CHICAGO | Waterview Tower | 1,047' Official / 1,035' Roof | 89 FLOORS |NEVER BUILT

[ChiPsy]

Originally Posted by aaron38

What the heck is trade credit insurance? I read through the wikipedia entry and still don't get it.

...Why wouldn't the trade credit insurance firm just provide the loan themselves, since they're prepared to take the risk anyway? Why the middleman?

Until someone with more knowledge answers these questions, I can respond at least partially: It's because an insurer backs up several projects with the anticipation that only a few of them might go under -- so whereas they might have enough money to cover one or two projects themselves (in the case of a triggering event), they wouldn't have enough money to cover all of them (and therefore wouldn't provide the funds up front for each, or any, of them).

[ChicagoChicago]

Originally Posted by ChiPsy

Until someone with more knowledge answers these questions, I can respond at least partially: It's because an insurer backs up several projects with the anticipation that only a few of them might go under -- so whereas they might have enough money to cover one or two projects themselves (in the case of a triggering event), they wouldn't have enough money to cover all of them (and therefore wouldn't provide the funds up front for each, or any, of them).

You're speaking of the law of large numbers.

Actually, the reason an insurance company wouldn't provide the loan is because they aren't a bank and don't function with their investment vehicles like a bank does.

A bank leverages its assets (loans) against its liabilities(deposits) in order to make a difference on the spread. It works well of them to do this.

An insurance company typically makes money off of their investments, not their premiums. Providing a loan would tie up large amounts of cash that they don't have.

[jjk1103]

Originally Posted by aaron38

What the heck is trade credit insurance? I read through the wikipedia entry and still don't get it.

So Teng is going to borrow money from China. But China wants a garantee that they get their money back if the project crashes. So Teng needs trade credit insurance, which would pay up if needed.

But in that case, why wouldn't the trade credit insurance firm just provide the loan themselves, since they're prepared to take the risk anyway? Why the middleman?

...trade credit insurance is so the sub-contractors will supply men and material to the site.....they really don't want to fight in court for their money for years....

[LaSalle.St.Station]

bit kinda of shit means owner has interest ...a good sign

[Rilestone75]

First of all the article is incorrect, Trade Credit Insurance is used for manufacturing operations where a company is selling goods or buying goods from a supplier in another country. The idea behind this type of insurance is that if the purchaser defaults on the order, the supplier can be made whole.

What Teng needs here is a financial guarantee, another type of insurance that would insure that the Chinese bank is made whole, in the event of a default by Teng. A Surety Bond will not work in this case, as it violates certain laws when you name a lender as the beneficiary...

[honte]

^ It seems like the lender would rather be the policy holder for that kind of insurance... and therefore it should be their burden to secure it?

[Rilestone75]

Originally Posted by honte

^ It seems like the lender would rather be the policy holder for that kind of insurance... and therefore it should be their burden to secure it?

Agreed, but why would the lender spend the money on the premium when they can make it a condition of the loan? They can push it back on the borrower. Kind of a nice place to be, collect a huge sum of interest on the loan and not worry about a default... its like printing your own money!

[3countriesplan]

The thing is already 1/3 built. I know its not going to happen but why don't they continue building the thing then figure out how to solve the problem as they build? If I ever wrote 1/3 of a book then paused to talk with the publisher and refused to continue work on the book as I was in talks , I'd be an idiot. Work as you find the financing! Teng has really dropped the ball on this one.

[denizen467]

^ Yeah, they are such dummies. I mean can't they just persuade all the hardhats to keep showing up every day without whining about payday so much?

In other words, you need 0 employees to write your book, but this project needs 100s.

[cbotnyse]

Originally Posted by 3countriesplan

The thing is already 1/3 built. I know its not going to happen but why don't they continue building the thing then figure out how to solve the problem as they build? If I ever wrote 1/3 of a book then paused to talk with the publisher and refused to continue work on the book as I was in talks , I'd be an idiot. Work as you find the financing! Teng has really dropped the ball on this one.

its simple, workers can not work for free. There is no money to pay them.

[NYC4Life]

Chicago labor is not like those in Dubai, where workers are paid low wage and where conditions are sometimes below substandard.

[Dalton]

I was crossing the Michigan Ave bridge yesterday afternoon and the good news is that, unless you are savvy to the situation, the Waterview hulk is barely visible and does not stand out as an obvious eyesore. Tourists won't even notice it. This abandoned hulk blends into the street wall and has not yet become an obvious failed project. It's a good thing they had to stop work before it got too tall to be ignored.

[The Pimp]

Originally Posted by cbotnyse

its simple, workers can not work for free. There is no money to pay them.

Thanks cbotnyse... You saved me the opportunity of teaching our newbie friends and econimics lesson.

[SolarWind]

Originally Posted by Dalton

I was crossing the Michigan Ave bridge yesterday afternoon and the good news is that, unless you are savvy to the situation, the Waterview hulk is barely visible and does not stand out as an obvious eyesore. Tourists won't even notice it. This abandoned hulk blends into the street wall and has not yet become an obvious failed project. It's a good thing they had to stop work before it got too tall to be ignored.

August 25, 2008



155 North Wacker is visible in the background behind Waterview Tower.

[photoLith]

So this project is officially dead or what? Is it going to be like the Ryangyon hotel in NK? A dead hulk to be finished decades later?

[spankbudda]

I think the one bright side of this is that the crane is still up there...if they take that down, well, thats a problem. I still remember visiting bangkok in the late 90's after the economic bust and all construction had halted--the skyline was half finished and stayed that way for years...such an eye sore.

[Bergenser]

I hope they continue the construction soon!

[Rilestone75]

I don't think this project is dead, I just think we won't see any progress until November... There are 30 months or so of construction left and the market will have changed somewhat by then. The condo's are almost 68% sold, and the hotel contract can always be renegotiated. if we get the olympics, it will be built for sure, along with every other hotel that is in the proposed stage right now.

[10023]

At what point do they start losing these "commitments"?

[NYC4Life]

Let's hope the tower will resume construction soon. The steel frame and the existing structure built so far can't be left to deteriorate. Repairs later on will only cause the pricetag to rise even higher.