- 12 Oct 2021 20:35
#15194182
If China bailouts Evergrande, then they have the resources to pay back any investors. If they don't, then Evergrande goes bust and the investors lose out.
The Chinese housing market issue is actually separate to Evergrande though. The Chinese have been manipulating the market in order for the price of homes to remain stable for a while now given investment in property has dried up. Like property and anything really, something is only worth as much as someone else is willing to pay for it. So they might keep this system in place. Or they might let it crash. But if they let it crash, people might default on mortgage payments which might effect Chinese banks very much like in 2008. So my instinct is they will retain manipulating the market. As long as those with property believe someone will come along and pay the price or more for it, the bubble can't burst.
wat0n wrote:Both.
If China bailouts Evergrande, then they have the resources to pay back any investors. If they don't, then Evergrande goes bust and the investors lose out.
The Chinese housing market issue is actually separate to Evergrande though. The Chinese have been manipulating the market in order for the price of homes to remain stable for a while now given investment in property has dried up. Like property and anything really, something is only worth as much as someone else is willing to pay for it. So they might keep this system in place. Or they might let it crash. But if they let it crash, people might default on mortgage payments which might effect Chinese banks very much like in 2008. So my instinct is they will retain manipulating the market. As long as those with property believe someone will come along and pay the price or more for it, the bubble can't burst.