China's Mortgage Crisis, Banks are Failing, Protests Everywhere. China's financial crisis is Here...

in 1989 the ccp did something that shocked the entire world [Music] china's democracy protests were threatening the ccp's rule it made them scared so scared that the ccp decided to launch an attack against its own citizens to silence the protests in the process thousands of innocent chinese students were killed and thousands more were wounded in the last few weeks something similar has been happening in china that is scaring the ccp [Music] chinese citizens across the country took to social media to do something that has never been done before thousands of would-be homeowners pushed for a movement to stop paying mortgages on their homes in an attempt to put pressure on the ccp and banks to treat them fairly protests broke out in multiple cities and the crusade seems to be gaining more and more momentum each day the ccp is so worried that it has already sent out tanks to maintain stability [Music] for the first time in more than 30 years the ccp is fearing for its existence and it all has to do with china's real estate bubble according to one expert the ccp sees this situation as a political protest not a banking crisis government officials are extremely fearful about how this might turn out but one country could already be facing a recession and that is china a massive protest over frozen bank deposits hundreds gathered in zhengzhou tens of thousands of them have begun withholding payments demanding compensation before long thousands of security personnel appeared accusing the local police of using violence against them they'd rush over by the hundreds grab somebody and beat them and kick them regardless of whether it was men women the elderly or children even people with disabilities big chinese banks are at risk over nine trillion dollars in loans are a danger of defaults and if the situation gets any worse this could foretell the collapse of china and the ccp this mortgage crisis isn't the only crisis the ccp is dealing with as covered in my previous videos zero covet policies and bank deposit scams in hanan pose a big risk to china's fragile economy too but this mortgage situation is by far the biggest threat as it affects trillions of dollars involves some of the most important industries like banking and real estate and influences millions of households in the country according to a well-respected expert this mortgage crisis could be a hundred times worse than the 2008 financial crisis so to keep the news under wraps the ccp sensors are working overtime to censor any articles and videos that spread the truth now i have my suspicions that the ccp's bots have always been disliking my china videos in order to suppress it in the algorithm so if you guys can just take a quick second of your time and tap that like button below it helps me out a lot with the youtube algorithm especially when covering topics that are critical of the ccp even though the protest started in july the problems have been brewing for china's real estate market for decades so before jumping into how these protests are threatening the ccp's rule let's first go over how the chinese economy got to where it is now [Music] here in uncle sam's america it's considered to be an important part of the american dream to own a home but slowly it's getting less popular among newer generations to do so because well it's not very affordable china on the other hand is different the importance of owning a house has only gone up in the past couple of decades real estate is one of the asset classes that the public trusts more than anything and real estate ownership has been a very important cultural significance to the chinese people families use real estate as a way to plan for their retirement guys with real estate are considered attractive choices for marriage and the amount of real estate you own is directly related to your social status in society considering all this you can see why real estate prices have continued rising over time if you want to learn more about the cultural and economic significance of real estate in china polymatter has a great video on this which i will link below there's a high demand for real estate because of all these factors and coupled with incredible price rises in the past you can see why everyone and their mother wants to buy a home kind of reminds me of the 2008 u.s housing market where everyone wants to buy real estate because real estate prices are only going up the rush to buy houses was so huge that the developers were selling out complexes before even breaking ground for construction however even after construction finished apartments just sat there empty because they had owners but no habitants demand was high because everyone wants to buy their second or third home to get rich on the real estate boom so supply increased drastically to match the demand but a lot of these homes were just sitting empty as owners were only buying these homes in hopes of price appreciation because other asset sectors weren't as accessible and developed real estate was the only thing people invested in based on one data set chinese families had around 70 of their wealth in real estate yes you heard that right 70 percent they're not much for diversification oh just imagine if something happened to the real estate market all right i think i'm laying on the foreshadowing a little too thick the collapse of chinese property giant evergrand unfolds shares in the highly indebted company have fallen 80 percent this year and 15 towers unfinished for seven years the developer bankrupts these towers were recently brought down in shanghai after 20 years of stalled construction [Music] evergrande took full advantage of this boom in china's real estate market and became one of the largest developers in the country at one point in 2018 they were actually the biggest real estate company in asia when people look at something that big well they kind of just assume it's all legitimate oftentimes though that's not really the case i hope you guys learned that lesson after the 2008 crisis if anyone had looked under the hood they would have realized that some of the practices happening at evergrand were far from appropriate now due to the sheer scale of the company a lot of practices were quite complicated but here's my attempt at trying to simplify this remember earlier how i mentioned that fomo into real estate was so bad the people were buying houses before construction even began usually a company like evergrand would lease a piece of land from the local government then they would turn around and sell the houses that are supposed to be built there and receive full payment for the houses before even breaking ground companies would never have any issue selling out as the demand for real estate was so high people were more than happy to take out mortgages and buy houses just in hopes of owning real estate someday in the future now the big problem that starts here is that companies like evergrand wouldn't usually use the money from the sale to start construction no instead they would use the money as down payment to buy even more land so they can sell even more apartments for the future now this is already a huge problem this should not have been allowed in the first place any unbiased person can look at the system and figure out that this isn't gonna last this is exactly the job of the ccp but they passed on this responsibility to the local governments and this is where another problem lies local governments were directly benefiting from these real estate pyramid schemes that companies like evergrand had going on you see in china one of the big ways local governments make money is by leasing land to developers like evergrand this meant that the more risk these property developers took on the higher the bids on this land that the government was leasing out around 50 percent of local government's revenue was coming from leasing out land the same government that should be protecting its citizens from these risky practices is benefiting heavily from these so-called risky practices this is a prime example of perverse incentives we don't even need to get into the corruption that goes on around these land leases this was one of the main reasons why china's real estate bubble has gotten so big regulators were always slow to step in because it was directly benefiting them the ccp saw where things were heading and tried to get things under control by implementing the three red line policies for property developers but it was a little too late the debt burden continues to weigh on china's evergreen group as its angry suppliers are protesting the developer's unpaid bills while its bondholders patience has dissipated the shady practices don't just stop there either evergrande would list these houses as assets under their balance sheet to get more loans from the banks so they can finish construction these houses were already sold to other people so no matter what accounting magic you use these can't be considered assets of evergrand the worst part is that evergrand wasn't the only one pulling these shady tricks almost every real estate company in china was operating this way the whole sector was over leveraged to the teeth just like a ponzi scheme the only way to continue forever is if you continue growing forever but you can't keep growing if people lose trust in evergren's ability to stay solvent and i'm sure you guessed it by now that's exactly what happened once the company misses one payment chaos ensues early last year one of evergrand's subsidiary companies failed to make a payment on its loans and people started looking deeper into its financials this is when the house of cards started crumbling and the news about contagions spread across the world the debt burden continues to weigh on china's evergreen group china's top real estate developer evergrand is reeling under a financial crunch meanwhile in china the debt crisis at evergrand is only snowballing there's so many questions surrounding evergreen in a notice circulating on social media the suppliers have demanded payment from evergrand evergrass evergreen ever ground evergrown as evergrand's debt crisis deepens small business owners and people waiting for homes to be completed are starting to despair these investors were loaded with various promises to demand a developer to give them their money back the protest made authorities nervous when the news got out that evergrand could default on 300 billion dollars worth of loans panic spread throughout the economy people also realize that this problem isn't limited to evergrand the whole real estate sector is over leveraged and it's starting to crumble chinese developers owed around 5.3 trillion dollars in debt when the ccp realized just how big the problem was they decided to step in and soften the blow back in 2021 ever since then evergrande and other real estate developers have been chugging along slowly with the help of the ccp and by slowly i mean like a snail's pace construction of buildings sold in 2019 are still not done all the funds from new sales are basically going towards paying off companies liabilities instead of actually finishing up projects this is just one example of unfinished projects that had to be demolished because of problems from the delay in construction [Music] whenever owners of these houses would ask about construction delays they were just met with excuse after excuse slowly things just got to be too much some of these citizens had their whole life savings invested in these unfinished projects and they just couldn't take it anymore so on july 1st all of the home buyers from a project in central china published a letter saying that they would stop paying their mortgage payments to the bank unless the construction restarts now a project usually includes thousands of houses and are worth upwards of hundreds of millions of dollars but at the end of the day it was just one project in a nation of 1.6 billion people so it wasn't that big of a deal but it didn't stop at just that one project by the same evening home buyers from another such project had announced the same mortgage boycott and the movement started to spread across the nation by july 12th 100 projects had joined the boycott and as of the writing of this script over 300 projects across china are boycotting mortgage payments until construction resumes tens of thousands of people have willingly defaulted on their mortgages in hopes of getting the government's attention people have also taken to the street to protest these construction delays currently these 300 projects represent more than a hundred billion dollars of debt that china's big banks are holding when you factor in that some major developers also defaulted last year on their debt this is not a good sign for china's banking institutions what's even more concerning for banks and the government is not just 100 billion dollars in possible default but the growing number of people who are joining in on the boycott the ccp has already ordered banks and news organizations to stop publishing reports about mortgage boycotts party officials are doing everything they can to kill this news these boycotts represent an existential crisis for chinese banks a crisis that has a potential to be a hundred times worse than what american banks faced in 2008 one of the big differences between 2008 and the current situation in china is that the majority of these loans are collateralized by houses that are not yet built so banks can't just repossess the house when someone defaults and cuts their losses banks are being forced to eat these losses and if the defaults keep growing there's a chance that big banks might fold one of the big four state banks and china has already limited people's withdrawals i'm sure most of you already know how the modern banking system works but here's a quick overview for everyone else banks usually loan the money that depositors deposit and hope to earn interest on it to make a profit usually the reserve requirement is set by the central banks let's say that it's ten percent that means that whenever banks get a hundred dollars in deposits they are only required to keep ten dollars in the vault and they can loan out ninety dollars and charge interest on it so this is just a very simplified example but these types of transactions happen millions of times over and over again in an economy and that's basically how the modern banking system works for every 100 in deposits banks are able to create about a thousand dollars of money in circulation now this system is pretty great in the past century a lot of economic growth is in part thanks to this fractional reserve banking but the only way this system works is if depositors have trust in the bank's ability to keep their money safe now if too many of these loans that banks are giving out become worthless then that trust starts to erode this is why the usa enacted strict lending regulations after the 2008 crisis so banks are careful with who they lend to now as more and more home buyers are defaulting on their loans chinese banks are also at risk of losing the trust of the depositors putting limits on the withdrawals definitely does not help with building that trust if too many people start pulling out their deposits from the banks then a bank run happens and banks collapse because of it this is where the big headache lies for the ccp the chinese economy is heavily reliant on its financial sector and the real estate sector real estate represents around 30 percent of china's gdp while seven out of the top 10 companies in china are financial institutions this is why as the news about these boycotts spread the ccp held an emergency meeting with the banks to discuss the rising risk of these defaults to help the struggling developers the ccp is considering injecting more than a trillion dollars into real estate companies so that they can finish off construction with these projects remember last year when the evergrand news came out the ccp was strictly against bailing out failing companies as they didn't want to promote risky business behavior in china but now that they're realizing that this has the potential to tank the government ccp officials are changing their tone when it comes to bailouts the ccp has also stepped up the censoring around this topic in hopes of stopping more people from joining the boycotts and protests as mentioned earlier the ccp sees this situation as a political protest not a banking crisis government officials are extremely fearful about how this might turn out i'm guessing they will do anything in their power to suppress any news around this topic usually my china videos are heavily disliked by chinese bots to hurt them in the youtube algorithm so again if you guys can take a second to scroll down and hit that like button it means the world to me as these videos they take a lot of time to make currently we don't have that much info as to what the ccp plans to do as the news is still developing but as soon as i have more info i will have a video out asap [Music] so youtube has age restricted and demonetized our last video because we're covering the chinese protests but you know youtube is basically saying that if we continue doing this we could get the channel deleted luckily i think i have a good workaround so i'm not gonna stop covering these protests basically the solution is that a lot of the clips will be blurred out so you guys are still getting the content but i won't be able to show all the clips if you do want to see uncensored videos you can just sign up to be a member which supports the channel and these videos will be available to all the members unblurred and it won't put my channel in harm's way as these videos won't be public i just want to clarify that my goal is not to squeeze money out of my audience but i mean since these videos are getting restricted and demonetized youtube membership is kind of the only way for me to recoup some of that revenue anyway hopefully you guys understand my side of the story if you do have any questions just comment down below and i'll try my best to reply to everyone if you guys haven't watched the previous video about how government officials stole 6 billion from chinese citizens click the screen here to learn about that it is definitely worth your time [Music]

Channel: Business Basics

Views: 5,254,650

Keywords: Investing, Investments, Finance, Wall Street, ETF, Stock Market, Warren Buffett, Economy, Long Term, Bonds, Bitcoin, Portfolio, big tech hearing, tech ceo hearing, amazon, google, facebook, jeff bezos, mark zuckerberg, antitrust, antitrust hearing, tech hearing today, antitrust hearing today, reuters, live video, tech hearing live, Sundar Pichai, reuters news, news, live news, apple, tim cook, big tech, trump, biden

Id: YBBnQmRcRI4

Length: 20min 35sec (1235 seconds)

Published: Thu Jul 28 2022

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[u/Superstonk_QV]

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[u/sirstonksabit]

We've been taking about the things in this video for the past year. You can't get past me, I'm stuck in the future!

[u/OhhKBoomer]

Pretty incredible video that discusses what Superstonk has been talking about for a while. Sounds like the narrator might have gotten some of his DD from here.

[u/PureCiasad]

Good video

[u/csdyayouknowme]

it is amazing the power those on top have to suppress news and information. We knew this a year ago and it still hasn't become main stream news yet.

[u/Maniquoone]

Sounds like China needs a wag the dog moment.

Ring ring, San Fran Nan, you no come to Taiwan or we get soooo angry.

Operation Taiwan invasion also known as Ponzi Scheme Cover Up 2000.0, engage.

[u/DarthBooooom]

If China needs a new currency they might want to approve this sexy patent: https://patents.google.com/patent/CN113298508A/en?q=zkrollup&oq=zkrollup

[u/Ascot64]

You can’t take tanks and run over innocent people and get away with it. Would love to see the CCP get what they deserve. Taiwan is the real China.