September 29, 2021

China’s Credit Contagion (Evergrande) 😱

Mesh Lakhani Headshot
Mesh Lakhani

Hey All,

Welcome to Talk Money Weekly - where I cut through the noise and curate the best money-related topics from the web.

Let's get started!


Markets & Business

TMW#24: China’s Credit Contagion (Evergrande)

Last week was a big shake up in the markets with the fall of China’s 2nd largest construction company, Evergrande.

Evergrande develops a ton of real estate in China and they defaulted on two large loans.

They used a lot of debt to fund the development of buildings, and defaulting on the debt sent a ripple through China’s banking system.

In this episode we discuss, what happened, why it’s being compared to Lehman, and what we should be watching out for.

Why Web 3 Matters

What do you prefer, saying crypto or Web 3? Web 1.0 was the birth of the internet. Web 2.0 were the apps built on that infrastructure to connect us all together (Facebook), and Web 3 or 3.0, is us moving to a decentralized structure where everyone can have ownership in the form of tokens (Bitcoin, Ethereum).

What would the world be like if banking, media, and social networks were all decentralized vs centralized? I.e. the evil empire not controlling everything; where a few get rich and the rest miss out? Chris Dixon is a student of the internet and now one of the best thinkers of it. When explained in 1, 2 and 3, it can help explain what crypto really is.

The issue is that the it’s quite complicated and needs to be simplified even further. I think we need good analogies and storytelling. That’s what good branding and advertising does for any incredible product.

Media and Politicians Don't Understand Crypto

To be fair, it’s not explained well. The amount of prerequisites you need to understand the foundation of crypto. Yes, critical thinking and rational optimism are things that can be taught, but the ecosystem have not done a good job on this.

As I mentioned above, we almost need Hollywood to tell this story. We need good writers, storytellers, producers (AHEM), to go out there and explain this in a way we can all understand. As much as I love all this tech and innovation, I find myself scratching my head at times…"excuse me, can you speak English please?”.

We’re back to the old, financial jargon bullshit to confuse everyone. In this case, we don’t need confusion, we need much less of it. The main issue is that politicians and media by association, have their own agendas. Which is a whole other issue to combat.

Black and Latino Neighborhoods Have Undervalued Homes

I’m not sure to read into this. I’d like to know the average income these homes are bringing in and then compare to similar white neighborhoods. Because if it’s the case they are similar income levels, then I’m wondering if appraisals are lower so that people can come in and purchase these homes at a discount and wait for gentrification?

But we all know that something is up here. Like is gentrification when wealthier people move in? Or is it when wealthier white people move in? A good friend told me that if anything, a neighborhood’s value is greatest, when it’s diverse with people. Because that’s when your top of funnel is largest for prospective buyers or renters.

I’d like to explore this further, and it’s something we’ll do with the podcast.

Is a Savings Account Worth It?

It’s not worth it if you're not getting paid to park your money there. Interest rates are low right now, and inflation is creeping up, so you’re technically losing money.

Money should be put to work at all times. Your money should be earning money over a long period of time. A savings account should really be used to save for something specific. I.e., you want to buy that bag, or that car, or that house.

But even then you could be putting yourself in low risk, liquid investments that will get your more than being stationary in an account getting 1%. Any bank is going to push you to open up any account…they get paid to do that. The rat bastards (yes, they are also trying to make a living, but we know they don’t really care about us).

That's all the news from this past week!

If you haven't already subscribed to my podcast, Talk Money, do so here. New episode next Wednesday!

Want to chat? Tweet me at @meshlakhani. If this email was forwarded to you by a friend, subscribe here for updates!

Past Email Newsletters