Evergrande, Credit Spreads And Bitcoin

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In this episode of Bitcoin Magazine’s “Fed Watch” podcast, Christian Keroles and I welcomed back Greg Foss to the show to discuss the new articles he’s written on Bitcoin Magazine about Evergrande from a professional in the high-yield credit space. We get to know Foss a little better in this one and discuss, not only the facts of the matter on Evergrande and high yield, but also his beloved Canada and some predictions of the future.

Evergrande Contagion

Evergrande is an evolving situation, we probably shouldn’t even call it Evergrande anymore because it has spread throughout the Chinese high-yield financial sector and has caused the entire Chinese real estate market to teeter on the brink of collapse. We could call it the Chinese financial crisis.

Our interview follows the outline of his article “The Macroeconomic Implications Of Evergrande For Risk Assets And Bitcoin.” Foss started by comparing the size of Evergrande’s default to that of Lehman Brothers’. Strictly speaking of on-balance sheet size, Evergrande is approximately one-fourth to one-third as large as Lehman’s default. That is sizable, but should not destabilize the entire financial system. Foss pointed out what is more likely is a focused contagion within China and the emerging markets.