Lehman Brother Crisis of 2008.<\/figcaption><\/figure><\/p><\/figure>But is Evergrande’s crisis actually as bad as the Lehman Brothers crisis? Well, yes and no. Let’s analyse. Given the size and systemic importance of Evergrande, it can badly affect other sectors in the economy, directly and indirectly.<\/p>
Lenders who lent money to Evergrande are waiting on their payments. Homebuyers are expecting to get ownership of their property soon. It is also believed that the company may have even more than $300 billion debt to repay that is not reflected in the balance sheet.<\/p>
Now, analysts believe that the government will actually step in and bring the company out of its financial woes to prevent the whole property sector from crumbling. But even it is going to have negative implications.<\/p>
To bail the firm out of such heavy debts, a lot of new money would have to be minted which will increase the money supply in the economy, thus, depreciating the value of Chinese currency.<\/p>
It will have an impact on the foreign markets also. The foreign players who have directly invested money in the property sector would be seeing losses. And while the Chinese would focus to bring the property sector out of stress, it would affect the demand\/supply in other fields.<\/p>
For example, the metal stocks in India which had been riding high for a while have seen correction in their prices and the reason is attributed to the fear of a decrease in metal demand in China.<\/p>
But S&P Global Ratings believe that this would not cause significant disruption. They said, “Evergrande is small relative to Chinese banks’ total loans. The banking sector’s direct exposure to Evergrande also appears well distributed.<\/em>”<\/p>Moreover, it would be far stretched to call it a Lehman moment because Lehman was an important part of the American banking system. It held financial assets. Evergrande, on the other hand, holds lands. So, it cannot really bring the world into recession.<\/p>
There has been no major blow to the Indian market because of this yet. The international markets have also not reacted very strongly to this.<\/p>
Most analysts think that it certainly cannot be compared to the 2008 Lehman Brothers moment and while it would have serious repercussions in China, the rest of the world would not be as severely affected by it.<\/p>
Note: The article was originally published here<\/a>.<\/em><\/p>","protected":false},"excerpt":{"rendered":"By Tina GargThese days it is impossible to open social media and not come across phrases like “Lehman Brothers”, “Evergrande<\/p>\n","protected":false},"author":27236,"featured_media":833354,"parent":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31175],"tags":[162992],"featured_image":"https:\/\/s3.youthkiawaaz.com\/wp-content\/uploads\/2021\/09\/28132247\/Evergrande-China-Web-450x300.jpg","post_raw":0,"view_count":"42","prompt":"China’s “Lehman Moment”: Will It Lead The World Into Recession?","like":{"total":null},"campaigns":{"pre":"","before":"","after":"","middle":""},"featured_image_srcset":["https:\/\/www.youthkiawaaz.com\/wp-content\/uploads\/2021\/09\/Evergrande-China-Web-450x300.jpg 450w","https:\/\/www.youthkiawaaz.com\/wp-content\/uploads\/2021\/09\/Evergrande-China-Web-100x100.jpg 100w","https:\/\/www.youthkiawaaz.com\/wp-content\/uploads\/2021\/09\/Evergrande-China-Web-272x182.jpg 272w"],"block":[],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.youthkiawaaz.com\/wp-json\/wp\/v2\/posts\/832746"}],"collection":[{"href":"https:\/\/www.youthkiawaaz.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.youthkiawaaz.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.youthkiawaaz.com\/wp-json\/wp\/v2\/users\/27236"}],"replies":[{"embeddable":true,"href":"https:\/\/www.youthkiawaaz.com\/wp-json\/wp\/v2\/comments?post=832746"}],"version-history":[{"count":2,"href":"https:\/\/www.youthkiawaaz.com\/wp-json\/wp\/v2\/posts\/832746\/revisions"}],"predecessor-version":[{"id":833332,"href":"https:\/\/www.youthkiawaaz.com\/wp-json\/wp\/v2\/posts\/832746\/revisions\/833332"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.youthkiawaaz.com\/wp-json\/wp\/v2\/media\/833354"}],"wp:attachment":[{"href":"https:\/\/www.youthkiawaaz.com\/wp-json\/wp\/v2\/media?parent=832746"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.youthkiawaaz.com\/wp-json\/wp\/v2\/categories?post=832746"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.youthkiawaaz.com\/wp-json\/wp\/v2\/tags?post=832746"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}