Bankless China's Crypto Ban... Why Now? | Sahil Bloom (SotN 9/28)
Sep 29, 2021
Sahil Bloom, a writer and macroeconomics expert known for his insights on the Evergrande crisis, dives into the chaotic world of global finance. He unpacks the staggering consequences of the Evergrande debt debacle and its ripple effects on the Chinese economy. The discussion also tackles China's recent cryptocurrency ban, examining its motivations and the potential innovation it could spur in the U.S. amidst rising geopolitical tensions. Can crypto emerge stronger, or will it be suffocated by regulations?
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Evergrande's Debt Crisis
- Evergrande, a Chinese property developer, over-leveraged itself with $100B in debt.
- The company now faces a crisis, impacting Chinese consumers and the global economy.
Systemic Risk of Evergrande
- Evergrande's debt is smaller than the 2008 financial crisis, but it's still significant for China.
- Their leveraging and dividend payouts create a moral hazard, risking consumer trust.
China's Dilemma
- China faces a dilemma: bailing out Evergrande condones excess, but not doing so hurts consumers.
- The government must balance stability with accountability for risky behavior.