90 Miles From Tyranny

Tuesday, October 17, 2023

The 90 Miles Mystery Box: Episode #2236

You have come across a mystery box. But what is inside?

It could be literally anything from the serene to the horrific,

from the beautiful to the repugnant,

from the mysterious to the familiar.

If you decide to open it, you could be disappointed,

you could be inspired, you could be appalled.

This is not for the faint of heart or the easily offended.

You have been warned.

Visage à trois #1785

Three Videos For Your Viewing Pleasure:

Three Additional Bonus Videos:

Visage à trois #1784

Three Videos For Your Viewing Pleasure:

Three Additional Bonus Videos:

Quick Hits Of Wisdom, Knowledge And Snark #1386

Visage à trois #1783

Three Videos For Your Viewing Pleasure:

Three Additional Bonus Videos:

Quick Hits Of Wisdom, Knowledge And Snark #1386

Short changed: Can China pay the bills?

Hui Ka Yan, chairman of Evergrande Group

Property giant Evergrande boss under house arrest as ‘economic miracle’ turns ‘speculative bubble.’

Amid reports and rumors of starving zoo animals and retirees not being paid their pensions, the chair of financially distressed China Evergrande Group, the world’s most indebted property developer, is now under “residential surveillance.”

Call it house arrest – and as the Chinese property sector loses its mojo some 42,000 local governments are looking for money to pay off creditors.

Evergrande chairman Hui Ka Yan, or Xu Jiayin, is under 24-hour police supervision and can neither leave his home nor receive guests without permission. He was once the richest man in China.

In 2017, Hui Ka Yan had a net worth of US$42.5 billion, surpassing Alibaba founder Jack Ma and Tencent founder Pony Ma.

Much of China’s prosperity – like Hui’s – probably now begs a question mark, and it’s not just the private property giants like Evergrande; it’s the tens of thousands of local governments that have built out and “modernized” China on what may be the speculative property bubble of all time.

The court is out on the extent to which real estate accounts for China’s GDP – 25% to 30% by most reckonings – but the issue, in a new era of massive oversupply and low demand, is where the new equilibrium will settle.

Says Andrew Collier, managing director of Orient Capital Research, “China has to reduce the size of the property industry by about one-third, which is going to cause a lot of pain for homeowners, local governments and some banks.”

Some analysts might describe that as an optimistic assessment.

‘Too big to resolve’

George Magnus, Research Associate at the China Center, Oxford University says that debt is everywhere in the Chinese system, and the extent of it is difficult, if not impossible to evaluate.

“Debts are lurking in public-private partnership projects – [there are] loans that are off balance sheet or off the books completely, and other local government fund raising schemes.”

Anne Stevenson-Yang, founder and research director of J Capital Research describes it as “a very inexact science,” referring to the problem of ascertaining the depth of China’s countrywide debt.

“A government may write a contract with a company to get a loan of, say, 100 million yuan,” Stevenson-Yang says, adding that it might be presented “as a land sale.”

“There's an understanding that the land will be turned back once the money is repaid, but that understanding may not be written down.”

Adds Stevenson-Yang, “I think the problem is just too big to resolve.”

An accurate measure of off-the-books debt would be a tall order, says Dexter Roberts, director of China affairs at the Mansfield Center at the University of Montana and a senior fellow at the Atlantic Council.

“What we do know is that it is very large and growing,” Roberts says.

“Beijing does seem determined to avoid the moral hazard of bailing out local governments. The trouble with that is the indebtedness of local governments has become so severe that it is spilling over and affecting many regular Chinese as well, as is true with elderly who are seeing their pension payments delayed or civil servants who aren’t getting paid on...