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Post by shmiffy on Dec 9, 2021 8:01:32 GMT -6
Evergrand defaults today. Any predictions as to how the dominos fall?
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Post by kenmb on Dec 9, 2021 8:58:12 GMT -6
As usual, let me know what the people in control are going to do and then I will post something.
In a free market world we wouldn't get to this point.
Good time to brush up on Re-hypothecation as well as taking someone else's debt as an "asset" and then using that "asset" to go buy/invest elsewhere. Yes, it's quite the system. It's all legitimate and proper, because if it wasn't, it would have been changed long ago. Of course this can all function just like a casino as long as the casino manager steps in to bail out whoever is about to crash the game.
So EG defaults on debt that was used as assets elsewhere for investments. The default leaves the initial lender without payment therefore deflationary. The debt not paid which is used as an "asset" now becomes like a contagion as who wants to have a debt as an asset when that debt won't be paid. Those holding the debt/asset could very well ask for something else in lieu of, or start unloading that debt/asset to get some value before it goes to zero.
To be clear: a debt becomes an asset because the debt is a promise to pay. Money in the bank. Unless the debt is not paid, in which case you are a bag holder of an empty bag instead of an asset holder. It's quite the system.
This is where the casino manager must step in. It is such a fukshow that the manager can't let it implode. So the manager steps in to cover the debt so the show can go on.
If you ever wondered what "too big to fail" really means then that is why. The whole joke of a financial system implodes if the big debt used as assets is not covered. So we see if central banks step in or something like "its ok if you miss this payment, we will let it slide and we will restructure your debt". How do you restructure the fact you aren't making payments? Just more BS. And so restructuring is underway. Smoke and mirrors.
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Post by kenmb on Dec 9, 2021 9:10:21 GMT -6
May as well put this in here. The gist of the article is speculating that Tether which sets the value of Bitcoin is not backed unit for unit by the $US. If tether is not backed 1:1 then it is scamming. What are the odds that crypto is a scam. I watched the videos in link that are under 12 minutes, but not the longer vids. The speculation is that tether and crypto is a scam to counterfeit currency (sounds about right) and in the case of Evergrande, the operators of Tether has taken in Evergrande debt as an "asset" to issue more tether. Meanwhile Evergrande now has this "loan" from tether to go and carry on business. Think about that for a minute. Because in essence, it is how our world works. Banks issue debt created from nothing (like tether is thought to do), the borrower goes and does stuff (ie Evergrande) and the bank now holds an asset to go do stuff with (tether issues more coin). Except that a bank is authorized to do this by an body who oversees this all (we are told to believe that) where as tether is not really authorized. So the idea of rules and enforcement come in to play. Which historically, I would say enforcement does not exist. So simply put, if we had rules with enforcement then the Evergrande situation could nuke our entire financial existence. That is not an exaggeration. So we will see what the controllers do, the people who decide when rules and consequences are applied or ignored. www.naturalnews.com/2021-12-06-crypto-reset-digital-fiat-currency-counterfeiting.html# |
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Post by kenmb on Dec 9, 2021 11:29:37 GMT -6
ZH put up an article www.zerohedge.com/markets/evergrande-has-finally-defaulted-heres-what-happens-nextAbout as expected in my understanding of things. It will be up to the PBOC or China regulators to step in and prop things up. The lenders who didn't get paid will talk debt forbearance, as in its ok if you didn't pay us, we will let it slide and negotiate something under a non disclosure agreement. Yes, free markets and rules and all that stuff gets tossed aside as needed. And my favourite is the option where you are running a Ponzi scheme and can't make your payments so we will lend you some more. How does $2B work for you? If you can't pay it back, no biggie. I will note one thing I am observing: Crypto always moved as one. Xrp, eth, btc, BCH, etc all go up or down at the same time. It's like if you are investing in one because you think it is a winner, then you throw money at the others equally - just because. Yeah, I don't know how that philosophy works but that is the history. Same with taking money out. If pulling from one crypto, you pull from all the majors. Just because. But the last two days is see all majors going down but xrp going up. That is different. All I do these days is look at what things are unusual. Can't say what it means, I have my ideas but they are usually wrong because the controllers step in and upset the game again.
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Post by torriem on Dec 10, 2021 10:01:30 GMT -6
Whatever cryptocurrency is, it's not a currency!
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Post by kenmb on Dec 10, 2021 13:39:47 GMT -6
Unbacked and unregulated crypto is the way of the future, ask any expert. Those 5% weekly changes in value just make operating your business more thrilling.
It seems the Evergrande thing will be a slow process. The only question is if it winds slowly down as the system is allowed to exert some form of real economic principles or instead things are slowly swept under the carpet along with debt elimination via "restructuring" and lenders simply taking a pass on collecting on debt owed so that the game can continue as always.
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Post by kenmb on Dec 16, 2021 12:18:01 GMT -6
I don't have the telegram app so will post this screenshot. It's an important concept to keep in mind, if the biggest developer stops making payments, in this case to labor force, what happens? Now this is where you put your tin foil hats on, or as I like to call it - think about the big picture. Because if a country is that dependent on a "private" company then the government becomes involved also. And that is fascism. And so you need to ask yourself how such a huge company gets into a position in the first place to where the government must be involved. I would say a lot of things have transpired over the years to lead up to such a situation. In Canada for example, we can talk of how governments get involved with large corporations via tax incentives, cost sharing, forgivable loans, etc all in the name of job creation and economic development. In essence, governments working with big corporations. Here at home we look at Evergrande from its effect on the stock market. What we need to think about is how it effects an economy. First in China, and then consider real estate bubble in China and consider if such a thing as a real estate bubble exists at home. Also note the Fed just said it was going to start raising interest rates. The same thing many people have said will never happen. And the Fed may not, time will tell. But if people don't understand that central banks already made massive policy mistakes for 10 years now then they won't understand that anything going forward is a policy mistake. Betting on which policy mistake will be followed seems like a bad idea. No idea how it will play out. But I think it is more important to understand what might happen. And not wait for the tv to tell you. And yes, let's all hope the government steps in. And it probably will. And then we can thank ourselves that we have government controlling so much of everything. The only question is whether or not that is good.
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Post by OptimallyDismal on Dec 16, 2021 14:45:11 GMT -6
The Kronos ransomware attack is a big deal, although you aren't hearing about it on the news (I don't think) but they are the HR for some very large companies, which also means payroll for a lot of hospitals, Walmart, Apple, just to name a few. These are American by the way, but Kronos has the data from millions of workers, that includes all you need for identity theft as well as bank accounts and transfer information.
The Gov of Canada has shut down a lot of their web pages and are showing this:
Important Message
We have become aware of a cyber security vulnerability affecting organizations around the world. As a precaution, we have proactively taken down some services that may be affected by this potential vulnerability while we address the situation.
All bids, sales or payments will be extended accordingly.
Our services will be available as soon as possible.
We thank you for your patience as we work to resolve the situation.
So is all this related? Probably, is there a point to it? probably, is it that we need to go to a digital currency? In my mind this is exactly why we shouldn't, we need to be able to use cash and write cheques for this type of situation when the technology fails.
Things are going to shit and our inept government will certainly not be able to cope effectively to save us, any thoughts?
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Post by kenmb on Dec 17, 2021 10:33:00 GMT -6
Didnt hear it was linked to Kronos, from my memory Kronos is indeed a pretty large payroll management platform. Seems to me I may have collected some paycheques issued by Kronos many years ago or have some other firsthand experience with the Kronos name. Cant remember for sure.
Kind of funny the same pioneer of computer software can't seem to get software issues sorted out before release but Bill Gates is a big cheerleader for issuing vaccines that are not proven.
An interesting aspect of these computer hacks and viruses is that everyone keeps moving to more centralized linkage, cloud data, and integrated management. You would think people would be working on more effective ways to island their systems to prevent such issues. Instead the people move to an architecture that actually enables the problems to become bigger. As I often say, what would are grandparents have done if faced with similar scenarios. Or simply how would intelligent people solve issues. But instead it is always a "corporate directive" that steers courses into the least desireable outcomes. I have seen lots of business destroying corporate directives in my career working for international companies.
Speaking of something currently relevant, watching the articles on Zerohedge and it seems Turkey is the place to watch right now. Not Evergrande. You might call the Lira currency a collapse, others might call it hyper inflation. The result is the same. I wonder how it is decided what term to use.
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Post by kenmb on Dec 17, 2021 14:16:01 GMT -6
In my mind, this attachment puts everything into perspective. I say fractional reserve lending is a scam and therefore there is a large conspiracy that allows it to occur, including how the Federal Reserve exists and operates as well as other central banks. Others will argue that fractional reserve lending is legitimate because there are rules and oversight and if anything was wrong with it then government would intervene.
Who has the infinite wealth to lend out and then collect the interest on it?
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Post by kenmb on Jan 5, 2022 22:01:33 GMT -6
Nothing new here but figured I would post this since I came across a news item. Evergrande is still defaulting and now asking for 6 more months of defaulting. The article also mentions smaller companies have gone bankrupt or defaulted. But the biggest company on the planet seems to be able to keep borrowing endlessly until suddenly, out of no where, everyone who is borrowing and lending finds a problem at exactly the same moment. finance-commerce.com/2022/01/evergrande-asks-bondholders-to-postpone-repayment/I do think I found the key point as to why nobody saw this coming: "Evergrande says it has 2.3 trillion yuan ($350 billion) in assets and 2 trillion yuan ($310 billion in debt), but it is struggling to sell real estate and other assets fast enough to keep up payments to bondholders and other creditors." We simple peasants may call this scenario a Ponzi scheme. Or just modern financialization of everything. See, everything works in our bogus economy when you can keep inflating things and borrowing cheap debt. It works especially well if you are in direct contact with the people issuing the cheap debt and know their plans. Nothing can go wrong. It only goes wrong if things stop inflating. I wonder if there is a lesson in here somewhere. Of course people on the inside can also know if the halt in inflation is also planned because they can then sell high and buy again at the bottom. So even a massive collapse can make people extremely wealthy. Perhaps the Evergrande default isn't that bad for some people. Only those who issue cheap debt and set interest rates really know. Don't know where this all goes. I am pretty sure a number of people do know. |
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daryl672
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Post by daryl672 on Jan 5, 2022 22:48:48 GMT -6
I just saw this yesterday, seems Evergrand has been given 10 days to demolish 39 buildings on this resort island, which is impossible. Sounds more like an excuse to seize them by the local authorities. That would take away a lot of those assets they are claiming they have.
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Post by Oatking on Jan 6, 2022 8:33:06 GMT -6
I agree Kenmb, Most banks like to evaluate our debt to equity ratio and that helps them leverage money lent out. Those inflated numbers we use for land assets are a huge part of that equation for farmers. Guys that have a debt to equity ratio higher than 50% now could realistically be much higher and that is without interest rates increasing. When I do my debt to equity ratio I use the current selling price on land in my area , I am not so sure it makes me feel any better but the bank sure likes to see that number!
I think that ratio is pretty dangerous to position your farm solely on. Isn't this how the bubble popped on the U.S housing situation. All of a sudden an asset was not worth what the bank thought it was worth.
Its a tough situation because you get a head by investing and spending money but the limit to your spending is judged on the present day situation.
Sounds like evergrande with a 50% debt to equity ratio feel into this trap over estimating what they were worth to impress the banker and could not make their cash flow. Cash flow is King!!
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Post by kenmb on Jan 6, 2022 9:34:32 GMT -6
I like to break it down like this:
Debt is a fixed number
Equity is a variable
So in an inflationary scheme the variable is an increasing number and all is well. But in deflationary system then things go bad in a hurry. And so I point out to the basic premise that "land always goes up". No it doesn't and my dad experienced that first hand so you could say I did too.
I will note that when borrowing $300B you are no longer just some guy off the street sitting at a desk with your tax return asking a banker for more money. No, at $300B you are on a yacht with the same people who already know which way interest rates are going and if there is a reversal, they know when. Unless someone upsets the apple cart.
We are not in a free market/capitalist system that sets interest rates by market action or supply and demand. We are in a centrally planned economy and there are people planning it. To assume the planners are keeping everything secret because they have a moral obligation to keep a level playing field is naive at best, and
plain stupid to be blunt.
So when we discuss Evergrande we all must stop thinking like peasants and think about it based on how the world really works.
It is kind of like thinking the peasants have rules and regulations that apply to them and that is the same if you are in $3000 of debt or $300B of debt. Hmmm no. The rules and regulations are for the peasants, the people in control are the ones who wrote the rules and regulations to control the peasants and so they most definitely don't apply to them. That is why Evergrande can keep defaulting indefinitely and get "loan restructuring" and debt forgiveness - whatever is decided is what is done. Rules don't apply.
And to Daryl's point, yes I saw that about demolition of buildings.
Think about that. So a bank who has equity because that is how they get paid back when their money created out of thin air disappears is going to say go ahead and level assets. Really? In what legitimate world would that take place? It would never. Never, ever, ever. But in our world it is the best option. Why? Because to keep assets inflating you would need to increase demand. So leveling a brand new asset would do that.
I could spin off on how changing dirt cheap interest rates and halting massive building boom is probably the best way to "save the planet" that no one wants to discuss but won't go there. But demolition of brand new buildings is not green. Yet the banks want to control your life to control global warming.
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Post by kenmb on Jan 6, 2022 19:13:33 GMT -6
Some days it like the internet is reading my posts then making news articles. Case in point regarding the people who centrally plan the economy have inside knowledge on where it will go. Also of note is that these people in the know who are caught - don't actually suffer any consequences. Go figure. The only question is whether they discuss with other people as to where things are headed, let's say people like hedge fund operators or the biggest real estate developers in the world. www.zerohedge.com/markets/outgoing-fed-vice-chair-quietly-covered-suspicious-trades-made-during-march-2020-marketThe only thing I roll around in my mind these days is whether the Evergrande issue is planned (as in the lenders and Evergrande all planned this, including the bond holders) or has someone upset the Apple cart and thrown things in disarray. |
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