In October 2020, Jack Ma made a statement: China's financial...
In October 2020, Jack Ma said: China's finance has no systemic risk, because China's finance fundamentally has no system. This blunt truth directly caused Jack Ma to fall from grace.
Finance is a double-edged sword. The effect of using it properly or improperly can bring about very good or disastrous consequences. The economic problems that China faces today are the result of misuse.
Starting from the concept that houses are for living, not for speculation, China's overheated real estate industry has entered a countdown to collapse. The leverage ratio of mainland real estate developers is hundreds of percent, meaning doing business worth 3-5 or 10 times the initial investment. The operating model is: use 1 unit of money to acquire a piece of land, then pledge it to (banks) for loans of 1-2 units, start construction and begin selling off-plan properties. Buyers put down 30%, borrow the rest from (banks), developers take the 30% from buyers and more funds taken in installments during the construction phase from (banks) back for recycling, then use the funds to buy more land, pledge to (banks) for more loans, and continue this cycle endlessly. Money flows continuously from banks to fund this game, all involved in this game - property developers, banks, government officials at high levels - are winners except for the homebuyers, who are losers due to high property prices and unfinished housing projects that still require payment of mortgages for 20-30 years. (1 )👆
Finance is the highest realm of creating something out of nothing.
Finance is a double-edged sword. The effect of using it properly or improperly can bring about very good or disastrous consequences. The economic problems that China faces today are the result of misuse.
Starting from the concept that houses are for living, not for speculation, China's overheated real estate industry has entered a countdown to collapse. The leverage ratio of mainland real estate developers is hundreds of percent, meaning doing business worth 3-5 or 10 times the initial investment. The operating model is: use 1 unit of money to acquire a piece of land, then pledge it to (banks) for loans of 1-2 units, start construction and begin selling off-plan properties. Buyers put down 30%, borrow the rest from (banks), developers take the 30% from buyers and more funds taken in installments during the construction phase from (banks) back for recycling, then use the funds to buy more land, pledge to (banks) for more loans, and continue this cycle endlessly. Money flows continuously from banks to fund this game, all involved in this game - property developers, banks, government officials at high levels - are winners except for the homebuyers, who are losers due to high property prices and unfinished housing projects that still require payment of mortgages for 20-30 years. (1 )👆
Finance is the highest realm of creating something out of nothing.
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