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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also Official report coming out on property prices, believe as much of that as you like ive heard rumors of impending price controls in various cities which strikes me as darkly funny. like usually price controls in real estate are ceilings rather than floors you know
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im trying to imagine a world in which this makes things better. like usually price floors just result in overproduction /if you have a guaranteed buyer/. but here you dont afaik so it seems like this just prevents many sales from happening at all but
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to the extent chinese real estate is better viewed as an investment vehicle maybe this works in some way by making everything illiquid. dont have to mark down assets as depreciated or whatever even if you cant actually sell them and so you just kick the can down the road further
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this seems like a stretch to me and i dont think it works since as i understand it the model for most developers relies on high turnover of these properties, and freezing the market screws them harder maybe it makes households who own homes feel better. prevents fire sales? idk
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Replying to @eigenrobot
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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Replying to @adamrocketblack @eigenrobot
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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Replying to @adamrocketblack @eigenrobot
its a hell of a lot better than allowing US banks to evict, repossess homes, than destroy to maintain price floors! The government let them destroy 2 million units rather than auction them off , and there has been a rent & homeless crisis ever since. And the increased prices
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Replying to @adamrocketblack @eigenrobot
were used to build massive amounts of empty luxury condo buildings across North American cities, used purely as investments for money laundering schemes.
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