iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
21,324 Blog Posts

MARKETS COLLAPSE ON CHINA CONTAGION FEARS

I’ve written that exact headline countless times since 2007. China is always collapsing, yet never actually collapsing. Today’s latest salvo into world ending financial apocalypse in the “this time is different” narrative is EvErGrAnDe — big dumb HK developer whose business is 100% fucked and so are their creditors. Wow, I guess China and HK will just let this one fall thru the cracks and collapse the entire country with it, yes?

Evergrande employs 200,000 people and has $300 billion in debt and its stock is at new lows and barreling to zero.

This did not happen overnight and people in the industry knew this was happening for months. Why is this important all of a sudden? Who fucking knows? Maybe now people felt like it mattered and now we’re all so scared, with Dow futures HAMMERED INTO DUST -600.

Nevertheless, I think it’s important to understand that this is too big to fail and China is more than likely to bail them out soon. In the interim, perhaps we can gin up some more fear in order to get the blood pumping, prepare for a seasonal September collapse followed by an October bump.

Early going both PUK and CS are hammered and I suspect if this drags out we’ll start to hear of exposure and who stands to lose, which I think is just about every major bank and insurance firm in the world.

The risk of shorting too heavily into these sort of squalls is we already knows how it ends: one giant bailout and massive rally to celebrate more central bank rigging.

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5 comments

  1. edge

    Yep.

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  2. Mr. Cain Thaler

    Lol probably

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    • Mr. Cain Thaler

      I think you’re all obviously correct that some kind of bailout is coming. Evergarde has ENRONx10 written all over it but the Chinese will obviously do something.

      Now what would be interesting is if that something bails out their own natives at near 100% and then they make foreign investors take a small bath. But I doubt they do it too painfully or foreign investments dry up.

      This is all a big distraction from the looming earnings write downs and GDP disappointments coming. Global economies are double dipping and commodities are so high that central bankers normal means of fighting this are constrained.

      Gold and silver are both higher today and some notable commodities – natural gas, rice – are fighting to flat. If commodities don’t drop with everything else the Fed’s hands will be tied behind their back.

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  3. edge

    I had a good September, and thought I had a good handle on things, but now I feel lost.
    Chop is my biggest fear. Maybe I better sit on my hands for a bit. 50% cash.

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  4. ezthere

    Why all of a sudden Xi Jingpin gets religion. Starts clamping down on gaming, risk taking, metals and property bubbles. This has been building for years! Think about it. A little late? Way late!. Something else is going on…. then ; Growth at any cost. Now; taps turned off.. I think nothing gets done. Either way Xi looks bad. So for me, he let’s it collapse. No bail out. Further, Chinese could have quietly bailed them out. No fan fare. They didn’t.

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