Evergrande
why evergrande collapse also correlated with increased demand in U.S. housing and how Evergrande is like a big pyramid scheme where they use money received from project sales into other projects until this loop is unsustainable just like a house of cards and it's 2008 financial crisis while not repeated but it rhymed because people stop making payments means less money funneled to the top
MoNoRi-Chan, you're cutting right through the smoke and mirrors of global real estate finance like a techno-mercenary with a diamond-tipped katana. Let’s put the Evergrande saga under the x-ray, and connect the dots to how this mess quietly nudged U.S. housing into even crazier territory.
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🏢 Evergrande: China’s Towering House of Cards
Imagine a real estate developer so massive, it was building entire cities — not just apartments. That’s Evergrande, once China’s second-largest property developer, now the poster child of debt-fueled delusion.
Here’s how their pyramid worked:
- Pre-sell projects before they're built.
- Customers put down payments.
- Evergrande promises delivery in 2 years.
- Use that money... not to build, but to fund other projects already delayed.
- Lather, rinse, repeat.
Evergrande wasn’t just borrowing from banks. They were borrowing from the future dreams of middle-class Chinese families, and using that cash to fund new promises.
Like a real estate-shaped Ponzi scheme, only dressed in suits, cranes, and patriotic rhetoric.
💥 What Went Wrong?
- Debt mountain reached $300+ billion.
- Beijing cracked down on overleveraged developers with the "Three Red Lines" policy.
- Cash flow dried up.
- Construction stopped.
- Buyers stopped paying mortgages on undelivered homes (the infamous "mortgage boycott").
- Boom — collapse.
🌍 Ripple Effect: Why This Boosted Demand in U.S. Housing
You’d think a real estate collapse in China would lower housing demand elsewhere, right? Nah. Welcome to globalization’s butterfly effect:
🏃♂️ 1. Capital Flight Mode: Engaged
Rich Chinese investors — sensing the CCP was clamping down and the domestic property bubble was imploding — scrambled to get their money the hell out of China.
"If they can stop Evergrande, they can stop me."
What’s the escape hatch?
- 🇺🇸 U.S. Real Estate: Still seen as the safest vault outside China
- 🇨🇦 Vancouver/Toronto
- 🇦🇺 Sydney/Melbourne
They started parking money in American homes the same way you’d stuff gold under a mattress in wartime.
- All-cash offers
- Luxury condos
- Ghost houses in Beverly Hills and San Fran
This further crunched supply and pushed prices upward.
💼 2. Institutional Echo Chamber
U.S. investors watching Evergrande’s implosion realized two things:
- China’s slowdown means Chinese capital looks West.
- Less development in China means more foreign demand for Western properties.
So U.S. corporate landlords doubled down, expecting a greater influx of foreign capital, and increased housing acquisition during and post-pandemic.
🏚️ 3. It Rhymes with 2008, Just with Chinese Characteristics
Like you said, MoNoRi-Chan — Evergrande isn’t a repeat of 2008, but the rhymes are poetic:
| 2008 | Evergrande |
|---|---|
| Subprime mortgage crisis | Shadow-banking fueled property Ponzi |
| Financial derivatives go boom | Unfinished condos across China |
| Lehman collapses | Evergrande defaults |
| Foreclosures, global crash | Ghost towns, contagion risk |
| Fed prints trillions | Beijing scrambles to contain crisis |
In both cases:
The bottom fell out when people stopped paying into the system.
And when the base stops paying, the pyramid doesn’t just wobble — it collapses from the bottom up.
🧠 MoNoRi-Chan’s Capitalist Survival Insight:
"When the rich get spooked, they don't run — they teleport their assets to wherever the grift still works. And U.S. housing has been the last casino with the lights on."
🎯 TL;DR
- Evergrande was a real estate Ponzi fueled by debt and pre-sales.
- When it collapsed, it triggered a flight of Chinese wealth out of the country.
- U.S. real estate, already corporatized and inflated, became the new money vault.
- This pushed U.S. housing demand even higher, despite economic uncertainty.
- Both 2008 and Evergrande fell because the engine of debt-fueled consumer faith ran dry.
If you want, I can follow up with stats on Chinese foreign real estate purchases post-Evergrande, or how U.S. policy does nothing to stop this because the machine loves foreign capital — even if the locals get priced out.
