Will USA Trigger the Coming Chinese Armageddon? Mike Maloney

published on August 2, 2020

What will precipitate the next global financial crisis will it be as bad as the last one or could it be many many times worse could it even have the power to bring the entire world monetary

System crashing down around us as you can see it's a pretty gloomy day here in puerto rico and that's because a tropical storm just passed through but that is nothing compared to the economic

Storm that's coming going to the goldsilvercom news page you know i try to put these videos together and as i'm doing it if i go back and glance at the news there's

Another story that's added to the story that i'm trying to tell where i want to try and connect some dots for you for you so here we've got 30 million americans didn't have enough to eat last week

What is hyper inflation and why should you care the us dollar is losing its clout as a world's reserve currency it's time to abandon uh us dollar hegemony

And these two articles relate uh gold surges to and adds three billion dollars to just three families fortunes 434 tons of gold were purchased in the second quarter

China says us is fueling a new cold war due to the presidential election 158 billion in collateralized loan obligations bet is putting the insurance industry at risk

And in this chart you'll see that the insurance companies own about a third of all of these ravaged by mexico's gdp falls a record 173 percent in the second quarter uh plunges german economy into a record

Recession uh us gdp i'm going to get to this story in a moment crashes by a record 329 percent that is basically one-third that is 33 worse than the great depression uh

Continuing jobless claims spike as almost 50 percent of jaw lost jobs may be gone permanently this is a disaster fed plans for the worst as it waits for congress to act over 62 million

People had no pay last week fed chief says surge uh starting to dent us economic recovery i'm sorry i'm laughing but i it's just unbelievable

That the people that are running things are so far behind the curve they're saying that this is start the the coronavirus's surge is starting to put a dent in the recovery from the end

We aren't done crashing there's there's no big recovery coming in an unprecedented move congress proposes taxpayer funded bailout of 550 billion in this is commercial mortgage-backed

Securities so that's uh you know all of the commercial properties uh us small businesses face mass mass closures without more pandemic aid uh us treasury makes 10

Billion loan to the postal service us renters oh 215 billion in back rent so let's get into some of these stories in an unprecedented move congress proposes taxpayer-funded

Taxpayer-funded bailout of the commercial mortgage-backed security industry so we had a taxpayer backed fund out of a taxpayer funded bailout of the mortgage-backed security

Industry in 2008-2009 when mortgage-backed securities melted down now it's commercial mortgage-backed securities and in this chart here what you see is this huge climb from um two trillion in delinquent

Uh you know this is a percentage i'm sorry uh percentage of mortgage-backed securities marked as 30 days plus so commercial mortgage-backed securities plus days delinquent and it was only two

Percent back in february now it's 10 that is a huge change and there's a representative taylor that's him and uh another a and he's a democrat he's a

Republican and then uh lawson a democrat from florida are sponsoring this bill under it uh there there's this is 550 billion in distressed securities and that's going to come from the 454 billion

Pot that was set aside for distressed businesses in the earlier stimulus bill so basically it'll suck if there's anything left there it'll suck all of that up

But the best sentence here is what was uh left completely unsaid is that the capital infusion will come from drum roll please the idiot taxpayers who won't even understand what's going on

And this is true i'm sorry to say but industry these all of these commercial mortgage-backed securities are held roughly 80 percent of them are held by a handful of funds

Who will be the ultimate beneficiaries of this unprecedented bailout funds which have spent a lot of currency lobbying miss sierras taylor and lawson so they've spent a lot of money romancing these guys that have

Introduced a bill to save them and it's all going to be paid for by us thirty percent of americans missed their housing their housing payments in june uh so that inc

That's thirty percent of americans housing that would be both rents and mortgages um us renters oh 215 billion in back rent uh the feared jumbo mortgage debacle is

Here thanks to the and ready to pound the housing market now as you scroll down in this article there's some uh numbers in here that are pr

Pretty frightening according to data provided by black night financial services 46 percent of borrowers who obtained a for barrance actually made

A mortgage payment in april so forbearance means they got the bank to forgive uh missing a payment or two so the bank is modifying the loan 46 of the borrowers that that asked for forbearance were

Actually able to not use it they made their payment uh in april but uh 20 that dropped to only 22 that were able to make their payment in may and 15

In june so uh these loans are uh going they're going bad they're uh they're delinquent now according to black knight 118 let's just say 12 of all jumbo loans are in forbearance as of

June 16th and so we're talking about you know only 15 of that 46 percent so this is close to half and uh and so let's say that that's 40 so it's 40 of the 12 percent

But you're still talking about a lot of loans that are currently going bad and um the 42 of their customers who requested forbearance are self-employed moving on further down

The page what we see is that in october he had focused on the growing problem of millions of americans that have with modified mortgages that have re-defaulted

And he explained that most of the residential mortgage loans held by large banks are jumbo mortgages unlike smaller loans that were securitized and sold off to investors jumbo loans are too big to be guaranteed

By fannie mae or freddie mac so this is both basically wealthier people and they were kept in the bank's portfolios and that is 95

Of the jumbo loans remain on the bank's balance sheets so this is going to part of what is going to precipitate a major banking crisis and this may not be bailed out by the

The government it might be bailed in by the depositors of the banks because this isn't fannie mae and freddie mac which was the mortgage-backed securities that went bad last go-around this is the jumbo loans

That are on the bank's balance sheets and so uh when the banks get in trouble it's going to be a combination of bailouts and bail-ins this time and so moving on

That may cause 40 million americans to lose their homes and this is um a family that uh couldn't make their payments and this guy had he says he claims to

Have applied for more than 400 jobs over the past several months and cannot find a job 400 of them and they are now they were evicted and they are now living in a shelter

And then this chart was in that article and it's showing uh the number of people facing eviction and this is renters the chart is of renters unable to pay their rent and at risk of eviction

Uh and it's the uh of the share of the total uh renter households west virginia is close to 60 percent and and 58 55 florida at 51 and even the very best the lowest

Percentage in here is vermont at 22 so everything washington 28 california 27 everything is i mean the national average is over a third i would say just looking at this chart

So nearly half of americans are considering selling their home as crush's finances and um 47 of homeowners have explored alternatives

Ways of making money two-thirds of the respondents stated they've got side projects 53 percent said they've sold valuables to supplement income so you've got nearly half of americans considering

Selling their home to whom do they sell how many people are actually looking to buy a home at any given moment do you think it's one percent of the population half a percent two percent

Three percent of the most i mean how many people are actively shopping for a home right now as a percentage of the entire population my guess is it's like probably one percent possibly even less

Who knows but i know it can't be very large and so uh half of americans are going to try and sell their home to that one percent of americans this is just not going to work i'm sorry

I shouldn't laugh at this this is really depressing and uh and and tragic but it just shows you that you really have to prepare for something here this is going to be bad what's coming at us and

We have to be ready for it us gdp contracted by a record 329 percent in the second quarter and so uh 329 that is 33 it's a third and uh uh in here there's a couple of great

Charts and i'm just going to go right to the charts the annualized gdp this is the this is worse than the great depression there's nothing that has ever happened like this 329

In a single quarter uh and uh then to to look at that in context this goes back to the end of world war ii and so in 1958 there was a quarter that was a 10

Contraction but then look at the bounce back that we have almost 10 percent expansion back there was an expansion rate of like six or seven or eight percent uh when you average all of these

Out and now we've got uh expansions that are like two three four percent uh so if you could draw a trend line across this it's this descending trend line and then you've got this you know so

They had a contraction that was less than a third of what we've just experienced and then this big huge bounce back we're not going to see that bounce back i'm sorry this is the next chart in it

And it's personal consumption quarter over quarter this is important quarter over quarter so they're using the previous quarter as the benchmark so this isn't the same

As the last chart and so here you have to look this was a the back in the 50s in 51 and 2 you had a couple of pullbacks but it's coming off of this quarter as a benchmark

So uh it's it's really not that bad this is coming off of this quarter so to get a total contraction for the year you have to stack them on top of each other and that would push this way off the bottom of the chart

Now this is personal consumption on your personal consumption if you've got to cut back because you're scared or you feel that you can't afford things anymore what do you cut back on you cut back on

Things like well i'm not going to upgrade to the the latest cell phone this year oh i'm not going to buy a bigger big screen tv basically what you cut back on

Is not the things that you need this is the personal consumption uh index and the way that the the allocations of personal consumption food and beverage 17 the biggies housing 329 so 33

A third of what we spend is on housing so this is something that you can't give up you're sort of fixed there you have to eat the next big biggie is transportation everything else

Uh are the things that we can sort of cut back in on so the first things you cut back on are basically the things like the cell phones the big screen tvs the things

That you that we buy from china which brings me to the end of uh this section this is a look inside the 52 trillion dollar bubble that has hijacked

China's economy this is the greatest bubble on earth and back in 2013 i went to china and i filmed in these ghost cities that they have where you've got miles of of these giant uh skyscrapers and

A huge apartment buildings and uh and so they build these ghost cities expecting them to sell in the future and what happens is china has had this mandated real estate

Bubble because it was all state housing before you would get assigned to particular housing and in 1998 or 9 they stopped that and they started selling homes

And now it's the greatest bubble on earth as a real estate as a percentage of household wealth so real estate as a percentage of household wealth in the united states

It's less than 28 in china it's almost 75 so this is enormous and the effect on china now remember everything has a little bit of a delay we've just stopped buying a lot of stuff from china so

The uh amount of trade the stuff that we're buying has really collapsed it's going to take a little while to work that through you know it's a chain reaction

Uh takes a little while but um the us housing uh at its peak of the us property boom about 900 billion dollars per year was being invested in residential real estate

In the 12 months ending june about 14 trillion was invested in chinese housing the total value of chinese homes and developers inventory hit 52 trillion dollars in 2019

According to goldman sachs twice the size of the us residential housing market and outstripping even the us bond market in fact the entire world bond market is

85 trillion and at its trajectory this is uh projected to eclipse that in just a few years 288 apartments in shenzhen were sold online in less than eight

Minutes recently um uh this is just a bubble waiting to burst and what's going to precipitate it is all of the disasters this set of dominoes that i just showed you

That's happening in the united states flooding over into the reduction in trade that's going to pop the china so this is going to be a global uh financial disaster many many times

Worse than the uh um so the leverage ratio is at 50 household leverage ratio 577 percent that is huge um and down here we have the ticking time

Bomb uh and this shows the china's home vacancy rate overshadows all other major economies us taiwan japan hong kong the vacancies have increased according

To wall street journal china's household financial survey shows that uh there are now 65 million empty units there are 330 million people that live in the united states

But that's not households households is it's it's more than two i don't know two point something people or three point something people so you're only talking uh a hundred and maybe 120

Uh million house household households or maybe a hundred and fif a hundred and something somewhere between 100 and 150 there could be as many empty units in china as half of all the the uh housing units that exist in the

United states that is how big this bubble is and uh they're the uh return on rents the yield so this is the difference between uh the mortgage and what you're making

On renting the property has fallen to two percent which means that once this bubble pops they're all going to go backwards on these loans and the value of the home will be less

Than what they owe on the home and what the income is from the home and they're going to have to unload these things and their real estate will crash as well now a state council decision back in

1998 abandoned the country's system of employer allocated housing and so the state owned the housing employers could designate you live here you live there and home

Ownership took off and this is the growth in mortgage debt going from 2008 not from 1998 but back from 2008 from 3 trillion to the september of 2018 at just under

20 so by the end of 2018 this way exceeded 25 trillion so the growth has been astounding and it was 2013 when i went there and filmed and

Saw this massive bubble and it's a government mandated bubble the government created this bubble by uh you know they owned the land they would

Give this land or sell it cheap to developers they would level it build these new ghost cities and sell them off and all of these the middle class bought them up as investments hoping

They would be filled and that has worked a ghost city takes a few years several years but eventually it does get filled but they keep on building more of them and now

The average home price across china has reached 93 times the average income and that's compared with san francisco the biggest bubble in the united states at 84 times and so this is a disaster waiting

To happen i know that it's going to start unraveling sometime soon there's going to be massive currency creation coming to the aid of this and what they

Don't understand is that ultimately it won't work what it means is a collapse in the global monetary system that's what it means if you got anything

From this please like it and share it with everybody you can hit the subscribe button and give us a thumbs up thank you very much for watching we'll

See you next time

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