Miller Magazine Issue: 142 October 2021

98 MARKET ANALYSIS MILLER / OCTOber 2021 with the pace of supply increases, according to a US spokes- man, who asked not to be named. U.S. oil production is still recovering from Hurricane Ida, which took a total of nearly 35 million barrels of Gulf of Mexico production from the market a month ago, equivalent to an increase in OPEC + supply in near- ly two full months. The worry among major consumer countries is palpable as rising energy, food and metal prices threaten to trigger an inflationary surge that complicates current monetary policy. As the massive restructuring of the Chinese developer Ev- ergrande Group approaches, Beijing is seeking to limit the negative impact by signaling that it is ready to support “too big to fail” corporation. In just the last week, Chinese authorities have instructed financial regulators to force the country's major banks to ease lending for home buyers and bolster the real estate sector. Bloomberg says that they also bought out some of Evergrande's stake in a struggling bank to curb the spread of the "infection." At the same time, the central bank pumped $123 billion into the financial system in 10 days to boost liquidity. These measures underscore that China intends to do every- thing possible to limit the impact of the collapse of Evergrande, while it is not trying to directly save the developer, the situation around which has been agitating global markets for several weeks. This does not bode well for the bondholders - both on the mainland and for overseas - who hope to somehow escape from the Chinese government. As per Bloomberg, the Hong Kong Stock Exchange has sus- pended trading in Evergrande shares along with shares in its property management division. The reasons for the suspension are not specified. Chinese markets are closed on Monday due to public holidays. China has a long history of dealing with the collapse of con- glomerates like Evergrande. According to researchers at Citi- group Inc., an example is the restructuring of the HNA Group Co. in this year. Based on this, Beijing is likely to intervene, split- ting up Evergrande's business and selling the assets to stra- tegic investors. In such a scenario, bondholders would lose a lot in value, and equity investors would lose almost all of their investments. Even though the growth in the last week, Ever- grande shares fell 80% in this year. The likelihood of a financial crisis is not yet high, but it will sharply increase if US Congress does not take action on the national debt. This issue is getting the attention of American