{"id":63,"date":"2021-09-24T12:16:16","date_gmt":"2021-09-24T12:16:16","guid":{"rendered":"https:\/\/cheaperthanguru.com\/blog\/?p=63"},"modified":"2021-09-28T09:17:46","modified_gmt":"2021-09-28T09:17:46","slug":"evergrande-crisis-explained-simply","status":"publish","type":"post","link":"https:\/\/stockcircle.com\/blog\/evergrande-crisis-explained-simply\/","title":{"rendered":"Evergrande Crisis Explained Simply | Will it Cause a Stock Market Crash?"},"content":{"rendered":"

Will the Evergrande Crisis in China Cause another Financial Crisis?<\/strong><\/span><\/h2>\n

One of China’s biggest property developers is in trouble and the company’s called Evergrande. <\/span><\/p>\n

Evergrande is saddled with 300 billion dollars in debt<\/span> and has struggled to make repayments, thus the creditors are circling like vultures.<\/span><\/p>\n

According to Evergrandes official website:<\/a> \u00a0<\/span>Evergrandes name comes from “Ever” for never ceasing existence & “grande” for universal growth. Could this name become an Ironic obituary?<\/strong><\/span><\/span><\/span><\/p>\n

\u00a0Evergrande has over 1,300 real estate projects in more than 280 cities. According to CNBC, China Real Estate makes up approximately 25% of the Chinese economy,\u00a0 thus it’s major deal and a collapse could ripple the world economy.\u00a0<\/span><\/p>\n

Is Evergrande similar to Lehman Brothers?\u00a0<\/strong><\/span><\/h3>\n

The collapse of Lehman brothers in 2008 was a major catalyst which caused the Financial crisis & stock market crash. Lehman filed for bankruptcy with 619 billion dollars in debt.<\/span><\/p>\n

There’s a lot of fear in the market right now because people are seeing this issue with this major property developer in China & drawing Synergies.\u00a0<\/span><\/p>\n

The Good News is Lehman Brothers is VERY DIFFERENT<\/strong><\/span> from Evergrande, there are a few main distinctions:\u00a0<\/span><\/p>\n

    \n
  • Lehman Brothers held financial assets (mortgage-backed securities)<\/span><\/li>\n
  • Lehman Debt at Bankruptcy ($619 Billion)<\/span><\/li>\n
  • Lehman in the US.<\/span><\/li>\n
  • Evergrande in China (Government has vastly more power).<\/span><\/li>\n
  • Evergrande owns real land assets.\u00a0 (Real Estate)<\/strong><\/span><\/li>\n
  • Evergrande Debt ($300 Billion) (half of Lehman)<\/span><\/li>\n<\/ul>\n

    The Mortgage Backed Securities which Lehman held was given to many people on what’s called “ninja loans” no income no job.<\/span> These were wrongly rated by Credit agencies as AAA (investment Grade). More on this in our Section on Michael Burry & the Big Short<\/a>. <\/span>However Evergrande owns real land in China,<\/span> so i do believe Evergrand is more secure than Lehman Brothers.\u00a0<\/span><\/span><\/p>\n