Hey this is tom and in case you're following the evergreen story, i'm sure today, you're feeling extremely confused, because this is actually getting out of hand. On the one hand, you read the wall street journal and in that article they tell you that the government in china instructed local government to brace for impact, if ever again, actually fails, basically telling them hey we're, not bailing out evergreen. On the other hand, we know that today is the deadline for the dollar denominated payment. They have to do 83 million.

Also, if you take a look at the stock price, it actually went up today by 18 in a single day on the eve of this coupon. So what the hell is going on and how these three pieces of information can actually coexist, which they can, i assure you they can makes perfect sense, but mainstream media is just too lazy to do their job and actually connect the dots. It's very simple: it's going to be a three-minute video check this out. So on the one hand we have the chinese government essentially leaking information, letting everybody know that they've instructed the local government to brace for impact.

Now what the hell does that even mean? What kind of bracing for impact the local government can do in china? Can you understand how things work in china? The local government pretty much asked the central government what to do when they go to the toilet? It's not a system that basically it works independently, so that kind of instruction means nothing. It means jack unless you're, trying to tell everybody how you're not bailing out these rich bankers that screwed up, which is exactly what they're doing here, which goes exactly. According to my prediction from two three four days ago, which is china is going to play the game, basically saying: hey we're not bailing out evergreen we're not bailing them out and whenever somebody tells you something categorically about themselves, it's usually the opposite, so check this out. On the other hand, we know that today, thursday, is the deadline for the dollar coupon, that's the big one.

We know that they've settled the yuan coupon and that's a question how exactly they settled that they haven't told us that they repaid it. They just told us, the bankers in china actually worked out an agreement, which is also something i told you about. There's going to be pressure from the chinese government on the chinese banks to give them a little bit more time, which is exactly what happened with the local yuan denominated the bonds which basically went away for a while. So now we're faced today with the deadline.

83 million dollars and if they miss it, they're basically screwed and all of us are screwed wrong. Now check this out. Why did the stock price went up today? You know there's a reason for that. People are not idiots.

The reason is because the deadline today is completely fake. It means nothing now, i'm gon na tell you in a second why, but even if it was real, it's not a huge deal, which i explained in my two previous videos, which you can go check out. I'm gon na put the links below in the description, so today's deadline is meaningless. Imagine you're buying an apartment right and in the apartment you have an agreement.

Basically, when you have to vacate the premises or when you have to accept the premises, if you're the buyer and in every agreement like that there's a grace period, eventually, somebody will run into problems and they'll need some more time to basically evacuate the premises and give You, the keys, you know, happens and usually it's a week, two weeks, three weeks, the same thing same grace periods are very customary and lending there's a lot of variables. A lot of unknowns nobody's gon na penalize you if you miss a payment by a day or two now in the case of evergrand, they have a 30-day grace before any triggering of any penalties now check this out. This is really interesting, so shout out to patrick boyle, if you're not yet subscribed the best underrated channel on youtube. My favorite go and check him out.

He says that evergreen are probably going to default on purpose on the 83 million, because there's no consequences, there's no penalties. It literally is meaningless. It's completely declarative, there's no operational, there's no triggering of anything. So basically, what patrick explained to me - and i tend to agree with him - is that he thinks that they're gon na default today just to keep the cash for another 30 days, because cash on hand is definitely more valuable than repaying a coupon early, because for them It's early now that means that the deadline is not really today, and that is exactly why you saw the spike.

The 18 is because there's informational arbitrage, certain people, certain investors - didn't understand that thought that today would be the deadline sold out and a lot of other investors actually took the opportunity. But if you're watching my videos, you know that we're talking about this. For a long time for a whole week, basically saying that this whole thing is fun i'll explain why now, i'm not a fan of chinese stocks, not even by a long shot, but what i explained to you in my previous videos is that this company, even if They eventually default on this is completely meaningless and i'll explain why so because they hold real estate. What you have here is a very close circuit situation in real estate.

The most important thing for a company is trust if they lose trust by the people who finance them they're pretty much screwed, because it's a cash intensive business. You need a lot of cash to raise these infrastructure projects, so you need a lot of debt and if the bankers become antsy - and they think that you have issues on the first sign of weakness, they're going to cut you off essentially creating a snowball effect, a Self-Fulfilling prophecy of failure, so that is why you can't seem weak, and if this would have happened in any western country, i guarantee you that evergrand or their competitor is from the west would never have gotten a single dollar, because this is in china. It's a whole different story, because the chinese government literally controls the chinese bank, so they can control the enforcement of these clauses. These provisions and what the chinese government can do here is basically go to the banks and say well give them more grace give them time because in real estate the only thing you need is time if you're in deep, because real estate has actual value.

It's not like securities, it's not like options. It's not like derivatives. If they actually manage to finish these buildings, they're going to be able to sell them, maybe at a discount, maybe not a great price, but they have value and there's going to be a lot of cash flow coming in once they actually finish these projects, which means Most of these debts will be repaid as long as they're giving enough time and enough cash to finish the projects. Now this will happen in china.

In my opinion, because of the way the banking system is there just basically to execute the policy of the chinese government. So i don't see any failure in this company, even if they default on the 30 day, which i still don't know, maybe they will maybe they won't but here's my theory as long as the chinese government plays this double game. On the one hand, saying we're not bailing them out, on the other hand, pressuring chinese banks to give them time money and leeway to finish these projects. I think that is more likely than not that, with the next 30 days, there's going to be a lot of money flowing indirectly from these banks into evergrand in order to help them cover the 483 million debt.

Just my theory, but this is what i think is going to happen now eventually, as i mentioned this before once this whole saga goes away. I think the chinese government will take a massive uppercut into this company, completely breaking down into a million different pieces. So this never happens again but, as i mentioned before, this 18 spike that we saw today is just a manifestation of the same things. I told you yesterday and two days ago.

This whole evergreen story is blown out of proportion. It's all fud and it's coming for me, not a china stock fan, not a china economy, fan and they're lucky it's real estate, because if this was securities or derivatives or debt, my goodness this would have been a shitstorm. But this is easy real estate. All you need is time and patience which the chinese government will quietly provide for them to finish this out.

So complete known story, there's another 30 days even for the next fudd, and if you think otherwise, let me know below just keep it respectful. You know don't talk about my grandpa, he gets annoyed. He reads all the comments. I'll see you tomorrow,.

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