The biggest thing that stood out to me was the mismatch between revenue and spending at different levels of government. 90% of spending with only 50% of tax revenue for regional government compared to 10% spending with 50% for the central government. I suppose that's the mechanism they're using to centrally manage the economy, by controlling fund transfers to lower levels of government?
Including personal debt and corporate debt, this will also put China above 300% net debt to GDP. That seems really high, but I couldn't easily find equivalent values for other countries to compare against. Canada has 100% consumer debt to GDP, 107% government debt to GDP, and corporate debt of $2 trillion / $3 trillion GDP is about 67%. (And I think Canada is considered over-leveraged compared to peer countries).
I suppose that's the mechanism they're using to centrally manage the economy, by controlling fund transfers to lower levels of government.
I would agree with this view. The local governments are responsible for the majority of spendings (including pensions, health care), but they can barely raise funds themselves.
The central government has already said that the new debt will be forwarded to the local government, and that it will be 'off-budget', meaning the money goes to LGFVs. The future will tell us how this ends up, but the risks are high imo given the country's debt burden is so much higher than in most other countries as you suggested.
You can't make such a decision based on simple financial calculations, not in the least as there is no way to make reasonable predictions in our current market environments. Ask any investment advisor, and they will tell you to buy your home if you can afford it.
This is off-topic: Why is the NYT accessing the camera when going to the linked article?
NY times again telling people it’s better to own nothing.
“Save” 133k over 10 years, but throw all the rest of your housing money directly down the toilet. Can’t sell a rented apartment when you no longer need it, so even if the house doesn’t appreciate, you still come out far ahead with buying in most situations.
Plus you never stop paying for rent, but eventually you stop paying the mortgage.
It's definitely different for every person, and situationally dependent.
If you are as well off as Taylor Swift and get to choose... yeah, rent if you don't want to deal with the hassle of home ownership. You're rich and will be fine no matter what you do.
For everyone else, if you generally are going to work in the same geographic area (even if a bit of a commute) for the next decade... then yeah, if afforded the opportunity, buy. It's better to own something if given the chance (in general).
Hard to say in this current market. I took a 0% down payment mortgage out a decade ago, have paid off 30k, and have 200k in fake equity. Fake equity as the valuation is real estate bubble BS, and buying now could result in a massive negative equity (putting borrowers under water) if/when that bubble bursts, but simple fact of the matter is, as the above poster mentions, as long as you keep paying the mortgage, you actually get some equity/own something.
Worst case, your loan does go under.... you go bankrupt and end up.... right back where you were if you were renting anyways.
The way I like to look at it, is a mortgage (fixed) only gets cheaper. A decade from now, you're making more money, but inflation has devalued your income? Your mortgage principle + interest did not change in that time, so inflation has technically made your mortgage cheaper; whereas we've seen rents double, triple, or even quadruple in the past decade.
Note for the curious: While FDA and similar loans can get you lower down payments, what I used for 0% was a USDA Rural Development loan - only allows you to buy in certain areas (not metros typically), but you may be surprised what areas do qualify - check out the map, anything not highlighted qualifies - zoom on in, maybe that 'small town' a 10 minute drive outside the big city does: https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do .... even winning a bid on homes in the current market may be tough though....
It's an intersting contradiction trying to square what seems to be two completely different approches to housing. You seem to be mainly concerned with having stable housing on your own terms as your priority. This article seems to be targeted toward those whose priority is capital gains. While you and I see a house as a place to live, the market sees housing as a financial asset and the main financial asset available to the average person. Through that lens, this article demonstrates that one could actually lose money on their investment instead of gaining it implying it would be better to invest elsewhere.
The own nothing and like it model works very well for plutocrats since what they "own" are valuable financial assets which can be leveraged to borrow as much tax-free cash as they want for as long as they live, using their unlimited credit to borrow more cash to pay back the loans until they die. A step below that are people who understand that it's always better to risk the bank's money than one's own and live their lives on credit as well. That's all the capitalists who can basically live through arbitrage. The model breaks down a bit for us workers who are expected to behave like capitalists but without access to the credit that comes from the social classes described above. There are some people who luck out doing this, but this system was not made for regular people. I personally would rather live like a person with a house.
It’s like saying we stole your stock, and then it went up, so now we can afford to pay back what your shares used to be worth. No you cannot have the shares back, only their price from when we crashed the crypto market.
Convenient for who? The people who orchestrated the theft are going to prison. The people who came in to pick up the pieces are the ones who were able to claw back the money to pay back the victims.
The FTX restructuring officer wrote a letter to the criminal court specifically arguing that SBF's argument was bullshit for all sorts of reasons, and the court agreed: "A thief who takes his loot to Las Vegas and successfully bets the stolen money is not entitled to a discount on his sentence."
Plus that argument and a few other statements he made showed his lack of remorse, which denied him credit under the guidelines for acceptance of responsibility, and probably factored into his fairly harsh 25 year sentence.
Yeah, FTX stole customer investments, sold them, then invested that cash in other stuff and hand out cash to executives. Some of it was traced to specific people (including SBF and his parents), and the restructuring officers clawed that back. Some of the investments paid off, some didn't, but the end result was that there was enough to repay people based on what things were worth on the bankruptcy petition date.
There seems to be a misunderstanding here. Who's keeping ill gotten gains? This is like the Madoff case where the investments on paper simply didn't exist. There are no gains, much less ill gotten gains, that aren't being returned to victims.
That’s like telling Madoff’s victims they get paid back in 2024 the amount they invested in the 1990s.
No, people are getting paid based on the value of their investments at the time of the FTX collapse, not tracing back years to when they first deposited funds. That distinction makes a huge difference, especially in a case like Madoff (or the original Ponzi scheme by Charles Ponzi himself).
100% it's crazy. I mined 1 btc in 2008(?) on a 9800gx2 over a bit longer than winter in Australia, and I've left it in a wallet and watching it flap up and down in value. This announcement was basically "crypto is up so we have enough again". I mean selling what they must have will crash the market again surely. Or the repayment is over 36 months as they slow sell, but then they risk the value again going down.
Don't do crypto kids, it's a game for traders with an appeal to people who want to self host, self sufficient, disconnected from big banks, and all that, but it was corrupted by financially motivated assholes. Therefore it became an investment/wealth vehicle and received the attention of the most morally bankrupt, manipulative people.
Trust is what any currency that has no intrinsic valueis built on. Crypto can't have that when the fraction of good to bad actors is skewed so heavily.
I'm a dum-dum, can someone explain? Does "off balance sheet" just mean "we have these "assets" but we aren't going to tell you what they are because we don't have to"?
I would. These banks are and have always been highly corrupt, which will happen when you aren't properly regulated. There's just no reason not to gamble with people's money (off the books of course) since Uncle Sam will pay you back the losses out of public money.
Imagine you're planning a big party and you've set a budget for how much you can spend on food, decorations, and entertainment. To stick to your budget, you decide not to include the cost of some items, like extra snacks and drinks, in your official party budget. Instead, you plan to buy these items using separate money that you haven't counted in your main budget.
In this analogy, your official party budget is like a bank's balance sheet, which shows all the assets and liabilities they officially recognize. The extra snacks and drinks are like off-balance sheet assets—they're costs and commitments that exist but aren't included in the main budget (or balance sheet) that everyone sees. Just like how not accounting for these extra items might make your party budget look more manageable, keeping assets off the balance sheet can make a bank's financial health appear better than it actually is, potentially hiding risks or liabilities.
"we have these "assets" but we aren't going to tell you what they are because we don't have to"
Yes, this is exactly what off-balance sheet, OBS for short, means.
Suppose a company has a line of credit at the bank of, say, 1,000,000 dollars, but the credit line comes with a financial covenant stating that the debt-equity-ratio must not exceed 0.5, meaning that the company's total debt must not exceed half the company's equity at any point of time.
Suppose now the company wants to buy a new machine on credit, but the costs for this new asset would violate the covenant rule. So the company founds a subsidiary. The subsidiary would then buy the machine to immediately lease it back to the parent company. As the parent company doesn't legally own the machine, it is not on its balance sheet, meaning the debt-to-equity ratio is fine, but it can control and use the asset (the machine) as it is the company's subsidiary's asset.
The company now pays leasing fees (instead of interest rates, had it bought the machine directly on credit), which, of course, stresses its liquidity (very much as it would be in case of a direct credit).
So OBS assets can technically improve ratios, but they are hard to analyze and assess (but they can deceive shareholders and other stakeholders, including authorities, by conveying a higher solvency and liquidity than they actually have).
Large companies and banks have many opportunities to create such OBS. They often create so-called Special-Purpose Vehicles (SPVs) following a similar approach as in our small example. Banks can also move assets through securitization, leaseback agreements, accounts receivables, derivatives.
Don't get me wrong, there are good reasons to use this tool, but if and when you overdo it, you may not know yourself what risks your entire business actually bears. It becomes incalculable.
And if then, say, you can't pay back a small loan because investment A went wrong, then investment B that has initially nothing to do with A may also suffer, which then effects C ....
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