going to be an exciting week in china real estate markets another big developer probably missing a bond payment today, evergrande likely to formally hit default at some point this weekhttps://archive.is/qkINL
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please read this thread as pure speculation and me trying to steelman their policy i dont understand how their markets work at a granular level my baseline hunch that theyre kind of fucked remains tho
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oh shit xi was (is?) trying to push through a property tax. note that previously this had not existed in china note this is functionally a bigass bite to the use of real estate as /the/ household store of value in chinahttps://www.wsj.com/articles/in-tackling-chinas-real-estate-bubble-xi-jinping-faces-resistance-to-property-tax-plan-11634650751 …
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price floor would make more sense in this context. lol. government sets asset price and also tax rate what could go wrong apparently theres an incipient party rebellion over this interesting times and all that
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It doesn't help the developers, but if the owners are using them as collateral for other credit an effective floor price could be useful to prevent contagion
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This was kind of the US government's intent with TARP, I think, to stop people sliding into Bad Credit Rating Hell based entirely on the market deciding that their house (the only real asset they own) wasn't worth anything.
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This policy At first glance doesn't seem so bad. (1) Maybe its designed to stop blockbusting. Or (2) excessive short selling, either of real estate, or (3) real estate backed securities or (4)Real estate pegged securities ie potential toxic asset derivatives.
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Floor sales protect balance sheets of large & Very large stakeholders without having to bail them out directly Or have a smaller financial crisis act as an ignitor to a large-scale crisis the way the US loan crisis set off the banking crisis and auto failures. But prima facie
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