saw an NUMBER_TOKEN drop in a single shanghai-based developer on the hong kong exchange yesterday before trading was paused the entire exchange is kind of in chaos as there's other real estate companies all across china which are beginning to go in free fall and it actually has a lot of connections to our own housing crisis in terms of when you have NUMBER_TOKEN of the economy built up into a single sector then you allow all of this debt in order to spiral on top of each other which is built only on the premise that the value goes up hence the stonks ticker because these stunts go up it's like well as long as it goes up we're good but oh the moment that it goes down a little bit and some of our debt obligations comes into clear view then it's a total disaster it's a big it's a big big moment for xi jinping because look the ccp what they care most about other than making themselves rich is actual legitimacy amongst the chinese people and if chinese people million or so in the so-called you know socialism with chinese characteristics lose their houses that's maybe an expectation here in the united states that's a central guarantee guarantee of the ccp if they lose that massive social unrest within china and you can see how the questions here are not clear-cut because on the one hand as you said what allowed this whole scheme to continue was prices going up and up and up some of it artificially so and so as long as that was continuing basically the music didn't stop right on the other hand prices going up and up and up means that young people who want to buy in and start their own middle class chinese dream are increasingly unable to do that which is why xi jinping in part put into place these three red lines and trying to reel things in and kind of take the foot off the gas pedal so that they could balance in affordability with you know hopefully not having housing prices fall off a cliff too much of course they've also got a demographic issue which just means that demand is not as much as it used to be so um these are thorny questions that they have to deal with right now so look i think still probably what is most likely to happen is they're going to suck it up and they're going to bail them out most likely that is most likely the case because the risk here is so high because you are talking about look you're talking about NUMBER_TOKEN NUMBER_TOKEN employees talking about innumerable contractors that's reportedly some of the people who've been storming the headquarters of these contractors who are like we're not getting paid there are employees not getting paid you're talking about NUMBER_TOKEN different cities that are enmeshed and intertwined with evergrand you're talking about all these different financial institutions i think i saw it was like NUMBER_TOKEN domestic banks and NUMBER_TOKEN other financial firms that evergrande owes money to that's not going to be able to make their interest payments to a lot of those banks so it's just such a gigantic risk and so intertwined throughout the chinese and ultimately global economy that's why you would still probably bet on them just saying eh well i guess it is too big to fail and i guess we are just going to continue to have that moral hazard but it is
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