[bohadi]

The 200$ billion hole in CN real estate is comparable in size to the SVB signature US banking crisis. In that case US treasury policy was a bailout for uninsured depositors who are wealthy supporters of the ruling blue party.

Most of the underwater property developers are wealthy patrons of the ruling red party in China and will ultimately receive similar government bailouts. Privatized gains and socialized losses it's the same movie everywhere.

But this is just theatre, on the order of 1 trillion disappearing in smoke is not going to sink the ship of any nation with 100 trillion in wealth assets.

edit: I should say this money doesn't really disappear in smoke, it's bourne on the backs of mostly middle classes amortization over the period of decades in hidden inflation taxes and marginal lower living standards.

[worrycue]

This isn't their only problem though. Local Government Financing Vehicles are also having trouble servicing their debts - the only way they make money is leasing out land but the real estate sector had imploded. One of their biggest lenders, Zhongrong International Trust Co. also just failed to make payments.

Their economy seem to be swimming in bad debt.

[bohadi]

local and provicial governments really dont matter. they do their best to support and bid projects for national champions and siting direct foreign investments where competitive. the areas which outperform (do least bad) have their executive talent siphoned to the central government. as FDI has dried up in the global slowdown restructuring and local reforms are due. one idea is to heavily lean on consumption which is palatable to some. i dont see that the chinese (or the japanese) feel that is a tenable path however

[worrycue]

> local and provicial governments really dont matter.

Local governments are broke though and their LGFVs owe people a lot of money and can't pay.

The central government I believe is bailing them out - handing out longer term loans to kick the can down the road. It's still a strain on their financial resources.

[0xDEF]

>In that case US treasury policy was a bailout for uninsured depositors who are wealthy supporters of the ruling blue party.

I really doubt that David Sachs, Peter Thiel, and other wealthy right-libertarian VC bros support the "blue party".

[bohadi]

ah yes, SV the rightwing stronghold

whats the practical influence of the libertarian in such environment? rules-for-thee; and looting

[namaria]

The whole financial and taxation systems are engineered to reward owners of wealth and discipline laborers. The outcomes are pre-defined. I thought this was pretty well understood.

[kasey_junk]

Why would Chinese Communist party members bail out USD denominated bond holders when they didn’t bail out Yuan denominated bond holders in 2021?

[bohadi]

where do you see the onshore forex market moving? merits investigation though

[KirillPanov]

It's not until the tide goes out that you see who was swimming naked.

[gumballindie]

Corporate socialism is much like communism. Both have in common a ruling caste that benefits from exploting the masses. Which is why we need something better than communism or capitalism. I am curious as to why we seem to have stalled political innovation. Are we stuck with variations of these concepts for the next couple milenia?

[bohadi]

history is over!

[gumballindie]

It's not over but it certainly slowed down. If you think it hasn't can you point out any meaningful innovation? Other than leveraging llms to improve last century tactics and ideologies?

[bohadi]

For sure political innovation is a terribly slow process. I don't believe leveraging LLMs will have a direct observable effect on that until civilization <> AI digests for little while longer. Yes we could certainly discuss AI governance (governance by AI)

There are two other areas you would seem to point at. Firstly other technological innovation will have momentous effects, I will not name the buzzwords but you easily know from what by excluding AI/LLM. The second and far more interesting is what I will call political innovation which is orthogonal to technological development, which is totally driven by changes in consciousness. I think that often looks like a stepfunction, because I hardly see the needle moving there outside the generation-to-generation cultural noise.