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The Second Chinese Corporate Default: Real Estate Developer With CNY3.5 Billion In Debt Collapses
A few days ago, copper prices and the Chinese stock market were roiled by speculation that another - the second in a row - Chinese bond default may be imminent, in the shape of Baoding Tianwei Baobian Electric (TBE) a maker of electrical equipment and solar panels, whose bonds and stock were suspended from trading a week ago after reporting massive losses. A few days later, TBE "promised" not to default when its next interest payment is due in July (although how the insolvent company can see that far into the future is just a little confusing). And yet the market shrugged and contrary to its recent idiotic euphoria to surge on even the tiniest of non-horrible news, barely saw a rise. Today we may know the reason: overnight Bloomberg reports that second Chinese corporate bond default may be imminent after the collapse and arrest of the largest shareholder of closely held Chinese real estate developer Zhejiang Xingrun Real Estate Co, which just happens to be saddled with 3.5 billion yuan ($566.6 million) of debt.
Debt which absent a bailout, which at this point is very improbable, will not be repaid.
From Bloomberg:
Zhejiang Xingrun Real Estate Co. doesn’t have enough cash to repay creditors that include more than 15 banks, with China Construction Bank Corp. (939) holding more than 1 billion yuan of its debt, according to the officials, who asked not to be named because they weren’t authorized to discuss the matter. The company’s majority shareholder and his son, its legal representative, have been detained and face charges of illegal fundraising, the officials said.
What is curious about this particular potential default is that it touches not only on the massive leverage in the Chinese system, but on the one real bubble in China (since nobody there seems to care about the Shanghai Composite): housing.
The collapse of the company, in the eastern town of Fenghua, adds to concern of strains in China’s real estate sector. The property market in smaller Chinese cities faces “true risks of a sharp correction” due to oversupply and investors may have underestimated the risk, Nomura Holdings Inc. economists said in a March 14 report.
Two calls to the chairman’s office and financial department at Zhejiang Xingrun weren’t answered today. A woman who answered the phone at the Fenghua government’s news office who declined to give her name confirmed the company cannot pay its debt. A Beijing-based press officer at CCB said the bank asked for more information from its local branch about the report and hasn’t heard back.
So going back to the collapse, Bloomberg adds that the failure of the company was reported earlier today by the Chinese-language National Business Daily, which cited an unidentified government official for the news. The report blamed the failure on mismanagement and high costs of private lending, according to the newspaper.
“We think the default of the developer will alert the banks on escalating risk from developers amid the liquidity tightening,” said Johnson Hu, a Hong Kong-based property analyst at CIMB-GK Securities Research. “We maintain our view that banks may revisit loan policy on property and may take stricter stance on property development loans, particularly for small developers.”
It is also about to get worse: "Property shares slid to a 16-month low in February after Industrial Bank Co. suspended mezzanine financing for developers, adding to concerns that smaller developers may default on their borrowings amid the government’s property curbs and an economic slowdown."
And just like that, quite suddenly, the tide is flowing out and all those swimming naked will be revealed. What happens next? Precisely what we said would happen a week ago, when we explained the imminent plight of Chinese corporate where things such as this are about to be revealed...
CITIC Trust tried to auction the collateral but failed to do so because the developer has sold the collateral and also mortgaged it to a few other lenders.
... as having taken place at a truly massive scale.
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This is a bigger nightmare than MBS collapse of the US.
Can't the Chinese just print money like our Jew Run FED and bail out everyone??? After all the Chinese invented paper money.
Where are all the ghosts going to live?
which just happens to be saddled with 3.5 billion yuan ($566.6 million) of debt
$566.6 million... is that a lot these days? I genuinely can't tell any more.
long bamboo slivers and organ transplants
What are the Jewish Rabbis already on the ground in China????????
http://eyeswideopen5.blogspot.com/2013/01/jewsmayors-arrested-for-harves...
http://www.nytimes.com/2009/07/24/nyregion/24jersey.html?pagewanted=all&...
Wow,
Both of your links had nothing to do with China. And the NY Times is very left wing anti semitic.
You are full of racist progapanda.
And the NY Times is very left wing anti semitic.
Lulz
Wouldn't the correct play be to short organs due to the increase in supply? How Bout going long in Chinese organ repo firms?
$666.6 million... is that a lot these days? I genuinely can't tell any more.
See What I Did there?
With the majic of rehypothication that 566.6 million could be on 100 different books with an "imaginary" value of 5.6 trillion.
Not a problem till the 99 figure out they are scewed.
How much is that in plastic bitcoins?
Yes, at a monthly rate of $75-$85 BILLION for ever; $500 million doesn't seem that much at all. Of course with the JPM's, GS's and other Pharisee banks, it is not real, it is just a book entry on the FED which is also entered on the banks to make them look solvent. It's like moving $5 from your back pocket to your front pocket and calling it $10.
With Chinese corporate bonds, it was a real loan of real assets from third parties. This sort of thing, if not bailed out, will make investors seek haven in US equities. This is great for the Socialist USSA as their Bolshevik Pharisees really need people to believe their circle jerk has value.
@GetZeeGold
Makes a new meaning to.................."ghost bustesr"
Who you ganna call!
better yet, where will they vote?
No worries....they've got the new Diebolds.
Thanks Chuck Hagel......would you like to be the Secretary of Defense?
Xinxiang?
Translated it means "province of wind and ghosts."
Quite possibly.
Fenghua, Zhejiang province (Home of Xingrun Real Estate Co.)
Zhejiang province has the highest level of provincial local government debt in the whole of China. Other cities such as Ningbo and Wenzhou are infamous for their 'astute business-minded ethos', and their non-performing loans. Despite the fact that everyone and their moms all wanted to get into house flipping or take out loans to open factories after the financial collapse, no one would have been able to see this coming.
http://www.telegraph.co.uk/finance/financial-crime/9504692/Credit-crisis...
What would Mao Silvertongue do?
He would say Joooos do that to me again and I cut you with my butter knife as many times as Peking ducks fly over the Yellow River
Ogolfer would just read his teleprompter and tell us we've never had it better, shut up and get back to work and pay your slave taxes, and he'd go off to shank some balls with Reggie.
Confucius say:
"Long nights of poo poo platters & fly rice await corrupt bureaucrats who dip own wicks in people's ink."
sorry,I don't get out much.Who's Reggie?
Independent "Jew Run FED"
How sad it must be for you to be run by a few million Jews. There are billions of people in the world, and yet, you have no power over that minority. Perhaps you will one day realize, that even if there were no Jews on the FED, you would be in the same situation. But, your anti semitism would probably prevent that. Thus the elite will always defeat you. Corruption is corruption no matter what race or religion.
Yes, it is pathetic that the West is run by a tiny number of Jews. A big part of the explanation is that we've bought into the narrative of the poor victimized Jews and that in turn means we can't even question them, far less criticize them.
"Corruption is corruption no matter what race or religion."
Right, but when that corruption and the wealth and power which flows from it benefits a small ethnoreligious minority, for decades, and in more than one country, and where, for example, members of that group have been recently appointed to a wildly disporportionate number of positions at the head of federal agencies having anything to do with banking, finance, or budget [to include the Fed, treasury, IRS, SEC, OMB, FDIC, National Economic Council, Council of Economic Advisors, CFTC] as well as a disproportionate number of high level posts in other federal branches and departments [Treasury and State perhaps especially], then the question becomes, why is this one group given disproportionate benefit of the theft which "would occur anyway?"
In other words, you are attempting to distract from the {at least very arguable} legitimacy of asking about Jewish over-representation at the Fed, etc. by claiming we'd be in the same situation. But while we may or may not be in the same situation {I would tend to believe it would be a little different, with less ethnocentrism and cronyism but don't think it would be a huge difference given the same monetary system, sure} the point is that one tiny minority is benefitting from it, and while obvious, there is great social pressure to not discuss the power of what is the most powerful ethnic group in the country - all while, for example, the chattering class worries out loud about their being too many 'whites' on the local fire department, etc.
In other words, I don't think you make the question regarding disproportionate Jewish power invalid simply by nakedly claiming we'd all be getting screwed anyway - as it stands, one group more than any other seems to benefit, and not just in the united states.
I think adults can and should discuss what this means for the 97.5% of the rest of the country. If you do not, perhaps you can share why. I'll listen, but I've never heard a good argument - only ad hominem.
so francis_sawyer creates another account.... let's cut the anti-semitism before you all get shit-canned again...
eat a dick you phony fuck - you're the bigot, not me.
I grant you I push the proverbial envelope on a verboden topic on one of the few internet forums with the sack to allow people some leeway {and yeah, thanks Tylers} but I don't hate anyone.
Except people who are full of shit.
Ya cunt.
Gonna cry to Tyler to get people banned again? Is that your little power-trip?
"Due to Oversupply"
http://video.cnbc.com/gallery/?video=3000187343
There is no oversupply, only overprice.
China cannot just print to allow this bubble to grow bigger. The stakes increase with the size of the bubble. State's ability to control the country and maintenance of social stability is at stake if there is a massive crash bought about by a massive bubble.
Ha.. they need to find a way to gradually deflate.... good luck.
Its easy just turn billion Chinese asses towards the USA and fart all the smog and pollution to Yankee imperialist
they can if the US is letting its bubbles continue to expand, which is appears to be. Because not doing so would be, in essence, like letting themselves get robbed as the dollars value declines.
So they may as well overleverage and create debt and build while they can, eh?
In any event, China can use a lot of the cash its sitting on to buy more gold mines in Africa, and maybe spend it to spruce up that wall.
So much of it smells like pee!
At the root of all decisions made by Chinese ruling class is FEAR.
The vast majority of the 1.7 billion people live on the edge.
History of change in China has always been about starvation, and its consequences on social stability.
If this is true and i aint saying it is, they will be able to export thier starvation around the world in effect starving our poor as they spend thie excess $ buying food for higher and higher prices.
as we use more and more EBT!
winning?
In U.S. The nonproductive are given the EBT so they won't starve and riot.
Same Fear.
China does not believe in free rides so they have had a giant "make work" program. hence the empty citys.
As far as return on investment, both averted chaos.
China now has millions of unused units.
U.S. now has millions of fat assed dependents.
You have talent for problem-solving!
Leads to a big reduction in the Free Shit Army. What's not to like?
This FSA thou speakest of...
Art thou referring to the unproductive Poor or the unproductive Rich, who liveth off the largesse of the Fed?
Remember as a kid strapping into an amusement park roller coaster and slowly chugging up that first hill? We are just cresting it, and are about to see what the Rehypothecated Dragon coaster has in store for us. Hold onto your butts.
Well, unlike back then that seatbelt is set to fail at the crest, AND, there's no rail past that crest! The "free ride" tickets are automatically "expired."
Oh no! This means the Chinese will need to invent some money and the US markets may only rise by 1% today. This is catastrophic!
Actually the MBS collapse would have been much worse than this, if Hank Paulson didn't demand and receive over-reaching (and unconstitutional) powers to bailout the banks and hide the fraud of the MBS system.
Dude, toxic debt in zombie banks and mark to make believe.
It happened.
And no, Hankster did not save the world, he did plundered you.
The red is mine, can't believe anyone greened you for that.
Or was there supposed to be a /sarc on the end of that?
Probably because others are not too inept to discern a description of events vs approval of the events. Don't know how you get "Hank Paulseon is a true world hero" from my statement.
Yeah, I get it: omelet <--> broken eggs ... bombs <--> wedding party
So I mustn't disapprove, but just see the bigger picture, why it's all necessary and justified and why the means have no import to the ends. Great, but actually no, instead, you just earned another red for being precisely that sort of disgusting person.
"Hankster did not save the world, he did plundered you" is what I really wrote.
"Hank Paulseon is a true world hero", is what you wrote as though you were quoting me, directly.
See a small difference? What you did is called a misrepresentation. It's a form of lie.
No arsehole, you were not describing events there, anyone paying attention can see that you were ADVOCATING YOUR APPROVAL, as well as inculcating APOLOGETICS for massive criminality to serve banking interests at the expense of actual working people and business.
Which objectively makes you something of a complete CUNT and lowlife parasite, and pretty much qualifies for bullet insertion.
I would give you further disapproval, but clearly you don't merit the input.
Forget your meds there? Hopefully you and your entire family die in a car crash soon, as it would help rid the world of inept fools that cannot learn reading comprehension.
No vote from my end, but...
Who is to say that the US MBS book is closed? Further, how can we reasonably assess the total impact?
In my mind it (MBS crack-up) was just a symptom of the disease, the disease that was always going to get us anyway: perpetual growth on a finite planet.
somehow these are the guys the US is supposed to be worried about... uh, no
Bullish!
Timber!!
Gold
We dont see this event could derail the up trend of s&p 500 index.
This is a mild, first wave of Mainland China/Hong Kong defaults, and as the dude from Dollar Shave Club would say, THE PARTY HAS ONLY JUST BEGUN.
It is going to be a brutal tsunami of leveraged and cascading losses in a long, mean season.
Highly leveraged defaulting debt death spiral; it's what's for dinner, bitchez .
They have one trillion dollars of pre printed Yankee IOUs surely they react faster than the US FED
A trillion Bernankestamps ain't what it used to be...
Real estate, selling shares based on hopium and hot money, family business, and non GAAP accounting.....what can go wrong IS going wrong.
Shameless plug. Dollar shave club works well for us new "takers" in the machine. Really saves money I can use for PM. Great value and one less thing to buy at Costco, ha!
The level of corruption is on par with the level of money printing so China is "beating" us in the race to the big bust. Big bust is a registered term, used by permission of the FRAcking jackals at the FED.
How you say "You better call Saul!" in Chinese? ;-)
Looks like it is smoggy where the photo was taken. Maybe the smog will go away after the collapse.
It does the wind blows it over Pacific and the Americans breathe it with Fukushima seasoning
Independent " It does the wind blows it over Pacific and the Americans breathe it with Fukushima seasoning"
Sarc/ Perhaps it is those Chinese and Japanese Jews that are to blame. /Sarc
Go long on GMO fortune cookies.
Choo Choo- Slow train to the destruction.
All I wanna know is where's my free money! COME ON lift those stawk indexes, make 'Murka feel good for another day!
I would say they have a demand problem...
They don't have a spending problem......they have a paying for it problem.
Not sure what the difference is in the end.
“If one synchronized swimmer drowns, do all the rest have to drown too? ”
? Steven Wright
He was a seriously funny guy, seriously!
I'd seen some news blip from some financial house (Moody's?) suggesting that China's growth will remain strong but they (financial house) worry about China's ability to control debt-build up. Or something similar.
WTF? Yeah, if I can get my hands on a lot of free money I too can create BIG growth! And now for something completely different, watch me pull a rabbit out of my hat: Hey, look! I can stick my head in a croc's mouth! Now then, watch me pull...
What is this default thingy that you speak of? It seems I heard this term once before a long time ago in a quasi-capitalist society.
It's that thing you think you can handle until they start to pile up. Then it becomes so painful you just print money until the dead pigs float back up-river and reanimate.
Mark to fucking Market Bitchez!
AUD still strong.....must be hot Chinese money eating up Aussie real estate....one bubble to another.
Awesome!
LOL
Gallows Humour
Zhejiang could not be reached for comment from his $16 million California Mansion.
Rehypothecated real estate. The Chinese are geniuses.
let me ask what might be a stupid question, but that's how you learn things - by askin', see?
How in the fuck can there be a genuine oversupply of housing in fucking China?
Easy. They live in virtual houses.
The same way we have an oversupply here. Nobody can afford them and the banks are holding on to an abundance letting them rot to the ground. Drop the price to an affordable level and the supply problem is gone. But they won't do that there or here ....that's too much like real free capitalism.
I think that jC was being a bit tongue-in-cheekish.
Too bad, though, that we have to let the homes go to shit before they can be used... In the long run that's how it's going to end up anyway, as maintenance will not likley be possible (too costly [when everyone is unemployed and materials are vastly more expensive]).
Location, location, location.
America has the same problem. Too many houses for middle and upper classes. Not enough people with middle and upper class income. The obvious answer would be housing price deflation to match reality. But that would affect the price of houses for the 1% too, so that will never happen. So, there will be millions of empty houses and millions of homeless people. What a fucked up world!
Between 1988 and 2008 the EU paid rich landed farmers NOT to produce food, meanwhile millions starved in Africa. Its a wonderful world.
Pretty clear why the "1%" don't like deflation- really hurts their assets. So, rather than them taking a hit they keep prices propped up and cause the pain to hit the rest (until, that is, the reality can no longer be kept in the closet- renters unable to pay).
lol. good question. the answer is: a big chunk of those second and third apartments? they are not for sale or for rent. they are being hoarded
Lord Keynes would have loved to be alive to comment on this, and he would have put to shame the "rational homo economicus" brigade, there
it's a form of saving which does not result in investment, at least not immediately. and the rest might be counted as malinvestment, if location is no good
we're gonna find out who the equivalent of Blackrock is over in China very, very soon... look for the string of holding companies that start to bleed out of every orifice in the next six months
For every 100 houses 'sold' there is only 1 .... double counting x 50
If you are lucky maybe only just double counting ... lol
Who knows how sysemic and deep this practice.....but going on US example of absolute disregard for consequences.....
My local bank said a Chinese guy came in with the cash, brand new $100 bills, to deposit for payment in full for a house. Looks like they have the plates to print those up too.
Actually not over supply...over priced. If they dropped it by 90% then could sell them all... lol
oh.....
S&p 500 still track for 30% return, its for sure.
'The company’s majority shareholder and his son, its legal representative, have been detained and face charges of illegal fundraising, the officials said'
those 2 need to get on board with Presidential budling - stat!
or, the majority shareholder's son can commit 'suicide'
When I go for my afternoon walk/run here in Shenzhen I love checking out all the new ground level "commercial" storefronts with the pretty facades and storefront windows and signs......But they are ALL empty concrete shells with no tenants, the developer just made them look pretty and occupied......While he tries to sell the 35 story apartment units above all of this......
It's cool, just a wee paper cut, won't need a tourniquet ... move along.
Like the small cut "Julia Child" had on SNL?
just another day of 'Conunism' in China... and the stupid fucking Dem party in the US is all about emulating that model, too... those fuckers are going to be _gone_ once the 2014 and 2016 elections blow through
Elections.... LOL...... GO RED TEAM!
unlike the rest of the loony bin around here, I choose to deal in reality...
there will be elections, there will be swaps between 'D' and 'R', and that will have an impact on how things get done in the US
fuck you guys who say they're all the same... if that were true there would have been 'R' votes for the PPACA and _there are none of those to be found_, just as a single example
Reality? Your reality is warped as hell if you actually believe there is a fucking difference. Did you forget that Zerocare is based off of Romney care? Or that president Zero is just expanding Bush's insane "war on terror" policies? How many times has Boner rolled over in the fucking house to Zero's demands? They are all the fucking same and you can tell yourself they are different, but that doesn't change reality.
I choose to deal in reality...
Reality - 300+ million people in America
Reality - for president you can choose one of two people who could win.
Reality - Bush ran on a humble foreign policy
Reality - Obama ran on a humble foreign policy too.
Reality - Both Obama and Bush Jr. Lied Lied Lied Lied Lied Lied.
Reality - Out of over 300 million people you can choose one of two persons to Lie to you for the next few years.
In a real free election more than two choices would be possible - it's as simple as that.
I also suspect that you
cant own property (must pay rental fees to govt.)
have to work for free (pay income tax)
cant voice your opinion (free speech zones)
If you stop any of the above guys with guns will come to your house. They will put you in a cage. Perhaps a little torture?
http://www.washingtontimes.com/news/2014/jan/23/staff-members-committed-half-sexual-assaults-priso/?page=all
"The best slave is the one who thinks he is free." ~ Johann von Goethe
Yeah. Never mind that the big banks were bailed out when the W puppet was president.
"TBE, a maker of electrical equipment and solar panels..." Poor Leo. Haven't heard much from him in years.
Sigh, some people just don't get TRUE fundamentals... Had completely forgotten about old Leo. Anyway, he (and fonestar?) is a perfect example of why I'll never look to pimp something.
If I were Chinese I would buy the shit out of Gold and Silver. Especially, if I were concerned about fraudulent investments. Hell, I see so much fraud in America's own backyard that if you don't have tangible assets that represent your life energy in your own care, you are asking for it to be stolen. In a world where banks, corporations, governments and criminals are not held accountable how can you save your money in any sort of asset class outside of one's possession? I just can't wrap my head around all of the fraudulent criminal schemes that JP Morgan, B of A, Citi, and other financial institutions have been caught red handed in, yet people line up to give their money to these people for safe investing. Unbelievable...this shit will end in tears on both sides of the Pacific.
We tend to project our honesty on others so it is confusing.
Banks are continuing criminal enterprises...that is it!
From a western perspective things look bad, but this is China. They have a public banking system so there is no risk of a liquidity crisis and they don't have the potential for hyperinflation as that requires private bankers acting out of malice before it occurs. So the market drops, life goes on and all the panic about a potential collapse will fade away with time.
"...they don't have the potential for hyperinflation as that requires private bankers acting out of malice before it occurs"
this is a long shot. any evidence that malicious private bankers are necessary for HY to occour? printing too much is usually all that is needed
Yeah, except that the Chinese peasants are invested in real estate as opposed to stocks, and if property prices correct stronly to the downside, a near certainty, then the massive social unrest becomes a reality. Japan better watch it's radioactive ass, because the Chinese leaders are going to be looking for a way to distract the peasants.
owning their own central bank [as well as having trillions of reserves, a huge manufacturing base, and trade surpluses] makes China's situation substantially different from the US - particularly as the FRN loses reserve status, which is inevitable and accelerating.
This doesn't mean they don't have serious problems, but they aren't saddled with a privately owned Fed {overlapping with its largest private banks} or an economy that is bleeding jobs while millions of unlawful immigrants displace the FSA at Walmart and Burger King all while the middle class gets into massive debt graduating from college with a degree in women's studies.
stupid fucking communists - they know how to slaughter their own people and float dead pigs down the river and that's about it.
Corzine could fix this ............
Everyone on Wall Street is focusing on the Alibaba IPO so everything is alright for now.
But "house prices never drop"...Fu Wang said to the people......
And bad chinese news is good today lol. Must be that 5 day Ukraine peace period. 5 days of green until total annihilation.
The US can't empire build, fuck everyone to death at home by keeping them under control, taking guns etc when the one entity that matters is crashing. They have to keep the markets under control at all cost. They are buying, destroying everything with the unlimited money making machine.
I can't wait to see this property tax hike bullshit that the IMF suggests to take hold. The taxes are too fucking high as it is. I can't wait for someone to burn their house down and dump a truckload of ashes on the courthouse steps.
At one time there was a big uprising over property taxes and trying to outlaw them on personal residences, just a couple years ago, it was all over the net and now you can't even find it in the search results without making a real effort. And of course the usual politician response "Oh haha haha ha ha ha haha, what a ridiculous notion! How am I going to pay for my retirement?".
Shoulda fired up the demolition bulldozers long before it came to this.
The "unload it on the bagholders" media says markets are up because of China
http://www.foxbusiness.com/markets/2014/03/17/china-hopes-lift-wall-street/
LMFAO!!!! What a waste of fucking time Bloom, WSJ, FOXB, BI, Seeking Alpha are.
The whole of the Chinese economy is based on people (US & Europe, et al) spending money they don't even have backed by the full-faith and credit of a bankrupt, albeit well oiled, printing press. Good luck!
what would you say the economy of the US is based on, and who is more fucked when the fiat regime collapses under the weight of its own absurdity and debt service?
A true test would be to assess how any given country could do if its borders were closed. I think that China would really take a huge hit given that it's a BIG energy importer and that people have been charged with "growth" for some time. The US, on the other hand, does have resources (though consumption rates dictate how far and how long they'd go), and, the people, by this point (ignore the MSM), are somewhat braced for a next leg down (expectations for growth likely much lower than in China).
Bah.
A little Feng Shui and that will get rid of the ghosts in the system. Chinese have been doing this since forever.
Bernanke used chicken guts and lizard tails and got it all wrong.
Wei Tu Brok will fix things right.
Pile on!
China announces plans to expand citieshttp://www.ledger-enquirer.com/2014/03/16/3007689/china-to-raise-urban-r...