Is Evergrande Defaulting? Is This The Reason For China’s War Against Bitcoin?
September 16 2021 - 01:43AM
NEWSBTC
The biggest property developer in China, Evergrande, seems to be on
the verge of collapse. They apparently owe $300B. Is bankruptcy on
the table? There’s a better question, though. Is Evergrande the
only company in the sector with these kinds of debts? Or is
Evergrande just a symptom of a widespread disease? Also, how does
this relate to Bitcoin? Do we present a valid case in the following
article? Is this “China’s Lehman moment,” as the pseudonymous
Bitcoin analyst suggests? Related Reading | New To Bitcoin? Learn
To Trade Crypto With The NewsBTC Trading Course What we know for
sure is that “China’s major banks have been notified by the housing
authority that Evergrande Group won’t be able to pay loan interest
due Sept. 20,“ according to Reuters. Plan B’s comment sets the
tone, and the video shows the intensity of the situation: China's
Lehman moment. The money printing will be massive, I repeat
MASSIVE! This is good for #bitcoin https://t.co/lAdSMhnk3L — PlanB
(@100trillionUSD) September 15, 2021 Check yesterday’s date. Well,
on September 15th, 2008, Lehman Brothers filed for bankruptcy.
Let’s quote Investopedia for a quick recapitulation. “At the time
of its collapse, Lehman was the fourth-largest investment bank in
the United States with 25,000 employees worldwide. It had $639
billion in assets and $613 billion in liabilities. The bank became
a symbol of the excesses of the 2007-08 Financial Crisis, engulfed
by the subprime meltdown that swept through financial markets and
cost an estimated $10 trillion in lost economic output.” Is China
living through a similar situation right this minute? How Did China
Evergrande Get Here? A few days ago, on September 13th, the South
China Morning Post seemed cautiously optimistic about the
situation. They explained the root of the issue:
“Reports about missed payments to contractors, attempts to
reschedule payments on wealth management products, and failure to
sell assets have prompted Chinese regulators and the central bank
to intervene to prevent a shock to the financial system.” At the
time, the big news was that they hired “Houlihan Lokey and Hong
Kong-based investment bank Admiralty Harbour Capital to assess its
capital structure, evaluate the liquidity and explore ways to ease
its current liquidity crunch.” And you know what that meant:
“Hiring such financial advisers means Evergrande has come to a
serious stage of listing what it owns, what it owes and what are
the best plans” to extricate itself, said Lung Siu-fung, an analyst
with CCB International. The writing was on the wall.
Evergrande price chart on HKEX | Source: 3333 on TradingView.com
Where Are We Now? Is China Really In Trouble? Apparently, China
Evergrande was caught in a loop. The company was pre-selling
apartments and using that money to fund other projects, in which
they also pre-sold the apartments and the cycle started again.
Evergrande bonds are suspended, and there’s a chance they won’t be
active ever again. They might be worthless. The stock is near its
all-time low, it has lost nearly 80% of its value this year.
Completing the story, CNBC informs: “The company warned investors
twice in as many weeks that it could default. On Tuesday,
Evergrande said it’s at risk of a cross default, which means such
risks could spill into other related sectors. Evergrande said
Tuesday its property sales would continue to deteriorate
significantly this month, adding to its severe cash flow problems.”
Is there a possibility that Evergrande’s problems are the symptom
of a widespread disease? That’s the $1M question. Is China’s real
state sector really in trouble? For that answer, we have to go to
ZeroHedge’s report: “Country Garden, the nation’s largest developer
by sales, plunged 16% in the past two days, while Gemdale slumped
12% as a gauge of property shares in Shanghai tumbled almost
5% in the period, with valuations firmly below book value.
Following the news, Guangzhou R&F Properties drops 10.8% to the
lowest since Dec. 2008 while Greentown China -9.1%. At this point,
one can safely call it a crisis.” How Does Evergrande Relate To
Bitcoin? China’s Bitcoin policy doesn’t make sense. Regulating
themselves out of the leadership position in the most important
industry of our times is beyond comprehension. There has to be
something else going on. We at NewsBTC have been on the case. We
explored the Digital Yuan CBDC angle. We looked at ads selling
small hydropower stations. We discovered China’s dominance over the
Bitcoin hashrate was waning before the ban. And we detailed the
so-called new “China Model.” The guaranteed outcome of
fractional reserve banking: Impairment of promises. It's just a
matter of when and at what magnitude. The impairment of credit will
cascade to other balance sheets unless central planners debase the
currency via QE, UBI, and/or debt forgiveness. BRRRRR — Preston
Pysh (@PrestonPysh) September 15, 2021 Under Plan B’s original
tweet, two comments attract attention. Investor and podcaster
Preston Pysh feels that the situation is “The guaranteed outcome of
fractional reserve banking: Impairment of promises. It’s just a
matter of when and at what magnitude.” And the person behind
Documenting Bitcoin goes conspiratorial and says, “They knew this
was coming. Perhaps this is why they “banned” bitcoin.” That, as
you might imagine, opens a huge can of worms. Related Reading |
Since China’s Mining Ban, Bitcoin Hashrate Has Recovered by 68% And
Counting Full of confidence, Plan B responds, “Yes, and they closed
the exits, typical they always do that.” Bad for the people in
China but, in general, bullish for Bitcoin. To recap: the
government saw this coming from a distance. They knew the crisis
was going to repeatedly hit the country and banned Bitcoin mining
to scare the population into not buying the hardest asset ever
created. Bitcoin, the true hedge against the collapse of every
economy. In any case, the Chinese government will probably try to
print its way out of this one. And somehow it’s going to use this
crisis to unveil their Digital Yuan CBDC. Does the theory sound
coherent to you? Or is there even more to this story? Featured
Image by Li Yang on Unsplash - Charts by TradingView
Bitcoin (COIN:BTCUSD)
Historical Stock Chart
From Feb 2024 to Mar 2024
Bitcoin (COIN:BTCUSD)
Historical Stock Chart
From Mar 2023 to Mar 2024