The coming stock market crash... when the recession will finally feel real

Here's Joe Brown from Heresy Financial, with a video titled, "Global Margin Call: an urgent warning to all investors."  Of the handful of videos from serious financial market watcher, analysts, and investors that have recently made "stock crash coming" videos, this video has the best overview of how thing may play out soon.  Joe makes the case for serious downsides in treasuries (bonds), stocks, and real estate.

Disclaimer

While the mainstream business news and federal officials keep pushing the "no landing" or "soft landing," "there will be no recession" narrative, the people paying attention to actual forward-looking data, see a much different picture.  Even a couple of months ago, it looked like the major stock crash, and the visible drop in today's highly inflated asset prices, particularly stocks, would probably hit the crisis point in September or October.  There were all kinds of negative issues in the economic world, kind of glacially grinding towards a major recession.  It looked like September would be about the right time for it all to come together and hit the fan.  That appeared to be about when stocks would lose their froth, and begin the inevitable big slide down.  Now we are about a week away from September 2023, and the best analysts I watch on the short term trends are saying pretty much the same thing.  The stock market may even have topped out, time will tell on that one.  But there's a major downturn coming soon, and it looks like we are right on the precipice of it now. 

"Get out of stocks now!"- Self proclaimed "bond king," and financial market analyst, investor, and YouTube channel hose, Steven Van Metre just said it straight out, pulling no punches about the near term future of stocks.  

"Global Crash Countdown" - Brent Johnson, known for the "Dollar Milkshake" theory, and co-host Jon Kutsmeda, from the Milkshakes Market Madness podcast/channel, are also seeing a major economic crash coming soon as well.

"When will it end?" - Jeff Snider of Eurodollar University, in conversation with Steven Van Metre, looks at the data of the current asset bubbles, and they wonder how much long the bubbles can blow up before it all pops.

"Michael Burry $1.6 billion short"- David at the The Money GPS YouTube Channel, digs into the news that Michael Burry, who gained fame in the movie, The Big Short, after making a fortune shorting the U.S. housing market in 2008.  

"End of America: Why inflation, the dollar, and The Fed will doom us all" - Well damn, that's a bummer of a title, from Daniella Cambone of Stansberry Research.  This video, a compilation of several of her recent interviews, was just uploaded as I was working on this blog post.  

These are just a few people who actually look at the actual economic data, who have made very dismal YouTube videos, in the last 8 days.  Do you see a theme here?  Some of the best minds looking at that actual economic data, day after day, see a major correction, if not a full blown asset price crash, coming really soon.  Don't take my word for it, watch these videos, and see in the actual data, from several different data sets, showing major economic slowdowns around the world.  It sure looks like we are getting really close to the stock market, and other over-priced asset bubbles, falling soon.  My guess is in the month of September, 2023.  Bad things have a way of happening in the economy in September.  That's just my personal, educated guess.  Think 2008.  

If you managed to find this post, and now are wondering about your stock portfolio's future, check out this video below.  Again, from Joe Brown, the guy in the top video, this video explains the basic idea for seven different strategies you can learn more about, and use, if you come to the conclusion that stocks really are in for a good-sized drop.  Remember, consult any professionals needed before you make investment decisions, and do the due diligence needed to make the best decisions for your personal situation.  

Heresy Financial: "7 Ways to Make Huge Profits from a Stock Market Crash"

This post is for education and entertainment purposes only, and is not financial advice.  See the linked disclaimer above for more information. 

Here are a couple of theme songs for this crash:

"Old Money" - Lana Del Rey

"The Wreck of the Edmund Fitzgerald" - Gordon Lightfoot

There are no paid links in this post.

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Steve Emig The White Bears's Substack

China is beginning to collapse financially

Don't take my word for it.  Here's Joe Brown from Heresy Financial channel giving his take on the current trouble with China's economy.  He gives a good overview in this video.  Much like the pandemic, this is another thing coming out of China whose contagion will spread around the world.  

I'm not going to editorialize on this one, just give you links to several really smart people speaking on this subject in the last few days.  

" black swan event...!" Jeff Snider of Eurodollar University on the dismal economic numbers coming (and not coming) out of China

"Nightmare unfolds" Steven Van Metre looking into the Chinese economy, and the Evergrande bankruptcy

"Verge of collapse"  David from Money GPS channel, with his take on the economic problems in China

These are four really smart people on money and finances, all looking at the events of the last few days in China.  The huge Chinese real estate developer, Evergrande, filed for Chapter 15 bankruptcy in Manhattan the other day, to try and get help dealing with its U.S. and world creditors.  The Chinese yuan is sinking in value, as well.  Their economy is slowing down dramatically.  There will be effects of China's troubles hitting the U.S. economy and businesses soon.  

I'm doing a lot of my writing on Substack these days, check it out:

Steve Emig The White Bear's Substack

The world's biggest property developer just went bankrupt: China's Evergrande goes Chapter 15

David from the Money GPS YouTube channel gives us a first look into the collapse and bankruptcy of China's Evergrande, said to be the world's largest property development company.  China's real eatate market is a $62 trillion industry, it's the single largest asset class on Earth, bigger than the bond markets, stock markets, and every other asset class.  And it's in big trouble right now.  

I've been watching David's Money GPS channel since late 2019, shortly after the Repo Market crisis happened.  He's had his eye on the Chinese real estate market for quite a while, and in the video above, he gives his early take on what's happening with the bankruptcy of Evergrande, and where things are likely to go from here.  He takes his information from original sources, not 2nd or 3rd hand opinions.  This helps us get a clearer picture of what's happening around the world in economics, business trade, and related issues.   

I'm doing a lot of writing on Substack these days, check it out:

Steve Emig The White Bear's Substack

Deflation? Jeff Snyder makes the case for future deflation

Eurodollar University channel's Jeff Snider has an amazing knowledge of the eurodollar system (the real reserve currency system), and the nuances of the banking and monetary system.  Jeff, and his friend and frequent guest on his podcasts, Steve Van Metre, have taught me a lot about the financial systems nuts and bolts in recent months.  In this interview, Jeff makes the case for coming deflation, instead of another wave of inflation.  Yes, DE-flation, as in prices actually going down for a period of time.  

I feel pretty stupid listening to Jeff Snider's videos.  But after 2-3 months of listening to his daily videos regularly, his insights make more and more sense.  In this video he makes the case that the "inflation" we have dealt with is actually the result of a "supply shock," and that now we are into disinflation (prices not rising as fast), and may well be headed for actual "deflation," where prices actually drop overall.  It won't be forever, but it looks like inflation is, and quite possibly will continue to decrease in the coming months.  Just check out the video.

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Steve Emig The White Bear's Substack

56% of student loan borrowers will have to choose between loans and necessities

 According to this new CNBC article, citing a Credit Karma survey, 56% of people polled who owe student loans say they will have to choose between paying student loans and buying food and paying their rent.  The article goes on to say that 45% of borrowers expect to get behind on their payments, and to become delinquent, at some point.  The article says that even many people with incomes of over $100,000 a year will have trouble making student loan payments.  

Pure and simple, the federal government is going to eat most of the $q.4 trillion or more of the government owned student loan debt.  Most people can't afford to pay it.  It's just that simple.  But no one wants to admit that.  Think about it, you're not considered responsible enough to buy an alcoholic drink at age 18, but you can sign a contract for $40,000 to $100,000 in debt when you have no means to pay it at the time.  Think about that one.  

The smart people that can't afford it simply won't pay it, and will take the hit to their credit.  What are they going to do?  Repossess their brains?  There are over 40 million Americans with student loans, over $1.8 trillion in total student loan debt now, and the average payment is estimated to be about $400.  Around 37% of student loans weren't being paid on time in the spring of 2019, a year before the pandemic (the Nerd Wallet article with that info has since been updated to more current stats, but I read it myself in 2020).  

Honestly, I'm 57 years old and currently homeless, though I'm a working artist and blogger.  I just don't earn enough to rent a place to live.  I'm GLAD that I didn't go to college.  While my economic life got off track for several reasons in recent years, not going to college is one of the best decisions I ever made.  I didn't have the money to go, not even close, when I graduated from high school.  My parents didn't save money, because of the dynamics going on in our house.  I didn't have a strong direction in life at age 18, so I probably would have been on the 5 or 6 year plan, bouncing between majors, if I had gone to college.  I knew I wanted to have my own business at some point, and I didn't need a degree to hire myself.  There was nothing I was really interested in that required a college degree.  So for me, avoiding college was the right decision.  That's just me.  

But today, in 2023, it's a much different world than it was when I was 18.  A college education does not guarantee people a high paying job when they graduate anymore.  It's a coin toss, at this point, depending on a whole range of factors.  Some people with degrees will make millions more over their lifetimes, and many other graduates will struggle with their student loan debt for decades.  This issue is just beginning to hit a crisis point, and I believe it will be one more reason college enrollment will continue to drop in the next several years.  Young people who are not from wealthy families will see their parents, aunts and uncles, and other adults struggling with student loan debt, and huge numbers will take alternative paths in life.  I believe the coming recession, and its lingering aftermath, will be another reason that will force a complete restructuring of not only student debt, but the entire college and university system.  

I've been predicting a "College Apocalypse" since a chance conversation led me to do about 20 minutes of research, back in 2017, and I learned what SLABS (Student Loan Asset Backed Securities) were.  After learning about SLABS, I knew then the whole higher education system would reach a crisis point within 5 to 10 years.  The can got kicked down the road for three years, due to the pandemic, but it's now becoming apparent there's a HUGE crisis in higher education coming.  Student loan payments are supposed to start again in October.  Most people with those loans can't afford to make the payments, pure and simple.  Like commercial real estate, this is another major crisis we are heading for, and it won't end well.  

I'm doing a lot of my writing on Substack these days, check it out:

Steve Emig The White Bear's Substack

Macro-economics- Stephanie Pomboy- Best Voice on the Macro picture

There are two women I became aware this of this year that are both incredibly knowledgeable on the macro-economics picture.  The first one I found is Stephanie Pomboy.  She's been doing this work for many years now, and appears as a guest in the mainstream business media on a regular basis.  I personally love hearing her ideas in a long form video like this interview with her by Meb Faber, where she can go into some depth on current economic trends and topics.  You can learn more about Stephanie at her Macro Mavens site.

 

 I've been writing about "the next big recession" since 2018.  A couple of ultra long term trends and cycles clued me in to a potential major recession, or full blown great depression, beginning about 2020.  I knew that if it materialized, it would be both catastrophic financially, and a huge period of change, as well as a time of incredible opportunities in a financial sense.  As the last 3 1/2 years have played out, the pandemic and then the unprecedented amount of stimulus money handed out to banking, business, and every day people cut the initial 2020 recession (technically a depression) short, and completely warped the work and financial worlds.  

Since then, to get more info about how the short term trends were playing out, I looked for people who had solid information on what was going in the business, banking, and economic worlds, to help fill in  the Big Picture of what is going on.  These last 3 1/2 years have been crazy, to the point that even veteran business owners and investors have been scratching their heads, trying to figure out where things are going.  

I found Stephanie Pomboy first in this Wealthion interview early in 2023, and became an instant fan of her insights and knowledge of the macro-economic picture.  In the interview above, she begins talking about the recent "there won't be a recession" narrative, from traders high on Hopium, and continues on with her analysis of our current economic world, and the more obscure trends and insights she sees happening.  If you want a Big Picture view of the current economic climate, Stephanie is one of the best people to listen to that I've found. 

I'm doing a lot of my writing on Substack these days, check it out:

Steve Emig The White Bear's Substack

Become a Repo Man- Recession jobs

This video has a few cuss words, just to warn you.  But it's a good explanation of what it takes to become a Repo Man.  For any of you who are not familiar, that means going out in a tow truck , and taking towing cars that people are not making their payments on.  For the women reading, I'm not leaving you out, but this is a male dominated business since people do get angry, and sometimes violent, seeing their cars get towed.  That makes this a potentially dangerous job.  For that reason, there are very few Repo Women, as far as I know.  This guy is in Indiana, and the video is four years old, so it was made pre-pandemic, before craziness with the car market.  

According to this recent video by Lucky Lopez, there are now 20,000 cars being repo'd in the U.S. EVERY DAY!  For the life of me, I can't figure out why there are not a ton of "Become a Repo Man" videos on YouTube.  This means that every day, thousands of tow truck drivers for repo companies, all across the nation, are picking up repossessed cars and trucks.  There are more car repos now than during the Great Recession of 2007-2009.  That means that if you've ever thought about becoming a Repo Man, now is probably the best time to start.  In any case, the guy in the video above tells you the basics of what it takes, which should get you started on the path, if you are interested in this as a career. 

Why are there so many car and truck repos now?  All the money given out with all the stimulus checks and and PUA/PPP programs, during the pandemic, led to lots of people buying cars they couldn't really afford.  Lucky Lopez calls the people Stimulus Ballers, which is the perfect term.  Millions of people were Hood Rich in 2020 and 2021.  Some people just stretched themselves too far financially, since life was going good.  Some people straight out scammed the car dealers, putting  $10 grand down on a $90,000 tricked out Mercedes or big 4 X 4 truck, and then they never made a single payment on it.  Now the economy is slowing down, those big $700 to $1,000 car payments are getting harder to keep up with.  So hundreds of thousands of cars a month are getting repossessed.  Eventually, all these repo cars will have to be dropped in price, because there are just too many of them to sell, and like the houses with subprime home loans back in 2008, many cars now have loans on them for more than the vehicle is worth.  But things in the auto industry haven't become painful enough yet for dealers to dramatically drop used car prices.  That day will come.

In any case, repo men are doing a land office business these days, and that's one job that will need lots of people for at least a couple more years, as many other businesses struggle as the recession really sets in.  

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Steve Emig The White Bear's Substack

Good careers during a recession

OK, as I write this, the Federal Reserve, the business media, and much of the mainstream media, are now, suddenly saying we won't have a recession.  They're wrong.  Pretty much every actual economic indicator and the actual data says we are slowly grinding towards a substantial recession.  Plus, as an old guy who has lived through about seven recessions, the "We're not going to have a recession" talk usually comes shortly before the recession becomes obvious to everyone. 

That said, Shane, in the video above, gives solid advice on five different types of careers that are very recession proof.  Well, except for one.  This video is from 2022, and he lists tech careers as recession proof.  As we know now, the big layoffs in the last year have been in tech.  But that's an unusual circumstance.  During the Great Recession of 2008, and the pandemic recession, tech workers were pretty solid.  He's not old enough to remember the DotCom crash, which is when tech itself crashed.  But the other four different types of careers he lists are solid places to work during recessions.  If you're thinking about a new career, or just beginning to work in general, check this video out.  

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Steve Emig The White Bear's Substack

Your REAL mistake in buying this house was...

This video popped up on my feed, and since the FOMO real estate market is so recent, and actually still going in a few areas, I wanted to check it out.  I know nothing about Javier, I've never watched any of his videos, but he does seem sincere in his analysis.  But he missed the #1 mistake all three of these people made. 

Disclaimer

First of all, Millennials and Gen Z people, here's a basic fact of life, real estate agents are salespeople.  They only get paid if the deal closes.  They don't get paid for spending their weekends at open houses, or walking you through 17 homes.  They get paid when the deal closes.  So they will say what they need to say to sell you the house and close the deal.  Period.  Some agents may be really shady in this respect, some may be pretty honest.  

Never, EVER take a salesperson's advice at face value, on ANYTHING.  There's an old saying familiar to us geezers from Generation X and older, "Never ask an insurance salesperson if you need insurance."  Their answer will ALWAYS be "Yes!  Sit down, let's talk."  Unless your agent is someone you have a long relationship with, having closed multiple deals, where they know that being honest will lead to future deals with you, just consider the agent's ideas and advice as an opinion.  Find whatever professionals you need (example- Get a seasoned construction worker friend to walk through the house, and tell you their opinion, in addition to an inspection), people outside the actual deal, who can help you make a solid decision, one way or the other.  

Now, the real reason I'm writing this post, is the huge mistake that all of these homebuyers in the video above made:

You bought at the top of the market.  

Never buy at the top of the market, when it comes to major purchases.  

A simple Google search of "U.S. home prices chart" brought up this chart first.  Click over, check out the chart.  That chart shows median home prices, heading up and to the right.  You live in the early stages of the Information Age, there's lots of great data out there.  It took me about 5 seconds to search and find that chart.  Do some research.  This is called doing your due diligence.  And don't buy at the top of the market.  Anytime from mid  2020, to the end of 2022, was the top of that market at that point, on the U.S. median price chart.  That's just a national average, but it's a good first step.  Then do local research on real estate in your area.   Talk to other brokers and agents, and even better local real estate investors.  You know a couple, or know someone who does, ask around.  Nick Gerli's Reventure App is an amazing resource for national and local real estate data, across the U.S.. and is still free as I write this post (for a month or so).*  There are other databases as well.  

A home, or any other piece of real estate is a huge purchase, put some time into the due diligence process.  If the particular piece of property is a foreclosure, in probate, the product of a divorce, or some other kind of forced sale/motivated seller, (like the three people mentioned above will be soon), and you can get the property at a 30%-40% discount, it might actually actually be a good deal, even in a really high market.  But those deals are very few and far between, and the insiders snap them up before you hear about them, in most cases.  

The real mistake all of these people made, intelligent as they may be in other aspects of their life, is making a big, financially stretched, real estate purchase at, or near, the top of the market.  This mistake will cost each of those three people tens of thousands of dollars, maybe more.  Hopefully they learn that lesson.  

This is a mistake very often made by "high income/high spending" people.  In my younger days, these were usually people in professions like doctors and lawyers.  Really intelligent people in their area of expertise, but prone to wanting to "keep up with the Joneses (or the Kardashians, these days).  Because of this, high income/high spenders were prone to making bad financial decisions.  In today's world, the high income/high spender category includes tech people who've made money in stock from start-ups they were a part of, professional athletes, rappers and other musicians, top actors and media personalities, and all the entrepreneurial people and YouTube ballers who've earned a really high income at a young age.  Sometimes even at a not so young age.  This is also why big lottery winners usually go bankrupt in a few years.  

I nearly made this mistake myself in 1989, though I wasn't making very much money.  I first had almost enough money to buy a house way out in the Southern California desert... 6 or 8 months before the real estate market began to crash in 1990.  I could have squeaked into a small single family house way out in Lake Elsinore, if I stretched myself.  Luckily, pure fear of debt, and the 1 1/2 hour commute to work, kept me from buying a house.  The video company I worked for was dissolved a few months later, though I was kept on by moving to the parent company, which really struggled in the 1990's recession.  So I didn't make a mistake I definitely would have regretted a year later.  Ultimately, not buying a small house worked out in my case.    

   One more thought on the 2021-2023 FOMO real estate market.  I'm creating a new acronym, feel free to share it.  FOMO = LOPMBD.  OK,  I know it doesn't roll off the tongue like FOMO does.  What does that stand for?  Fear Of Missing Out equals Lots Of People Making Bad Decisions.  If there's a sense of FOMO in any situation, where there's a big purchase involved, then FOMO is nearly always a sign it would be smart to back off, and walk away. 

This is actually a very basic sales tactic, to create a sense of urgency with a customer, to force them to make a decision without properly thinking it through.  "We only have one purple Escalade with 24 inch rims left on the lot, this thing's going to get snapped up quick!" In that situation it's always smart to back off and think about it.  In many cases, it's smart to wait for a better time, and take time to learn that market, and the longer term cycles in that market.  Buying a gallon of milk when the price is a dollar more than usual, won't seriously affect your life.  Buying a house for $600,000 or a million dollars when the market's about to drop will seriously affect your life.  It's worth it to do some more research on the long term price cycle.  If the whole market is in FOMO mode, also called a mania sometimes, then there's probably a big drop in prices coming before too long.  Smart money buys during the "sale" after the FOMO subsides, when motivated sellers appear, and the market drops off.

One last thought, the amazingly knowledgeable macro economic analyst, Danielle DeMartino Booth, recently cited data saying that 65% of people who bought a home in 2022 and 2023 already can't afford their mortgage payments (13:47 in the video linked).  This is when prices are just beginning to drop in former boomtowns, and still fairly steady in most areas.  We haven't seen the big home market crash yet.  Those take years to play out fully.  

 Anyhow, the people who bravely responded and were mentioned in the video above are the beginning of a huge wave of motivated  home sellers coming soon.  That will be followed by a huge wave of foreclosures, since home prices are already dropping in some cities, Phoenix being one of the worst.  A lot of people who bought houses in 2020-2022 will be upside down within the next year, and many won't be able to sell.  That's when the serious real estate investors start buying properties, at much lower prices.  

Yes, I realize some people will rake me over the coals for this post, considering my own current housing situation.  But this post is good advice, either way.  Haters gonna hate.  Whatever.  

* Not a paid link 

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Steve Emig The White Bear's Substack

One Barbillion dollars in box office gross in two weeks...

 In just over two weeks, the Barbie movie has now grossed over $1 billion dollars.  One site had the tagline, "One Barbillion Dollars."  Mattel, the (still striking) movie industry, and a couple thousand struggling movie theaters, are glad for the movie's success.  Photo shamelessly stolen from internet.

Does anybody else remember way back, when we first heard about the original Pirates of the Caribbean movie? I was thinking, "There's no way they can make a decent movie based on an old ride at Disneyland."  Maybe that was just me.  They made three pretty damn good movies, and two other ones, in the Pirates of the Caribbean series.  They were all led by Johnny Depp's quirky Captain Jack Sparrow, a character based largely on Keith Richards.  Seriously.  

My point here is that with some good writers, you can make a good mass market movie starting with most any topic.  A good writing team could create a compelling story about a rutabaga, if the rutabaga was famous to begin with.  In the case of the Barbie movie, we have a very feminist movie, from what I hear, based on a toy that warped little girl's body image ideas for over 50 years.  Touche'.  

The reason I'm writing a post here about the Barbie movie is because in one of the videos I watched, when I wrote my original post about "Barbenheimer," the Mattel CEO said he had 14 other movies in development, all based, of course, on Mattel toys.  OK, Hot Wheels, there's definitely movie potential there.  But what the hell are the other 13?  Fisher Price people?  Thomas the Train?  Monster High? American Girl?  Barney?  Uno?  Stay tuned, apparently Mattel plans to go "Marvel" on us, and use their toys' intellectual property to produce a whole bunch of movies, which probably won't do near as well as the Barbie movie has.  Stay tuned kids...  Oh, and this video is still the best video ever featuring Barbie. 

I'm doing a lot of my writing on Substack these days, check it out:

Steve Emig The White Bear's Substack  

There WILL be a mass student loan payment revolt this fall

This is a short interview with Landry's CEO Tilman Fertitta, whose business owns high end restaurants like Morton's, The Charthouse, and many more top brands.  He says straight out that the high end restaurant business is slowing this summer.  This interview is from late June or early July of 2023.  He also says that he fully expects a further pullback in business when people have to start paying their student loans again.  

In this humorous YouTube short video, we see a guy with an exceptionally high amount of student loan debt, preparing to make his loan payment.  How do you feel about making your student loan payments?

Here's the basic stats.  There is now $1.774 trillion dollars of student loan debt in the U.S., spread across 43.6 million people.  You can check out those stats, and others here.  As most of us have heard, the pandemic inspired student loan moratorium on payments ends in September 2023.  Interest starts accruing again in September, and payments are supposed to begin being made again on government backed loans in October.  

As most of us have also heard, about 2/3 of Americans have been living paycheck to paycheck, with little or no savings.  People live at a wide variety of levels, but a huge number of people are just getting by these days, whether they make $40,000 a year or $150,000.  According to this article from May of 2022, that's about 166 million people.  Here's a fun stat most people don't know, according to the BLS, the total U.S. "labor force" is 166.95 million people in June of 2023.  Those are the people that actually have jobs, out of the approximately 330 million Americans.  So roughly the entire U.S. working population is already struggling to make their monthly bill payments.  

Pure and simple, a huge part of those people who owe student loan debt cannot afford to start making those payments in October.  It's probably the vast majority that really can't afford those payments comfortably. While many may try to start making payments, I believe we will see at least half of those 43 million people not pay their loans to start with, or get behind in payments within a few months.  Multiple indicators, like the continued rise in credit card use, suggest tens of millions of American are already tight, or actually struggling, financially.  In addition, the economy is slowing rapidly on most every level, and nearly every economic indicator says we're heading into recession at the same time.  That means more slow business, and more layoffs in the future, which will exacerbate the problem.   

I truly believe that these trends will combine into an organized movement of people simply refusing to pay their student loans, at some point this fall.  As I've said many times before, I simply predict the inevitable.  

Most people can't afford another $400+ monthly payment, and they won't stop feeding their families to pay that debt.  They will look at all their other bills, and then to their returning student loan payment, and think, "What are they going to do if I don't pay, repossess my brain?"  And they just won't pay, and will take the hit to their credit scores.  That will coalesce into a mass movement at some point, to simply refuse to pay, in all likelihood. 

So that's yet another factor in the coming  mega recession I see heading our way.  I could be wrong, which, of course, is possible.  If that's the case, and everyone DOES make their payments, then those payments become a $17.2 billion monthly hit to an already slowing economy.  That's a loss of over $200 billion (1/5 of a trillion dollars) hit to consumer spending, per year.  That's a lot of money not going to restaurants, local stores, clothes, cars and trucks, and everything else, which is the point Mr. Fertitta mentions in the video above.  

  This is a bad situation any way it plays out.  But it will play out, one way or the other, and we, as a society, will have to figure out some way to work through this mess.  And all the other messes (commercial real estate, hundreds of nearly insolvent banks, affordable housing and homelessness, etc.) currently at crisis levels.  

Why is there so much student debt these days to begin with?  Few people have heard of SLABS, or Student Loan Asset Backed Securities.  Since the Great Recession, student loans have been packaged into debt instruments like Mortgage Backed Securities (MBS).  You remember those?  Subprime MBS< along with CDO's (Collateralized Debt Obligations) Those are what helped crash the economy in 2008.  Because of the Great Recession, the loan requirements were raised, and a lot less residential MBS and CDO's were created since.

But, let's face it, like Margot Robbie explained in the linked MBS clip above, these investments made out of thousands of bundled up loans, made an insane amount in fees for investment banks.  So after the Great Recession, investment banks used this same concept to create SLABS out of student loans.  And the total amount of student debt soared.  They also created Collateralized Loan Obligations (CLO) out of business loans.  And Commercial Mortgage Backed Securities (CMBS) out of commercial real estate loans, and Asset Backed Securities (ABS) out of car loans and even credit card debt.  Same racket, just different loans used to do it.  That brings is to 2023, where instead of this scenario happening with subprime home loans, it's happening with student loans AND commercial real estate loans AND business debt, AND auto loans, AND even some credit card debt.  Now you know.  Take cover.  

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Make money by sarcastically making fun of all other internet entrepreneurs... then shamelessly plug a high end product and reap affiliate link commissions

Are you sarcastic?  Can you make a satirical YouTube video about how goofy today's internet "entrepreneurs" are?  Do you know what affiliate marketing is?  Can you copy and paste an affiliate link?  Then you, too, could make money like this guy above.  I don't know who the fuck he is, but apparently 2.97 million subscribers do.  WTF?  Did this guy date a Kardashian for ten minutes or something?  2.97 million?  

This guy's making money by making fun of people.  Shit, that sounds fun to me.  You, too, could make money by making videos while making fun of other people.  This is humorous YouTube affiliate marketing in 2023.  

Find a course that teaches you how to do affiliate marketing (sign up on some affiliate marketers email list, then just get the free old videos, and learn from those, don't buy the actual new course).  Then figure out how to make a decent YouTube video (YouTube how-to videos will teach you.  (Remember kids, YouTube is the new college, and student debt is for losers!)  Then sign up for an affiliate program, make a sarcastic video, put your affiliate link in the bottom, and make money like this guy.  Oh, and build a following of three million followers, too.  That might take a couple of weeks.

 

See, it's that easy!  Now go detox your negative energy with whatever trendy drink from some obscure part of the world that people are drinking this week, and get to it!  

I'm doing a lot of my writing on Substack these days, check it out:

Steve Emig The White Bear's Substack

Recession 2023... is the most anticipated recession in modern history finally here?

It's Wednesday, August 2nd, as I write this.  This is an NBC national news report from yesterday (8/2/2023) about the collapse of 99-year-old Yellow Trucking company, which put 30,000 drivers, mechanics, and other employees, out of work this week.  This business shutdown became the first major middle class business shutdown to really garner major media attention this year.  

Disclaimer

Is the tremendously hyped Recession 2023 finally here?

Let's look at the world of business, finance, and the economy.  There have been a parade of layoffs in tech workers, over 386,000 total in 2022 and the first half of 2023.  There has been a record number of bankruptcies, business and personal, in the first half of 2023.  Six U.S. banks have closed this year, either in full collapses, buyouts, or forced mergers.  Silvergate, Silicon Valley Bank, Signature Bank, and First Republic went under in March, 2023.  This past week,  PacWest entered a forced merger with Banc of California (with J.P. Morgan involved), and Heartland Tri-State Bank, in Kansas was shut down by the FDIC.  

After the initial banking crisis in March of this year, banks, overall, began to slow down on making loans.  Trying to keep themselves out of further trouble, they raised standards on lending to both businesses and individuals, and have made less loans overall, this is called a "credit crunch," and is often a major factor in recessions.  The Federal Reserve (aka The Fed), in their own report, found 722 banks on the verge of being insolvent in May of 2023.  

The sales of residential real estate have dropped off a cliff in most areas, and price drops are beginning to show up in the data for several of the cities that boomed during the pandemic, and in recent years.  Then there's commercial real estate, where major corporations are "handing the keys back to banks" on entire skyscraper office towers.  This has happened to several major office buildings in recent months.  Many office buildings are financed on short term loans of 1-4 years, then they get refinanced.  Well over a trillion dollars in commercial real estate debt has to be refinanced in the next couple of years. Because of the higher interest rates, many landlords are seeing their loan payments double or triple when they go to refinance.  

In addition to all of these things above, several treasury yield curves have been inverted for up to 18 months, which are one of the most reliable  indicators of coming recessions.  The most widely used, the U.S. 2 year/10 year treasury curve, is the most inverted it's been since the 1980's.  

All of these different factors above are sign of a weak economy, if not an actual recession.  They all have occurred during the last 18 months, most since The Fed began to raise interest rates from near zero to 5.25%.  The higher interest rates raise the payments on loans, which ripple through the economy, as businesses and individuals get new loans, and refinance old ones.  This eventually causes all borrowers to pay a lot more in interest, which causes businesses and people to spend less, overall.  That's what slows down the economy.  This usually brings down inflation, over time, which is why The Fed began raising rates in 2022.  

With all of this going on, there's been this recent narrative that the economy is still strong, and we missed having the expected recession.  Through all of these things above, the unemployment rate has stayed low, and the stock markets kept going up.  Until today...  Ratings agency Fitch downgraded the quality of U.S. government bonds.  That finally got the stock market's attention.  

CNBC chart of the Nasdaq index today, looking at the 5 day chart, with today's cliff drop on the right.

The Nasdaq unexpectedly plunged 310 points today, a drop of over 2%.  The Dow Jones Industrial Average was down 348 points (-.98%), and the S&P 500 dropped 63 points (-1.38%).  It appears the summer stock rally has topped out, or at least is close to running out of steam.  

So... are we in recession?  Technically, recessions are officially called months, even years, after they happen.  That means, no, we are not officially in a recession.  But it's never called a recession when we're actually in one.  But we have all kinds of factors slowing down in the business and financial worlds, and if we're not in recession territory, it appears we will be soon.  There are just to many parts of the economic world slowing down dramatically right now.

What does this mean for average people?  The credit crunch means it will be much harder to get loans, in general, for several more months, maybe a year or more.  That's for all kinds of loans, credit cars, car loans, home loans, lines of credit, home loans, and refinances.  Debt payments are a killer in recessions, so it's best to pay off any debt possible, and reduce what you can't payoff.  If you can restructure loans to pay them back at a lower interest rate, that's really smart.  

In the work world, there will be a lot more layoffs, as more businesses struggle financially.  This will affect some people, depending on the industry, and how solid of employees they are.  You want to be the most needed person in the office in a recession, in case the company has to lay off people.  

Just in general, it's smart to cut back on unneeded expenses, particularly if you don't have a large savings cushion, which few people do these days.  Look at your life, and figure out if there are things you can do without for a while, as the coming months play out.  If you can use that extra money to pay down debt, or just build savings, just in case of an emergency, that's always a smart strategy.  We all know this, at some level, but everyone spends some extra money on things that aren't really essential.  

  To answer the original question... No, officially we are not in recession.  But we are in an economic period that's slowing down rapidly, and the next year or so will be a tough time for a lot of people.   Many people will struggle.  Lots of people will find completely new jobs, and many will find great opportunities in the tough times ahead.  Spending less in general, saving what money you can, and looking for new opportunities, are always good qualities to have in tough economic times, recession or not.  

Fitch downgrades U.S. government debt from AAA rating to AA+

Bloomberg analysts talk about the downgrading of U.S. debt from AAA to AA+ last night (8/1/2023).  Yeah, that's not good.  As I write this post, The Dow is down 271 points, the Nasdaq is down 284 points, and the S&P 500 is down 56 points (8:00 am Pacific  time, 8/2/2023).  

Why is the world so crazy now?  Here are my personal thoughts.

The Big Transition... My Big Picture view of the 2020's

I'm doing a lot of my writing on Substack these days, check it out:

Steve Emig The White Bear's Substack