What if we told you all the names in the headline are correlated and only pursue one goal: to postpone the default of inefficient, corrupt, and failed governments of the East and their satellite states? Let’s start from one point and connect the dots to get a clear picture of what is happening in the Eastern world.
Many countries on the eastern block suffer from a lack of freedom, dictatorship, no transparency, and inhuman and barbaric laws. Some of these countries may have laws not so different from their Western rivals, but it does not mean the rule of law is in place. These countries have been dealing all their life with two problems: brain drain and capital flight.
Their approach to cope with brain drain is simple, using psychological tricks and obscuring the truth. An ineffective approach toward highly intelligent and well-educated individuals.
Crypto and Real Estate, Two currency blackholes
Crypto and real estate work as black holes for major eastern governments. As these governments acknowledged their bond market is not as attractive as Western ones, in particular US-issued bonds, they use real estate as a source of draining liquidity from the market, mainly via the government selling land to people so they can build on it. They also own the majority of construction company shares and material producers, so in essence home building is a money furnace for them. As long as home building continues, it contributes to its ill-growing GDP and makes them live for another day. However, it comes with a price that is paid by home buyers in the east. As these houses become more available and the market becomes oversupplied, the price of homes tanks, and the life-saving of these buyers evaporates. If you add private sector bonds issued by homebuilders that default on their bonds, you can see the real capacity of this system in draining liquidity. This is what keeps these corrupt governments going. You can also read this article on Fortune for more info.
But what about Crypto? In our first issue of Market SITREP, we gave you details on how the crypto market, Russian Ruble, Chinese yuan, Bitcoin, and a giant Chinese home builder, Evergrande, are connected. Here are two charts from Market SITREP #1. We recommend you to read it.