Have You Heard of China’s Evergrande? You Sure Will Do.
Evergrande is one of China’s largest real estate development companies. They’re about to default on their bonds. For Real. Fortunately, the Chinese Government is about to step in. If you believe that will work I have some old Lehman Brothers notes to sell you.
Seriously, if you look around and see a bubble in high-rise construction and wonder if there will be enough demand, Evergrande may soon deliver the answer.
There was a saying when the U.S. was the global super-power, “When the U.S. sneezes the world gets a cold”. What will be closer to the truth is “When China’s buildings come tumbling down, the U.S. cranes will follow.”
Like China, every U.S. city is invested with new high-rise development. Build it and they will come. I say we are running out of “they”. The only “they” coming are bankruptcy lawyers.
The only question is when. I shouldn’t say that. I can’t predict the future. Nevertheless…
In China, where are the cheap electric cars, or flying passenger drones, or anything?! — to grow their city high-rise economies? In the U.S., just how many high paid Google, Apple or Amazon jobs are being created to buy up these supposedly desirable hamster-box views?
When did everyone, both in China and the West, start believing everyone would pay $4,000 a month to live in the same sterile box everyone else lives in?
The only difference between the “projects” built for welfare babies, in my youth, and what’s built today is the futuristic look developers concoct with concrete, plastic and glass. When storms hit these buildings it’ll be, “I’ll huff and I’ll puff and I’ll blow this plastic-shit siding back to China” (no offense China).
At the edge of Cambridge, Massachusetts, where I live, they built a bunch of these new developments in Alewife. Zillow must be wrong. Didn’t they hear about the housing shortage? Can this be right?
No worries. As the pandemic recedes, and unemployment benefits run out, those layabouts will be forced to take that help wanted position at the local Panera. Then they’ll rent this.
I can’t wait to see it! Seriously! Even at $20/hr. Let me see. $20 x 40 x 4 = $3,200. Ooops, better start with that 1 bedroom. Guess the homeless will have to pick another restaurant’s dumpster for day-old meals. With no money left after rent, these Panera worker-residents won’t be throwing out those pre-made sandwiches at end of night.
That is the only way I can explain what’s going on. Not only is Alewife far from Harvard, MIT and everything else interesting, it’s almost below sea level. A future rain storm will flood those first floors for all YouTube watchers to enjoy.
Many Chinese cities have already been ruined by floods in 2021, like Zhengzhou.
The Chinese government won’t be able to prevent defaults forever. Eventually, the truth will come out (that the Chinese economy has died from Covid shutdowns).
Eventually Americans will ask, “why didn’t we see this, right before our eyes!?”
Hey, no worries! We fall for it every time. At least this time we’ll have the Chinese to blame. What harm will there be in that?