Amazing it took this long! Must have been some creative accounting.
COVID, the CCP red lining capital rules, and the housing price collapse started 2 years ago. So congrats to Country Gardens for hiding this for 24 months.
China is going through their 2009 housing collapse now. It’s going to be worse than 2009, at least for China, due to the combination of factors of the post pandemic world.
They might be able to avoid it. If they don’t listen to their economists they won’t bailout their fail businesses. In which case they will bounce back quickly.
If they listen to their economists and give free government money to their banks yeah they will be screwed.
There is still a profit incentive to have something on the market, the disincentive is only if the value difference between the small market and bigger market is greater than the value of having something on the market vs nothing. And with the smaller market items they tend to be higher profit because they may be the only option available for that small market.
Plus there is uncertainty on whether the bigger market drug will make it through trials.
This is a potential distortion that will happen sometimes, or heck there’s a distortion where maybe negotiated prices might make the returns for some drugs not good enough to attempt.
But the alternative is higher prices on all the negotiated drugs, with impacts like people dying of diseases we have treatments for because they can’t afford it, and medical bankruptcies. We have elected leaders to decide between trade offs like these, and I think they decided rightly in favor of lower costs for everyone with the potential impact of some new small market drugs being delayed.
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