Daily Price Movement / General Discussion, page-29721

Soz, your comment wasn't given to me as a notification.

Yeah fair enough. I think the CCP will bail them out also. The general consensus is that they'll split up the current projects of the company and divy them up amongst the other construction companies.

Apparently this could lead to an oversupply issue and still cause a Chinese real estate market crash and obviously destroy some commodity prices during it.

That's a slow burn issue though ^

If Evergrande truly went under without help, then the effects would be reflected in the market almost instantaneously. Although not fully, because the magnitude of any side effect bankruptcies wouldn't yet be known.

I'm not sure just how many Chinese companies would go tits over arse, but this would be the greatest threat in recent history to the stability of their already extremely shakey bond market.

That's a $2T market I think from memory. Some US banks could be seriously hurt. Thereby threatening the US corporate bonds also.

That, combined with a global recession from China's economic implosion (however slight) could potentially see many companies around the world defaulting on their repayments considering the amount of bonds teetering on being re-rated from high risk investment grade over to junk bonds.

Fed still can't touch the rates in a situation like that obviously. However, it won't matter. The ratings of the bonds will still be downgraded regardless of interest rates in the event other companies within their sector start failing to make repayments. The issue will be no one spending their money. Rates won't be a factor.

None of this is a secret though. It's got it's own Wikipedia page. Google "corporate debt bubble".

It basically says a recession half as bad as the 2008 one could send the world off the edge haha