Bricking it. Remember that tweet we linked to a few days ago about how buying LEGO sets randomly would outperform VCs? The common riposte was, “But there’s not enough liquidity.” Turns out, there is: the LEGO secondary market is the same size – or larger – than some national economies. Given the state of the Chinese property sector at the moment, developers would have been better off building homes with the toy bricks.

The lowdown

• 🌊 ‘Third wave’ of inflation looming as oil prices surge.

• 🚢 Ship freight rates tumble as US consumers buy fewer goods.

• 🪫 Tesla’s China EV sales fall 11%.

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China’s embattled property sector

China’s property sector has been in a slump since 2021, when the government started cracking down on a debt-fuelled building boom, squeezing developers’ liquidity. And the situation just seems to keep getting worse.

Companies accounting for 40% of Chinese home sales – mostly private property developers – have defaulted on debt obligations since then, leaving many homes unfinished.

Now Country Garden, China’s largest private developer, with $200 billion in liabilities and close to $10 billion in dollar-denominated debt, has just warned of a potential default on its international debts.

Evergrande is in a similar crisis. Its 11th-hour cancellation of a bond restructuring deal late last month pushed a group of its investors yesterday to warn of the ‘uncontrolled collapse’ of the group. The company had the equivalent of more than $332 billion in liabilities back in June. That is substantially more than the whole of Argentina’s external debt.

The content we're consuming today

• Conversations with Tyler: Re-release: Claudia Goldin on the Economics of Inequality

• Odd Lots: Jigar Shah on the Pathway to Clean, Cheap, and Abundant Energy 

• FT: The very costly and unpleasant business of saving Metro Bank ($)

Off-balance sheet items

• Apparently our brains are very good at eyeballing up to four objects, but not five – here’s why.

The bottom line