Thread by @GRDecter

Evergrande is NOT 2008.

Time for a thread 👇

1. Not interconnected to the global financial system:

- Debts are mainly owed to Chinese companies.
- Didn't happen overnight, problems started last year when the pandemic slowed down sales.
- Anyone that still owns their debt may need to find another job.

2. No blowout financial crunch:

- TED spread FINE
- TED spread is difference between the interest rate on short-term U.S. government debt & the interest rate on interbank loans.
- In 2008, the TED spread exceeded +300 bps, breaking previous record set after the crash of 1987.

3. Not too big to fail:

- Evergrande has $19B in international debt
- US Federal Reserve buys $120B in bonds EVERY MONTH

Credit: @bullandbaird

4. Not without a plan:

- Evergrande has hired financial advisors & is moving to debt restructuring
- Chinese government wants to stop home prices from surging
- Speculation is govt. will let it fail BUT find way to protect people who have paid for unfinished apartments

4. Not without a plan (cont):

- Evergrande is estimated to have presold +1.4MM apartments valued at $200 billion
- Chinese government would get other developers to take over the unfinished apartments

5. Having said that...

Lord give me the strength of investors buying Evergrande stock at $2 which looks like it’s going to zero.