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What is the financial equivalent of tp?

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Another Possible Contagion Coming Out Of China.

(2024-Jan-31)

A court in Hong Kong has approved the bankruptcy of Evergrande, one of the largest real estate developers in China. One might wonder how is bankruptcy a concept under a communist regime? Well, it technically came out of Hong Kong which is nominally “autonomous”. According to a reliable source (Peter Zeihan) there are two main pathways this can unfold:

1. A western style bankruptcy, where there will be a fire-sale of assets for say 10-cents on the dollar. In a country where citizens cannot exit with their savings, the next best thing is to buy something physical to keep it outside of state owned bank where it is readily confiscated by the regime. Thus ~70% of all savings are tied up with in some sort of real-estate asset. Next thing, there will be massive unrest among the few “middle-class” content with their lives under the regime because of their nest-egg.

OR,

2. The CCP will override HK’s autonomy and annul the Evergrande ruling to stifle the noise. In this case, big and persistent drops in the stock exchange will be a mere token effect compared to (the few remaining) foreign businesses running for the exits with plenty of reason.

Both of these scenarios are bad enough but the kicker is Evergrande is not even the largest developer under strain. That honor goes to another outfit called Country Garden; about 3x larger. And there are many more many of whom are already CCP-owned.

Like the Wuhan virus there have been plenty of indicators of a brewing disaster early on while the rest of the world happily ignored them as it was half-a-world away. Here is an example published on Reuters.com in September-2021.

We can only hope that the tidal wave will be contained within China and its satellite states, but without a doubt we will see some level of contagion in the world’s financial health. However, the extent remains to be seen. But just to be safe, stock-up in the financial equivalent of TP, whatever it might be.