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Amid rising expectations of an Evergrande default, what would it look like?

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Credit…Andy Wong/Associated Press

Shares of China Evergrande, the troubled property giant whose fate has contributed to jitters in global markets, fell again on Tuesday amid a new prediction that it would soon default.

The company’s chairman, Xu Jiayin, told employees in a letter quoted in Chinese media that Evergrande would surmount its problems, which include $300 billion in debt, plunging sales of apartments and a payment due Thursday.

“I firmly believe that Evergrande will walk out of its darkest moment and resume full-speed work and production,” he said in the letter, which was confirmed by a company spokesman.

But a dire forecast about the company’s fate arrived on Tuesday for investors in Asia, this one from S&P Global Ratings. “We believe Beijing would only be compelled to step in if there is a far-reaching contagion causing multiple major developers to fail and posing systemic risks to the economy,” said the report, which was dated Monday.

Both the company’s shares and its bonds fell on Tuesday, though by more modest amounts than in recent days and weeks. Its shares closed 0.4 percent lower, and shares of other Chinese-focused property developers that tumbled on Monday recovered some of their losses. Hong Kong’s Hang Seng index, which fell 3.3 percent on Monday, ended the day with a 0.5 percent gain.

The impact of an Evergrande collapse would depend in large part on the attitudes of China’s top leaders.

Many of Evergrande problems stem from new restrictions on home sales as Beijing tries to tame property prices and address rising concerns about the price of homes. The government has also sought to teach a lesson to property developers who borrowed heavily in recent years to build more properties and finance their investments in other businesses. (In the case of Evergrande, those include interests that include electric cars and a soccer team.)

But a hard landing for Evergrande, should it default, carries risks. Unhappy home buyers and suppliers could cause unrest, while the financial impact on investors and others who might be exposed to Evergrande could be costly.

Beijing, however, has a number of ways to try to stop a financial disaster. The government controls the banks and the financial ties between them. It also firmly controls the flow of money across the country’s borders, allowing it to stem a potential rush of funds outside the country.

“The officials still have some tools at their disposal to calm down the panic,” said Zhiwu Chen, a professor of finance at the University of Hong Kong, who predicted the authorities would break up the company and sell its parts piecemeal.

The authorities also can control media coverage, while police have considerable powers to detain anybody who raises a public fuss.

Credit…Audra Melton for The New York Times

Two years into a relentless pandemic, the world economy remains awash in logistical difficulties. Factories in Asia are struggling to satisfy demand for their products. Ports are short of shipping containers and healthy hands to unload them. Trucks are idled for lack of drivers, with warehouses overwhelmed by goods.

And the continuing disruption to factory production and bottlenecks in shipping are leaving nonprofit groups short of goods for vulnerable communities worldwide, Peter S. Goodman reports for The New York Times.

In Haiti, one of the world’s poorest countries, an effort to increase household incomes is confronting a new problem stemming from the upheaval — a shortage of shoes.

The Haitian American Caucus, a nonprofit organization, imports donated, used shoes from the United States and sells them at low-cost to women who hawk them on sidewalks and in markets, earning crucial cash for their families.

The caucus is distributing almost 100,000 pairs of shoes a month, but it could manage four times as many if only more inventory arrived, said its executive director, Samuel Darguin.

“That pair of shoes represents so much more,” he said. “It represents a mother being able to send a kid to school, being able to afford health care and feed her family maybe two meals a day instead of one.”

Erin Griffith (@eringriffith) and Erin Woo (@erinkwoo), two of our tech reporters, are covering the trial of Elizabeth Holmes, who dropped out of Stanford University to create the blood testing start-up Theranos at age 19 and built it to a $9 billion valuation and herself into the world’s youngest self-made female billionaire — only to flame out in disgrace after Theranos’s technology was revealed to have problems.

Follow along here or on Twitter as she is tried on 12 counts of wire fraud and conspiracy to commit wire fraud. The trial is generally held Tuesdays, Wednesdays and Fridays.

Erin Woo headshot

36 minutes ago

Erin Woo

With that, Judge Davila is ending Gangakhedkar’s testimony for the day and instructing jurors not to consume media content about the trial, as always. The trial will resume on Tuesday — Erin Griffith will be at the courthouse to bring you live updates.

Erin Woo headshot

38 minutes ago

Erin Woo

We are now onto cross-examination. Holmes’s lawyer is questioning her about G.S.K.’s study of Theranos’s assays, pointing out that the study promoted her work. “The Theranos system eliminates the need for a lab and provided quality data,” the G.S.K. memo said.

Erin Woo headshot

58 minutes ago

Erin Woo

Despite having signed an N.D.A., Gangakhedkar printed out some documents and took them home when she left Theranos. “I was worried that I would be blamed,” she testified.

Erin Woo headshot

1 hour ago

Erin Woo

Three days after the email from Balwani, Gangakhedkar sent Holmes her resignation email. She testified that she was “very stressed and unhappy and concerned” with the planning of the Walgreens launch.

Erin Woo headshot

1 hour ago

Erin Woo

In an email from Balwani to Gangakhedkar, with Holmes copied, Balwani said the software team had been working until 3:07 a.m., but that the Edison blood-testing devices Gangakhedkar’s team worked on were “all sitting idle.” This was an example of the pressure they were under, Gangakhedkar said.

Erin Woo headshot

3 hours ago

Erin Woo

And, with that, Cheung has been dismissed. The government is calling Surekha Gangakhedkar now, a former Theranos team manager.

Erin Woo headshot

3 hours ago

Erin Woo

The government is now asking questions about a document that says, among other things, that Theranos’s devices “can be operated with minimal training” and that its results have “precision and accuracy equivalent to traditional clinical laboratory analyzers.” Neither is true, Cheung says.

Erin Woo headshot

4 hours ago

Erin Woo

Cheung said they were constantly having to recalibrate the machines, which made results take 2-3 days rather than the couple hours promised. “We had people sleeping in the car because it was taking too long,” she said.

Erin Woo headshot

4 hours ago

Erin Woo

Cheung just said she “became concerned about a month in” with the vitamin D samples, in November of 2013. She was concerned about the performance of the tests and that they were being used on patient samples.

Erin Woo headshot

4 hours ago

Erin Woo

Defense is done with cross-examination, after showing Cheung Theranos policy documents she said she’d never seen. The government is now asking questions again for redirect.

Erin Woo headshot

5 hours ago

Erin Woo

Holmes’s lawyer is asking Cheung a lot of questions about quality control checks that occurred on the Theranos devices. “There is a recognition that some errors would happen and this was the policy on how to deal with those errors,” he said.

Erin Woo headshot

5 hours ago

Erin Woo

Erika Cheung is now taking the stand as cross-examination continues.

Erin Woo headshot

6 hours ago

Erin Woo

The update you’ve all been waiting for: The judge is STILL pronouncing it ther-AH-nos.

Erin Woo headshot

6 hours ago

Erin Woo

In the courthouse now for another day of the Elizabeth Holmes trial. We’re expecting to wrap up testimony today from Erika Cheung, one of the key whistleblowers in the case.

Erin Griffith headshot

1 day ago

Erin Griffith

That’s it for today.🩸💉⚖️

Erin Griffith headshot

1 day ago

Erin Griffith

So far the theme of the cross-exam of Cheung seems to be using excruciatingly arcane details about the processes and procedures of the Theranos lab to show that its work was very complicated, involving lots of smart, pedigreed people.

Erin Griffith headshot

2 days ago

Erin Griffith

Cheung testified that in meetings about quality control failures, Theranos’s lab directors ignored the most obvious possible reason for the failures: “The Edison devices didn’t work.”

Erin Griffith headshot

2 days ago

Erin Griffith

Trial gear alert: A reporter brought their own binoculars to see the exhibits on the TV screens.

Erin Griffith headshot

2 days ago

Erin Griffith

Erika Cheung is back on the stand.

She described Theranos’s practice of demoing blood tests for V.I.P.s, where some of the results came from Theranos machines and others from Siemens analyzers.

Erin Griffith headshot

2 days ago

Erin Griffith

At this point we have heard lawyers and witnesses pronounce “Theranos” hundreds of times, making me start to wonder whether judge is trying to mess with us by sticking to his “ther-AHHHHH-nos” pronunciation.

Erin Griffith headshot

2 days ago

Erin Griffith

I should note the woman who clapped and yelled “you’re a good mom!” at Holmes yesterday suddenly stormed out of the courtroom after Judge Davila warned everyone that yelling stuff like that in front of any jurors could cause a mistrial. I don’t see her here today!

Erin Griffith headshot

2 days ago

Erin Griffith

Elizabeth Holmes’s entourage is down to just her mom today.




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