The Coming Great Depression 2.0 | A Horrible Crisis.

as always folks we gotta cover the

depression scenario the Great Depression

scenario of tightening Financial

conditions the FED potentially you

turning a massive Great Depression that

will be worse than 2008 Michael burry is

calling for it that this is no different

from the crash of 2000 no different from

the great financial crisis of 2008

except we are walking into the Great

Depression and in this video we're going

to cover institutional coverage on the

not so benign Great Depression scenario

that we could be facing now many of you

know that I am not the biggest bear

today I was a mega bear in January of

2022 that was the perfect time to start

being a bear today I am not a bear

however I like to pay attention to what

the Bears are saying and that is the

coverage that we are going to go into

right here first we are going to start

with a Jeffrey's letter on Greed and

fear and then we will cover multiple

other institutional pieces on the

depression scenario following banking

crisis here we go

Jeffrey says

check out the programs on building a

wealth link down below with an expiring

coupon code on March 22nd all right we

got that out of the way so

the Silicon Valley Bank collapse is a

hint of potentially massive financial

problems building in the former boom

areas of private equity and private

Lending and unfortunately the private

Equity Market could lead to it

collapsing could lead to a massive

disinflationary impetus for our economy

and the impacts of that will be great

let's analyze what some of those could

look like take a look at this

the fact that credit the credit boom in

the past cycle was in private lending or

Shadow financing will mean that lags in

monetary policy will prove to be even

greater than normal this is to say that

while in 2008 we had a boom in real

estate over the last decade we had a

boom in private lending known as Shadow

financing like startup lending and the

collapse of Silicon Valley Bank shows us

the potential first shoot to fall but

this does not mean there will be no

impact for monetary typing rather in a

world where the U.S enters recession

Silicon Valley Bank will be seen as the

first hint of problems to come in

private Equity just as the failure of

New Century Financial in April of 2007

was the first hint of problems to come

in subprime mortgages they're comparing

today to April 07 which means much more

pain still ahead in this respect 2022

was the year where U.S Equity suffered

multiple contraction from monetary

tightening 2023 will be will be the year

of earnings downgrades hitting the stock

market if the recession proves to be

accurate and we do go into recession

which we widely expect this is now the

key issue in financial markets 2024 will

be the year when markets will have to

end up dealing with the emerging credit

problems of the private Equity space in

other words multiple compression 22

earnings compression 23 private Equity

collapsed by 2024. that calls for Mega

hell over the next two years and it

really makes you want to make sure you

have your life insurance up to date go

to metcaven.com life you can sign up for

life insurance in as little as five

minutes it's the life insurance Lauren

and I use it's fantastic five minutes on

you can Apple or Android pay for it it's

great in this respect it's both amazing

and an opportunity that the leveraged

loans price index leverage loans is

usually lending for riskier companies

and there's an index that tracks a pain

in this in this region and it's still

only trading 6.2 percent below its

recent High the greed and fear index is

basically recommending you short

leveraged loans you can Google how to do

that but basically they're saying things

about to hit the fan

they say this would be a goodest time as

any if the recession forecasts are

accurate to jump into shorting uh

leveraged loans and private equity and

being prepared for the true pain that's

coming because they believe that we are

heading into a five quarter long

recession folks five quarters is

1.25 years in other words if we go into

a core a recession Q4 of 23 we could be

in recession all throughout 2024. this

is scary

they also believe that unfortunate

unfortunately because inflation is

remaining sticky the FED is going to be

in a very very tough situation they call

Jerome Powell a wannabe volcker they say

his failed wannabe volcker act has now

put him in a pickle because inflation is

not falling fast enough and we're in a

financial crisis which we were not in

this sort of financial crisis the last

time around now maybe we'll get some

Clues on what happens on March 22nd in

terms of what Jerome Powell ends up

deciding to do what is he forecast with

the Dot Plot but he is in a pickle and

what does this potential pickle mean for

the bear case what's the nightmare

scenario well here it is T.S Lombard

tells us what the nightmare scenario

potentially looks like

so first they talk about how this cycle

I hate the phrase is different they talk

about how this cycle is different

because in this cycle in many any uh

many so many institutions have talked

about this this cycle is different

because it really what households are

doing in this banking crisis is they're

polling deposits out of Banks and

they're buying treasuries and that's

actually really interesting because

that's what we did with house hack as

well that's my real estate startup now

that's it's important to know by the way

that we are closing the funding round we

may never have another found funding

ground until we IPO for a house hack

we're closing that funding round on

March 31st go to househack.com to read

the solicitation there this video is not

a solicitation while we are trying to do

the non-accredited round at the same

valuation probably for May or June we

can't guarantee that'll actually happen

because if the SEC doesn't give us a

green light we'll just start operating

and we won't do a fundraise so if you're

accredited you've got 12 days left to

potentially get in on househack but

anyway

what we did at househack is we pulled

most of the money that we had and we

bought treasury bonds back in November

so we've been milking like seventy

thousand dollars a month of just cash of

revenue from treasury bonds uh uh but

thanks to having these treasury bonds uh

instead of having them at Banks but

that's actually part of the reason why

you're having a banking crisis is

because money is going from bank

accounts to treasuries you actually

didn't have that happen so much in Prior

recessions and prior recessions yeah

people sold stocks and spent less money

but they didn't flee into treasury bonds

but that's actually creating more

banking stress this time around which is

quite interesting

on top of that because the Federal

Reserve is going through a quantitative

tightening process except for this last

week where they expanded a little bit by

300 billion dollars just the ditto 300

billion dollars the fat is actually

destroying money it's the opposite of

the money printer you're vacuuming it up

and lighting it on fire

the fed's balance sheet if it were

constant then the money that's going

into buying treasuries would actually

flow back into the economy but because

we're quantitatively tightening we're

actually burning money that burning of

money leads to potentially more banking

risk because banks are basically having

to move cash to people's pockets and

potentially move hell to maturity

Securities to cash that means taking

even more losses at Banks TS Lombard

here says Banks can tend to be cheeky

with what they do let me explain this

cheekiness in a very basic way and why

this banking price crisis could get

worse

in English there are two places the

Federal Reserve or Banks can put their

bags

a f s available for sale Securities and

htms held to maturity Securities you

don't really have to understand all of

the differences between these but in

English these are things that they're

willing to sell these are things they're

not willing to sell let's say you bought

end phase at eighty dollars and you

bought Tesla at three hundred dollars

let's just say okay uh well you would be

holding the bag on Tesla stock and you

would be up on end phase right so how

could you be cheeky with your financials

if you're a bank well just say your end

face stock is available for sale

and here you what do you do you mark to

Market which means you actually look at

the current market value and you say

look we have a profit we're so smart we

have a profit just look at our gains and

then you hide your losses in available

for or Hell to maturity uh Securities

and so you hide your bags over here

where there is no Mark to Market

requirement so in other words the banks

can hide their bags

Legally Legally hide their bags

and not hide their bags on the available

and basically prop up they're available

for sale Securities right what does that

mean here well if more people are

pulling cash out

banks are like crap this is going to

expose our bags in other words when the

bags get exposed things could get even

worse for the banking crisis

and so TS Lombard asks the question here

why would you keep your money in

deposits unless the FED Cuts rates or

Banks raise rates

right

it's a fair question why would you have

your money sitting in cash if you could

be milking four to five percent on

treasuries it doesn't make sense and so

in other words the Federal Reserve may

have to straight up cut their rates

to prevent the banking crisis under what

treasuries are yielding to stem the flow

of the banking crisis and until this

happens the financial crisis continues

because Financial conditions keep

tightening here's the nightmare

the nightmare scenario would be the

financial system cannot take any more

tightening but the real economy needs it

inflation stays High which forces fed

rates to stay high which forces Banks to

expose their bags more which leads to

more banking collapses while rates are

high and the FED has to over tightening

over tighten to stop this crisis you

have to lower rates and guarantee

deposits you have to quell the panic

guaranteeing deposits is what the FED

has started to do with the treasury

Department but not at all banks the

treasury secretary Janet Yellen

basically just told you your deposits

are not safe at small banks in fact I

could show you that which is very scary

because think about it I've regularly

been saying that you should be cautious

about having your money at the small

Banks now some people are like have it

you're creating third and you're going

to create the bank run no I I see a fire

and I'm warning people that there's a

fire coming to you I feel like I'm not

part of the problem I'm identifying the

problem right uh this is this is like

it's very obvious if you have more than

the FDIC Insurance limits at the bank at

small Banks why would you be there that

doesn't make sense and listen to what

Janet Yellen tells you in her

Congressional testimony right here she

gives you the biggest warning that you

possibly need to get out of small Banks

we're dealing with on it will the

deposits in every Community Bank in

Oklahoma regardless of their size be

fully insured now are they fully

recovered every Bank every Community

Bank in Oklahoma regardless of the size

of the deposit will they get the same

treatment that

svbp just got or Signature Bank just got

a bank only gets that treatment if a

majority of the FDIC board a super

majority is super majority of the FED

board and I in consultation with the

president determine that the failure to

protect uninsured depositors would

create systemic risk and significant

economic and financial consequences so

what is your plan that determination

right so so what is your plan

to keep large depositors from moving

their funds out of Community Banks into

the big Banks we have seen the mergers

of banks over the past decade

I'm concerned you're about to accelerate

that by encouraging anyone who has a

large deposit in Community Bank to say

we're not going to make you whole but if

you go to one of our preferred Banks we

will make you whole at that point

thank you

um

look I mean we're that's certainly not

something that we're encouraging that is

happening right now

that is happening because depositors are

concerned about the bank failures that

have happened and whether or not other

Banks could also uh no it's happening

because you're fully insured no matter

what the amount is if you're in a big

Bank you're not fully insured if you're

in a Community Bank well

you're not fully insured and you were in

signature and it was it just barely met

that threshold you were at signature

will we

felt that there was a serious risk of

contagion that could have brought down

and triggered runs on many banks

and that something given that our

judgment is that the banking system

overall is safe and sound

depositories should have confidence in

the system and we took these actions so

there's a special assessment that's been

done on Community Banks in my state and

all banks across the country was there

any discussion that that special

assessment would only apply to the

larger Banks or was it always assumed

the special assessment would cover every

Bank including rural banks in my state

um I I think I I'm not certain what the

rules are around that

um that that's for the FDI yeah all

right so we got the message loud and

clear Janet Yellen the big banks that

are systemically important plus or minus

250 billion dollars they get bailed out

their depositors are safe if you're at a

small bank and you have less than the

FDIC Insurance limit if you have not yet

gone to the FDIC calculator do that

Google it FDIC calculator and Google how

protected you are you should leave the

small banks that is what Janet Yellen is

telling you she is grabbing you by the

shoulders and saying uh yeah we're not

protecting all the small Banks they're

gonna go away and it sucks but they're

going to be a lot of bankruptcies and a

lot of unemployed people and this

banking crisis is not getting better

it's getting worse and the question is

how bad is it going to get for the big

boys the small boys going away that's

already almost a foregone conclusion the

big depositors are probably going to

flee the smaller Banks I hate to say uh

it's terrible but

the crisis could get a lot worse because

now the Federal Reserve is being called

upon

to not only to protect all depositors

with the treasury Department but also

stop quantitative tightening because

quantitative tightening is leading to

more outflows from the banking sector

which is just making this issue worse

and the problem with this is the

following

uh TS Lombard here says this alone

wouldn't solve the problem from a bank

perspective though as people would still

be putting their money into money market

funds instead of leaving them on deposit

the crisis has revealed to anyone who

has been asleep all last year that they

can finally get a return on their liquid

assets so why would you leave your money

in a bank right now Banks could raise

deposits but that would represent a

significant hit to prob profitability

that means there probably will end up

being another required step from the

Federal Reserve cut rates potentially

quite aggressively banks will have to

increase their deposit rates to stem

outflows damaging profitability but we

reckon the FED will help them by cutting

out a cutting rates and bringing money

market fund rates back down closer in

line with deposit rates otherwise the

tightening of Financial and credit

conditions will be hard to manage for

the ECB the financial system is less

Dynamic but outflows to money market

funds are a problem here as well central

banks on both sides of the Atlantic will

in any case be incentivized to wind back

policy by deteriorating activity data

and slowing inflation as the credit

crunch unfolds big picture we're in a

year-long's multi-year-long slog back to

higher yields that's their take

by the way I wrote a little note here

Bank assets being bought and sold are

probably why so much volatility happened

in bonds last week the bank's basically

liquidating but anyway uh they do

mention here though that because the

assets and crop question the treasury

bonds we talked about are also the

assets people are buying there is no

Doom Loop yet but where is the

depressive Doom Loop where is the real

depression listen to this the credit

crunch is already now going to expose

fragilities in the economy in the other

areas specifically commercial real

estate and intra-asian flows being the

elephant in the room these have a risk

of a doom Loop so remember what a doom

Loop is let me first give you what a

doom Loop is not okay a doom Loop is not

sell treasuries uh right that's not a

doom Loop because when people sell

treasuries yields go up and what are

other people doing they buy treasuries

now that does create some Doom in the

fact that it reduces deposits that

creates some Doom for banks but this is

why I say in recessions you stay away

from financials said that for over a

year either

okay

what is a doom Loop well here's what a

doom Loop is you ready for this

commercial or I should just say real

estate in general here's a an example of

a real estate Doom Loop okay so real

estate Doom Loop Number One

less investment what does that do lowers

prices

lowers rents this is uh this then lowers

uh well well this one here

is kind of like lowering your multiples

and this lowers your cap rates both of

these really bad because they funnel

together as prices go down because

people are less interested in investing

in commercial real estate uh because

they don't need an office they don't

need to expand their business because

there's less available debt for them to

borrow lending standards have tightened

so much what then happens prices for

commercial real estate go down multiple

compression then what happens well rents

could also go down but if rents go down

then prices should also come down for

commercial real estate that is a style

of a doom Loop but not only that what

you could also see is a collapse of

pricing

and Commercial mortgage-backed

Securities cmbs's why because banks are

having to liquidate their health and

maturity Securities small Banks having a

disproportionately large number of

commercial mortgage-backed Securities

when I met with Kathy Wood for dinner

she made it very clear that it's the

small banks that have the vast majority

of the cmbs's 25 of their book is cmbs

whereas the big Banks only seven percent

of their book is cmbs

if you want to learn more about this

kind of stuff in perspective how to

think about this remember programs on

building your wealth coupon best price

expires on the 22nd but anyway when you

get a collapse in these bonds now all of

a sudden you're killing uh the the

wealth of institutions

who would ordinarily be buyers in the

first place for uh Office Buildings or

commercial buildings or for basically

institutional real estate right

that potentially creates a doom Loop

because now guess what happens now uh

institutional real estate prices come

under pressure

which makes those more attractive over

residential real estate now investors

stop caring about residential real

estate because there are better deals in

commercial real estate maybe apartment

buildings for example residential real

estate is usually considered one to four

house duplex Triplex fourplex anything

else is generally considered commercial

real estate five units plus office

whatever retail you name it

so if it's more attractive to investing

commercial real estate then you have

less buyers

in residential and potentially

institutional Liquidations in

residential so people keep saying that

oh the real estate crisis is not a big

deal because inventory is so low

homeowners aren't going to sell

homeowners are just one piece of the pie

of this whole crisis one piece that's it

institutions go away now you have less

demand for investment real estate

pushing up cap rates potentially for the

commercial stuff lowering them for

residential which drive or making

residential prices look lower uh or

pushing you're basically putting

downward pressure on residential real

estate to convince investors to go back

to residential uh and this creates a

doom loop again

where prices potentially spiral down for

Real Estate through not only tighter

lending standards but also just less

investment and that is just an example

of what you could get in this sort of

depressionary environment T.S Lombard

here says asset prices are still

Clinging On to the old way of life

available debt available credit and

really this crisis that's beginning with

signature Valley Bank signature Credit

Suisse these are not coincidences these

are most likely the start of us seeing

the economy deteriorate and we're now

going to start in uncovering behavioral

changes that have not started reflecting

yet in asset prices specifically real

estate and we're weaning off the Global

Financial system when an economy that's

used to basically permanent easy

liquidity cheap easy debt this is a big

red flag so this is why you're seeing

these these nasty scenarios these

potential nightmare scenarios uh so it's

not just them over here

it's also over here the potential loss

of confidence you could see

in The Not So benign scenario this is

according to Barclays there could be a

loss of confidence and the credit

contraction would likely be abrupt

throwing the U.S economy into a hard

Landing in short order while Regulators

have taken important steps to avoid

these outcomes such as by making

depositors whole an additional step

could be to guarantee all deposits of

the banking system however that would

require Congress to act which may be a

possibility but so far is unlikely if

there is indeed a crisis of confidence

throwing the economy into a recession

history suggests the Federal Reserve

will be forced to ease aggressively

in past recessions the unemployment rate

has risen by three percentage points on

average that would be going from like

three and a half to seven and a half

percent

and the FED cut more than 500 basis

points when not constrained by the zero

lower bound well basically that means if

we go to five percent now we could be

going right back to zero so in this sort

of hard Landing scenario the left tail

risk is increasing substantially which

is the recessionary risk the cut risk

the rate cut risk and in other words we

could be seeing a lot more pain ahead of

us and a lot of Federal Reserve cuts at

the same time as we see more pain

now one thing that slightly props this

up a little bit uh is this idea that

boomers are more in cash however boomers

are also potentially likely to create

inflation this uh this piece by Lombard

suggests that basically there are

composite compositional effects of

people's life cycle uh and they

basically tell you this

young people aged 5 to 29 and old people

65 and plus are inflationary the people

in between who actually work are

deflationary so people working are

deflationary

people spending money and not working

are inflationary but we're potentially

and and they're saying that this era

right here is why we had a great

moderation in inflation well now the

people during the Great moderation of

inflation are becoming older and that's

very inflationary so now you have to put

together the piece of the puzzle that

you're getting here you're getting a

potential one end of the great

moderation of low inflation that's an

argument led by uh potentially Boomers

retiring which is inflationary okay so

now you have more sticky inflation uh

more sticky inflation

equals fed forced to keep rates higher

for longer however now you have a

banking crisis

and doom Loop

for Real Estate I didn't even mention it

earlier

but a doom Loop

uh a doom Loop for Real Estate is

generally considered bad because we know

that Mr Schiller who put together the

case Shiller index from Princeton Prince

famous Princeton Economist tells us that

when real estate prices go down people

spend less money all of that is

depressionary uh depressionary there we

go apparently that's not a word but

anyway

that could lead the FED to cut basically

to zero we could go right back to zero

in the sort of depressionary scenario

however that might not be enough to

prevent pain throughout 2023 and 2024.

remember the crisis we talked about

earlier in the segment 2022

stock prices down 2023 earnings down

2024 private equity and lending down and

this would be the start of tightening uh

lending so in other words if you want a

really bearish case

this is it

everything sucks going forward to 2024

now my take in this is maybe it could be

wrong but maybe just maybe

is it possible that inflation

does end up proving to be transitory

that's the only hope you can have is

that the inflation

here's your great moderation then you

get the covet inflation and this is kind

of where we are now is it possible that

this inflation we've seen right here

this this inflation continues if that

disinflation continues then maybe just

maybe the Federal Reserve could cut to

zero

prevent the depressionary like the full

depression and put a floor under the

real estate disaster and a floor under

the banking crisis

basically it is now High time that

disinflation occurs on hyperspeed so

here's your take

if you think inflation will prove

transitory

now may be a great time to invest in

stocks hashtag not personalized

Financial advice I have no idea what the

hell is going on in your life yes I'm a

financial advisor yes I have amazing

programs on building your wealth link

down below especially zero to

millionaire real estate a lot of people

are bundling out with stocks and psych

right now big coupon expiration coming

on March 22nd so anyway if you think

it's inflation is transitory now could

be the opportunity of a lifetime to

invest

now I personally think you go for

pricing power style stocks in that

environment something that would be

somewhat recession resilient for a short

shallow recession

because that way rich people can

basically keep those stocks propped up

rich people and rich rich businesses can

keep those propped up think Nvidia

Taiwan semiconductors AMD Tesla and

phase stuff like that and face is on

sale right now by the way I think great

opportunity we're getting close 160 is

like my load the truck Target for end

face but anyway

if you think inflation is here to stay

and the great moderation is over because

of uh like this this Boomer talk uh or

or the stickiness of inflation and I

really summed up this Boomer piece here

take screenshots of it if you want ready

here boom one

two

three there you go you could read the

whole Boomer piece if you want I don't

think there's anything yeah that was the

end of the Boomer piece so you read the

whole Boomer piece there I basically

gave you the summary of the Boomer piece

but anyway there you have the sort of

evidence behind it as well if you want

but anyway if you think inflation is

here to stay and the great moderation is

over because of the Boomer thing and or

the stickiness of inflation

well you probably just want to milk milk

either either uh milk bonds uh or just

cash or straight cash and short

sure right that's that's probably the

position you're in and so uh I actually

think a a heavy amount of positioning is

on the side right now a lot of caches on

the side right now

yeah retails uh individual investors

have started buying the dip

but uh in my opinion the only way you

can argue in the Nike Swoosh is if you

believe in number one this is the

volatile Nike Swoosh that we keep

talking about that is a number one

scenario right here

the Doomsday scenario and inflation is

here to stay

uh we effed basically

uh so uh pick your side or or head you

know or go 50 50.

so uh yeah

there you have it that is uh that is

some of the the madness uh that is going

on check out the programs I'm building

you out down below if it makes you

nervous get life insurance in as little

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all right that's the Doom scenario boy

there's a lot of content today

all right

um someone here donated money twice to

ask me about UBS I'll give you a little

idea here

there is talk that UBS might be

interested in buying Credit Suisse along

with a whole lot of other drama that

we've got to talk about what's really

important to know about uh Credit Suisse

potentially being looked at as an

acquisition by UBS is in my opinion any

private Enterprise would have to get

such a massive discount on these Banks

because if they don't guess what's going

to happen if one company buys a toxic

company the value of the company that's

not deemed toxic yet plummets unless

they got such a good discount on that

deal that they basically made that

company near worthless and then they're

getting their leftover clients that's

the only way that works out otherwise

that's how you get contagion a good bank

buys a crappy bank and now the good bank

becomes a bad bank that's the disaster

think about Bank of America and

Countrywide Bank of America bought

Countrywide you know how many lawsuits

and crap they had to deal with for years

after that because of the toxic bags

they bought at Countrywide that was an

oopsy-doopsy and that's kind of what

we're seeing now with credit space it's

starting folks buckle up now on the note

of real estate potentially crashing I

want to give a quick little append that

I was just in Fort Worth I took a look

at a lot of different areas in Texas

I'll be releasing a separate video on

that but I want to give you a little

teaser so I met with Sarah dichi who's a

tech YouTuber you should go follow her

and I learned something really

incredible for her I learned that she

grew up in Texas lived in New York moved

back to be with family in Dallas uh the

Fort Worth area but guess what she's now

moving out of Texas she's got some

reasons for that but based on the hint

she gives you here I want you to ask

yourself where is she moving and when

she announces this it could be pretty

unheard of but uh comment down below

what you think based on the evidence I

provide you now and it sort of ties into

this idea of hey if we do have a market

correction what does this mean for

potentially

re-migration welcome back everyone I've

got

see here this is so exciting and there

is the beach

so you live out here in Fort Worth Texas

why did you move to Fort Worth yeah the

DFW area is super great for just living

a simple life everything is easy out

here right it's not super expensive even

though it's getting pretty expensive

um you know finding a house has actually

been more challenging than I thought but

everything else like the rents you know

we live in a decent townhouse for not

barely anything

um you just have your own cars I'm

coming from New York City I mean I know

that's basic you can get around yeah and

but you bought a townhouse out here at

one point yeah so we bought a condo and

it's all I'm saying is I am so against

HOAs y'all stay away from HOAs I know

they serve a purpose for having junk in

your yard and stuff but Texas is the

land of HOAs oh so I got burned pretty

bad with that but now we're renting

super cheap like a nice townhouse for

2800 a month it's like nothing that's

awesome so rent's pretty cheap out here

compared to compared to New York oh yeah

you're gonna move back to New York ever

we moved out here to be a family and I

have had such a lovely time with my

family

but we're realizing that our jobs

YouTube it is helpful to have other

YouTubers around us so

we're considering other places yeah I

haven't even I haven't even told my

audience that but I'll say here we're

considering other places oh okay okay

all right other places with YouTubers

yes so there's maybe a couple places

yeah not too many of those places a

place

would you leave a place with no income

taxes I would oh that is how is how you

want to be around friends oh my gosh

okay okay well we'll have to leave

at least there okay well what are we

gonna find out when is when will the

world summer this is summer stay tuned

go to Sarah's Channel subscribe and find

out

where is she leaving Texas for