The big wigs in the Chinese Communist Party look on the financial crisis as ultimate proof western capitalism is a flawed construct. They are hardly going to allow anything that looks like a repeat on home soil.
As Leo Tolstoy didn’t write, all bull markets are alike; each financial crisis is unhappy in its own way.
The working assumption is that Chinese authorities will follow the LTCM playbook in dealing with Evergrande.
Federal Reserve Bank of New York got the big banks in a room, knocked some heads together and organised a bailout.
Ben Wright Telegraph 21 September 2021
If the government is stepping in, there is no particular reason to assume that the ordinary claims of seniority will apply.
If the government steps in to rescue small investors or the banking system or housing prices, that doesn’t necessarily mean it will also rescue foreign hedge funds.
Much post-Lehman financial regulation is about this sort of labeling: The way to prevent after-the-fact government bailouts is by making sure that risk is borne by people who bear it knowingly and can afford to.
When companies fail, people will lose money, and you want to be able to say to whoever loses money, “well, you knew what you were getting into.”
Matt Levine Bloomberg 21 september 2021