This is a snapshot of my "Lehman Bros." archive, which I pulled out of the files, just to image this. We hope EverGrande does not cause this ugly level contagion, and our view is that it will not. Lehman was linked to everybody, and they were hard-core liars. Their balance-sheet seriously misrepresented the financial condition of the Lehman Brothers enterprise.
Sept. 20, 2021 - Evergrande China. Sad and bad. It would be best, if they do not default. But since "fee-simple" land ownership is not really possible in China, then it looks like everybody has a problem. There is
maybe no real market for their "real-estate" assets, because maybe these do not even exist.
Since it appears that Xi wants to maintain the "North Korea" land-tenure model in China, then Evergrande maybe has no assets at all. This is a problem.
The whole Company may be just an air-bag. But it is their problem, not ours. You only have a problem, if you are holding Chinese paper - you think. But maybe your bank or your pension fund, holds this paper. Eweh.. Yuck...
Reuters has a good summary of this particular shit-show:
Personal and corporate integrity - the ability to trust the guy you do business with - this is the key to success or failure in the commercial world.
There are these places in the world, where the people just do not get this concept. It is
just not something inside their little heads. You can have lawyers write a million lines verbage into contracts, but it all comes down to trust. You loan some guy money (by buying his paper), and you have to know that you will
be paid back. If the bastard defaults on you, it is mostly his problem. You will lose money - but he loses his whole soul. He forfeits a life of honour. He loses his spiritual manhood - his very life-force itself. He becomes
just another biting insect on, or cancer-cell in, the great body of the world.
He who does not pay back what he owes, is a worthless and ugly error-condition, in the machinery of reality, like a radio-active leak in a school, or a dead-rat in the baby-food.
Is Evergrande the 2020's equivalent of Lehman Bros.? We don't think so. Lehman had that whole "clever New York guy" thing going - they had this myriad of multiple entities under the "Lehman" name - all different little orgs, - and they
figured they could bankrupt some, and keep others. It's a crooked-prick trick, that lots of sad/bad boys try.
You cannot invent racial pictures to characterize these folks, else you will just be make more errors. It all comes
down to how you respond to the misfortune of a reversal. The Jews would get unfairly treated, because they loaned money, and expected to be paid back, and folks would try to cheat them, and invent reasons why they did not have to honour their contracts.
It's not that Lehman were Jews, it's that they were bent assholes. And those come in every culture and race.
The stench of dishonestly and the dishonour, attaches to the defaulter. It smears the family or company name with shit, if you try
to do stuff like this, and use the bankruptcy laws to avoid paying your bills.
No-one will want do business with a shit-stained defaulter.
You should not default. You should pay what you owe.
When you are running
a business, you must ensure you maintain both financial and moral integrity. It is such a simple concept - but like "common sense", it gets brushed aside by a curiously large number of rather low-quality people.
We really hope the Evergrande
collapse does not damage the global economy.
Right now - every financial regulator, should require every public company, to indicate if and to what amount, they are exposed to this sad Chinese shit-show.