We are often just scamming the surface of what's going on. Some people read the topics and then dig in to all sorts of topics, while others just see a topic and then they move on. For example, a week ago the news was released that the Chinese company Evergrande was in trouble. I also read that it caused shockwaves to go through the financial industry, and most stock markets and even crypto turned red because of it.
Now, what do you do with this information? You read the topic, and you see the red numbers. But, why are markets turning red because of Evergrande in China being in trouble?
The question is what you do with this information. I hadn't heard of Evergrande before myself, so that is why I decided to look further into the topic to learn more about the company and what could be so interesting about it that would make an impact on financial markets all across the world.
The result of some quick research was the following article: https://www.ipaddressguide.org/what-is-evergrande-and-why-do-their-problems-influence-the-international-economy/
Why is Evergrande so important?
To be honest, this is like a Domino effect. What do I mean? Evergrande is one of the biggest companies in China. And now they are in trouble. They have taken loans from more than 100 banks and financial companies, and now they are in trouble. They have received payments for houses and flats that aren't finished yet, and now their customers want to get what they have paid for. Now stars the Domino.
- The company cannot pay their bills anymore.
- The people who have paid for their flats do not have anywhere to live.
- The banks want the loans they have given to Evergrande to be paid back. Since they do not get the money, other people using the same financial institutions might have trouble receiving the money they have deposited to the same bank. After all, the banks lend money to people using the funds deposited by others.
The domino:
- Evergrande cannot pay their contractors, nor their banks.
- The contractors have big loans on their equipment, and now they are unable to pay their loans since they haven't received payment for their jobs.
- The banks are in even bigger trouble, because not only are they missing out on the return payments from Evergrande, but also from the companies who have been working with Evergrande.
- Banks and companies is starting to fall apart and it is impacting industries and companies, both inside and outside China.
Life gets more interesting when you try to understand what's going on around you!