An Evergrande Moment?

What You Need to Know about Evergrande

This isn’t rocket science:

1. First, we have a cultural issue.  The Chinese are gamblers who love to speculate.  They can also be greedy.  Property development is to them — as it is to many — like HEROIN.  Extremely hard to manage short of addiction.
2. As the piece points out, 25% of China’s GDP is property related.  It’s been one of their main engines in wealth production.  Trouble is, property is often valued at more than it’s worth.  So, it can crash and often does.
3. Will Evergrande crash the Chinese and global economies?  It’s possible, but my sense is that China will BAIL IT OUT, so as to avoid a potential economic catastrophe.  We’ll see.
4. What this all shows is that China’s economic foundation is not so sound as many believe.  China lives in the same world as the rest of us, and it’s people are just as fragile and corruptible.  In some ways, more so.

This may get worse before it gets better.