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Wonder if the Chinese government will bail out Evergrande or if they lets them crash first to prove no onw is bigger than the state?
President Xi Jinping had also run out of patience with the excesses of the property sector, say observers, and Beijing formulated “three red lines” to reduce debt levels in the sector. Evergrande is proving to be the first big victim.
Specifically, it says that the ratio of liabilities to assets must be below 70 per cent, the ratio of net debt to equity must be below 100 per cent and the ratio of cash to short-term debt must be at least 100 per cent. In June, Evergrande was failing on all three metrics and was therefore forbidden from raising additional debt — triggering its current crisis. ‘Common prosperity’ If it is true that Beijing is the main cause of Evergrande’s predicament, then it stands to reason that it can end the current market meltdown by taking its foot off the property sector’s throat.
But deep structural forces in the economy have convinced China’s policymakers that property can no longer be a reliable dynamo for sustainable economic growth, analysts say. This is not only because of Xi’s famous phrase that “houses are for living in, not for speculation,” made in a 2017 speech. For one thing, the demand picture has changed utterly from when Beijing pushed through free market reforms in the late 1990s that touched off the biggest real estate boom in human history.
The House of Representatives voted Tuesday night to pass a continuing resolution to fund the government through Dec. 3 and raise the $28 trillion debt ceiling.
H.R. 5305, which passed in a party-line vote of 220-211, will need the support of at least 10 Republicans to pass in the Senate.
Citing opposition to President Joe Biden's agenda, nearly every Republican in the Senate has expressed opposition to tying the debt ceiling into the bill that funds the government. The federal government faces a looming shutdown on Oct. 1 if Congress cannot reach a consensus by the Sept. 30 deadline.
The government is also slated to hit the debt ceiling by mid-October, which Treasury Secretary Janet Yellen wrote in a recent Wall Street Journal op-ed could lead to "economic catastrophe."
as much as I want this to be the start of the bleed, its not yet the start of anything, markets will recover from this blip
Perhaps a very temporary recovery? Yes, naturally, that is how the markets work.
The US is in the biggest trouble they have ever faced. Yellen recently announced that if the debt ceiling is not suspended, the US will default on their debt. The markets already reacted badly to this announcement and is an indication of the outflows that will occur if they do increase the debt ceiling.
And then you have the inflation ripping the country apart at this point in time. A threat of a possible government shutdown. A government wanting to spend trillions more, which they do not have to spend. Threats by government of taxing the rich and businesses, ignoring the effects it would have on the middle-class and the poor.
Basically, any decision they make now will have a serious impact on their markets and a big decline is inevitable. This is already the consesus of many economists and investors alike. Now is not a good time to be invested in US markets at all, unless you are shorting them all.
as long as the FED holds interest rates low and doesn't change its QE stance (no tapering) everything is going to go up
I would love for things to go down, since I'm positioned for a collapse, but its not going to happen until the FED changes its position
and the effect of inflation is a rise in prices, thus prices will continue to rise, including market prices