This is really scary. These are big numbers that may affect the entire world.
Hong Kong real estate holding company in China, Evergrande, is in dire straights. This company has $300 billion in debt and it is unable to make its payments. [After living in Hong Kong the past decade, my hunch is that Evergrande is not the only company unable to make debt payments on real estate in China.]
A couple of days ago we warned that Evergrande is preparing for bankruptcy.
The problem is Evergrande is five times the size of Lehman Brothers, made famous in the 2008 crash in the US. On September 7, Zerohedge shared:
With algos busy chasing upward momentum in futures and global stocks, the biggest – if largely ignored story – remain the ongoing collapse of “China’s Lehman“, the $300+ billion China Evergrande, where following our earlier reports (see below) that a bank run emerged among creditors of the biggest and most indebted Chinese developer as its bonds were no longer eligible collateral in the repo market after a ratings downgrade, on Monday the rout went from bad to catastrophic as various Evergrande bonds crashed amid a liquidation frenzy, prompting China’s stock exchanges to halt trade.
The Shanghai Stock Exchange said in a statement that it had temporarily suspended trading in China Evergrande Group’s 6.98% July 2022 corporate bond following “abnormal fluctuations.” The exchange had also suspended trading in the bond on Friday. Tether commercial paper could be Chinese and it is one of the largest commercial paper traders in existance.
[Personal comment – there are numerous billionaires in Hong Kong and many, if not all, are in Chinese real estate. They may have been encouraged to do so. If these companies have problems similar to Evergrande, this could be a very big problem.]
This really could make 2008 in the US look like nothing. Hold tight.