?
Common China W
If you want privatized gains, you must accept privatized losses. No risk, no reward.
Unlike U.S. bailing out "too big to fail", China says "fuck you - we keep the tax dollars for us.".
Near perfect capitalistic communism as is possible.
Wow, actual Moral Hazard?!
Yes but can they please do this without leaving half finished skyscrapers in other countries? The situation in LA kind of sucks now that the city has to spend millions cleaning it up (supposedly sending the bill to a bankrupt Chinese developer, as if that'll work).
China has said they are going to take over projects under construction to finish them, which is good.
However, China still has to deal with a property glut, an elderly population who mainly used real estate to save for retirement, and local governments who needed real estate development to fund their budgets.
China is going to have to spend significant parts of its surplus dealing with this.
A property glut? Look at China's urbanization rate. A short-term oversupply is easily consumed by increasing urbanization. You cannot apply the American model to an economy in a different state of development.
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I'm sure there is a lot more nuance and context here that I don't know about, but at face value that's a pretty cool solution and I like it. The question is: how much of these developments were greenlit by government officials who are now refusing to foot the bills?
It sounds good because it sounds like the developers are the ones getting fucked over. But that's not really the case. They already made bank.
Chinas real estate development sector is mostly funded by pre-selling future projects. So the people who bought a unit that now never will be built are the ones truly getting fucked over. And while some of these people are other rich people planning on renting out these units, a big part are just regular people. Only about 25% of the population in China are renting. In some cities the percentage is higher but even in Shanghai and Beijing it's only around 35%.
So a lot of the people who are getting fucked over by this are people who bought their own home that now will never be finished. On the bright side they probably haven't paid the full amount yet but for many their entire lifesaving are still gone and saving up enough money to buy a new home will take a long time.
Sure the developers may lose a lot of net worth because their company isn't worth anything anymore. But they still have way more assets in their possession then they need.
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how much of these developments were greenlit by government officials who are now refusing to foot the bills?
By that logic, most U.S real estate companies like Blackrock and Freddie Mae would be greenlit, could you be more specific...
If we just mean which ones were state-owned (because "privatized gains, privatized losses" as one said), not much
According to even "China collapser" Michael Pettis:
https://twitter.com/michaelxpettis/status/1610265849528717318/photo/1
Then again, it's Caixin, so you can double-check...
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