China’s Economic Collapse Just Got Worse

oh boy you better hope Jerome Powell

already has level 99 Slayer because boy

we are getting slayed in this market and

folks China's struggles are worsening

and they're just not making things

better for us here in America at least

not yet but there might be some light at

the end of the tunnel which we'll talk

about towards naturally the end of the

video but first we need to go through

the fact of the matter that things are

getting worse in China and the hopium

that people have for China's party

Congress which kicks off on October 16th

May in fact be misplaced hey everyone me

Kevin here this video is brought to you

by Titan and of course the programs on

building your wealth which have a

massive expiring coupon code X which

expires tomorrow evening hopefully you

join before then because we've got a

massive renovation coming to the path to

wealth course and if you get in early

you'll have the best opportunity to lock

in some of the most amazing features all

right folks let's hit some facts on how

China is weakening and then we'll talk

talk about what's to come for the

Chinese economy note I will reference

some Publications by their authors such

as Bloomberg or Barclays but I didn't

help write those reference pieces I'll

simply be adding my own commentary and

perspective too though so first and

foremost let's talk about some of the

latest facts that we know about China

first we know that economic output for

China has now officially started to lag

behind the rest of Asia for the first

time since 1990. this as reported by the

financial times is because the World

Bank has officially revised down

economic growth for China to just 2.8

percent for this year that's compared to

8.1 percent where we were last year and

the prediction of 4.5 percent from

earlier this year now just 2.8 percent

and for China that's pretty dang paltry

now look don't get me wrong in the

United States we're growing at basically

negative six tenths of one percent but

boy Hill boy this is a bad trajectory

especially since JP Morgan in January is

like yo we only got a 15 chance of

recession and now they're saying there's

a 98 chance of recession point is when

trajectories and estimates start going

dirty they tend to go dirty a lot deeper

than we all expect

always seems to be worse than we expect

and that's quite unfortunate the rest of

Asia though especially as specifically

East Asia and the Pacific are expected

to grow at 5.3 percent leaving China

behind and leaving some to consider the

potential that Singapore might actually

take over Hong Kong as a financial Hub

not only that but you just had an EV

maker in Hong Kong list and based on the

story from Bloomberg Wednesday leap

Motors listed for 48 Hong Kong dollars

and over 250 million U.S dollar listing

and they plummeted 42 after listing

which should go to show that even though

we're globally in a relative Green

Revolution

this is not the time to IPO in Hong Kong

or really do anything Financial in China

because people are fearful and they're

trying to take their cards off the table

not put them on the table even gamblers

yes quite literally according to bi in a

bi reporter this uh actually just two

days ago Macau casino revenue is likely

to stagnate this month at just 11 of

pre-pandemic gambling Revenue citing not

only coveted zero policies but most

specifically quote the loss of VIP

clients that's probably because they're

all getting slayed by Jerome Powell in

the markets or in the real estate sector

now those fancy VIP clients ain't got

money to gamble anymore and the win

suffering though interestingly and we

reviewed this in the course member live

streams which you get access to when you

join any of the programs every day the

market is open we do those we reviewed

the fundamentals of win and we actually

noticed that their highest margin

product I want you to think about this

for a moment what do you think wins

highest margin product is is it food and

beverages a is it a b Entertainment is

it C rooms or is it D the casinos

well I have to say I initially thought

the casinos but I always like to fact

check myself and it turns out the

highest profit margin item for win

Resorts is

always go with C folks always go with c

those are actually apparently the

highest margin product for win and I'm

shocked that it was not casinos

obviously it's not going to be food

bever entertainment

anyway in my last video on China we

talked about how 52 000 infrastructure

projects have been started since January

yet construction and land values are

falling not only that but Goldman Sachs

is now iterating the same exact thing

this is a chart from Goldman Sachs

showing both construction and

Manufacturing at some of the lowest

levels that we have seen in the last 15

years we even have data from society

General that shows Mobility data

plummeting relative to the prior for

years we CEO there's that same Mobility

chart we also see housing sales

remaining subdued especially below all

prior levels of Prior years here and the

only sector that seems to be a bright

spot right now is Autos with a little

bit of an explosion here towards the end

of this reporting period uh charted here

by Society

I personally think some of this is

because of the Giga Shanghai shutdown uh

it's just too convenient that there's

this massive hole over here and this

massive explosion right up here as uh

Tesla deliveries are exploding except

those Tesla deliveries don't appear to

be exploding in China they actually

appear to be using uh Giga Shanghai as

an export Hub to produce the vehicles

inexpensively in China and then ship

them elsewhere which is great you know

it helps China at least with some

manufacturing and jobs and production

but it doesn't send us positive warm and

fuzzy feelings about how the Chinese

consumer is doing in China keep in mind

the Chinese consumer in my opinion is

extremely smart they began doubling to

quadrupling their personal household

savings as early as January of 2022

relative to January 2021 they saw the

writing of this disaster on the wall a

mile away they've been very smart it's

not their fault their government is uh

propped up some Bubbles and now those

bubbles are popping those bubbles are

popping so badly especially the real

estate one that institutions are now

trying to understand how exposed the

National Banks are to real estate real

estate makes up over 30 percent of the

Chinese economy and according to society

we have 20 of all outstanding bank loans

on average exposed to the real estate

sector look we know we've got problems

in China there's no doubt about that and

the real reality is the housing crisis

is just worsening I want to share this

story with you I'm definitely going to

butcher the pronunciation of this

particular location here but this was a

Reuters reported story wherein zulon

that's my pronunciation of it in zulon

there is a county Mansion complex which

apparently sounds really beautiful

but there is a 55 year old investor

among countless others who were

interviewed by Reuters who states quote

we invested our life savings into this

home

but the home was actually never finished

in fact the property this condo still

features unfinished electrical no water

they have to walk downstairs and carry

up buckets of water and no gas they do

have sewage though uh fortunately but

they have to bring their own water up

and the property isn't complete with

construction but they moved in because

if they didn't move in they'd be

homeless that's because in China you

actually buy properties before they're

complete and you start paying the

mortgage on them before they're complete

that's despite or I should say in

contrast to the United States of America

where you don't actually start making

payments on a new construction build

unless you're the Builder or unless uh

you have a certificate of occupancy from

a local housing uh building and safety

department that authorizes that it has

all of the items necessary for you to

live in like Windows and plumbing and

electricity and sewage and all these

things well this is leading to

substantial and obvious as mortgage

strikes over a hundred cities now have

home buyers protesting their mortgages

for unfinished projects unfortunately

out of the entire housing market in

China and this includes finished

properties

nearly four percent of the entire

housing market is made up of stalled

projects 3.85 percent of all homes in

China are solved according to Reuters

ninety percent of new homes in China

keep this in mind if you buy a new home

in China you are 90 likely to purchase

it Off plan which means you're buying it

while it's still under construction oh

so look China I feel like is just

getting used to the idea of private

property ownership they've only allowed

private property ownership since the

1990s but they're trying their best now

to motivate people to keep getting into

the real estate industry even though the

real estate investment scheme is falling

apart the bubble is structurally falling

out in China and they're doing this by

trying to lower rates on Five-Year loans

they're lowering Prime rates so that way

Builders can get encouraged to continue

to finance they've reduced restrictions

on like their three red line policy and

almost every single company in China has

a real estate division so there's a lot

of exposure to real estate the problem

is you now have institutions in America

and around the world and famous short

seller Jim chanos saying things like

look real estate is endemic to China it

affects everything the problem is real

estate in China has potentially large

now structural problems and when

somebody says that problems are

structural we're not just talking about

home prices declining 37 percent year

over year like they have in China what

we mean is

you gotta start over

that's really bad that means a really

painful reset is required that's what we

saw in 2008 in America

structural problems in the housing

market for every one dollar of real

estate Equity there was there were ten

dollars of outstanding instruments

suggesting there were ten dollars of

equity on real estate when there was

only one that's because of derivatives

and swaps and Arcane financial

instruments created by Bankers on Wall

Street which ended up crushing Main

Street with declines as high as 55 for

condos 50 to 45 for multi-family

properties and 40 to 45 for single

family properties

the structural problems of dead people

getting loans people without credit

getting loans people with no income no

job no assets getting ninja loans

adjustable rate mortgages that started

with teaser rates that were potentially

negative or zero percent and then

adjusted to five or six percent within

six months thereafter that ended up

bankrupting people and causing a

foreclosure crisis in America folks that

is a structural problem it's very much

like structural corruption in China

which Xi Jinping has made it his mission

to root out along with of course rooting

out his haters he's trying to root out

corruption for example Deloitte China

has just agreed to pay a 20 million

dollar SEC penalty that's wait a minute

think about that the SEC is finding

Deloitte China

that's because the light is an American

company right they got a division China

anyway four

alleging that Deloitte and the auditing

division of Deloitte China rather than

randomly auditing companies financials

would basically just call up the

companies go hey uh you know we're

supposed to audit you can you send over

uh some selected samples of accounting

entries that we're supposed to test and

then of course the Farms could quickly

clean those up yeah yeah yeah yeah yeah

yeah here here look at these don't mind

these over here look at these

scc's find him so we're finally seeing

some structural repair by Shining Light

on corruption and structural damage but

unfortunately the pain that America went

through in 2008 is now likely to be felt

in China and we could see a lost decade

much like Japan has seen a lost decade

this is of course leading to a lot of

hopium that things are going to get

better when China holds their party

Congress now a little bit of a

background here Xi Jinping is widely

expected to be re-nominated as Premier

uh and he might end up becoming premiere

for life we also believe that Xi Jinping

is going to give us his guidance on a

policy plan for housing some form of

guidance on covet zero some form of

comparison to the American way and how

they want to do things differently I

wouldn't be surprised if they end up

showing some kind of contrast to the

United Kingdom where the United Kingdom

is trying to essentially tax the rich

less and it's essentially motivate

trickle-down economics where you tax

wealthy people less and hope everybody

gets more money and China is going to go

with a more of common Prosperity

approach common ownership more

censorship and control sadly but with a

broad goal of reducing poverty expanding

the middle class affordable housing

education and maybe a little bit less

priority on green because right now they

got to focus on not collapsing into a

massive depression but eventually then

refocusing on green it doesn't help that

the Chinese population is aging it

doesn't help that we've got drama with

Taiwan although China is likely to

continue their strategy of quote

strategic composure and historic

patience which is very much in contrast

to Putin and they're probably also

likely to continue their calls on Putin

to come to some kind of negotiated

settlement with Ukraine we might

continue to see some form of suggestions

that local cities partner with

struggling housing developers or the

lowering of interest rates and others

sort of guidance for nationalism common

prosperity and party strengthening and

ultimately a very big contrast drawn

between the way China envisions the

world and the way the West views the

world

and we might even hear some comments

about how China is going to continue to

make it more difficult for individuals

to short the Chinese Yuan and try to

prop up the Chinese you want as a

currency because right now it's at

levels we quite frankly haven't seen

since 2008 as the Yuan weakens due to

Chinese economic weakness which makes

sense so we're expecting to get a lot of

opium but the reality is we probably

won't see a lot of real change in the

near term these party congresses tend to

give us a vision for the next five to

ten years these party congresses only

really happen twice a decade and so

we're going to be living with this

vision for the next five to ten years

and it would be a surprise to see

anybody other than Xi Jinping nominated

and elected here but what we do expect

is that whatever kind of hopium is going

into this congress party meeting on

October 16th is likely to fade into

sadness because little change is likely

to come of it anytime soon in fact

researchers suggest including Goldman

Sachs and uh Barclays that ultimately

any kind of stimulus the Chinese

government ends up performing is

unlikely to make any difference because

it's going to get canceled out by covet

zero Society General tells us that only

67.1 percent of people over 60 have

received their third dose of covid of a

coveted vaccine making really getting

away from covet zero quite difficult on

top of this Barclays estimates we're

probably not going to see a removal of

covet zero until we actually get through

another winter because coveted Winters

are usually the worst and China just

doesn't want to go through that now how

do I think this affects us in America

well ultimately I think that China will

be a global anchor to inflation I think

that the Federal Reserve is likely to

over correct and create not only

substantial disinflation over time but

potentially even deflation now I think

that China is actually going to help

contribute to this as a Chinese GDP ends

up waning and bringing down down Global

growth in global spending and there'll

be less money coming from China

purchasing say electrical Machinery

equipment from the United States which

they do and otherwise a potentially less

demand for Teslas or whatever it might

be we might end up seeing a very quick

decline to inflation and China's

actually going to be helping us with

this so we might consider sending China

a thank you card though the Chinese

probably don't feel that way because

they're going through hell much worse

than we are in America right now they're

being rational to save money being very

smart people and they have a country

that has a whole lot of potential but

they're going to go through some more

Dark Times ahead and unfortunately for

China

it's not going to benefit them as much

as it's going to benefit countries like

America who are going to benefit in my

opinion offer the reduction of commodity

or demand for commodity prices like oil

or steel iron or other Goods like even

Lumber quite frankly

or even as simple things like cars and

chips as China actually as much as they

want to build up their internal supply

chains we'll probably have to look

outward and ultimately beg for contracts

from countries in Europe and the United

and obviously the United States and

North America

just to continue to stay afloat it's a

difficult time but eventually we'll get

through it I think smart investors today

would actually consider encouraging

Brilliant Minds like Elon Musk to take

advantage of an opportunity like this

stimulus in China and a lot of available

labor in China

and potentially build factories in China

during the depths of Despair not only to

help the Chinese people and give them

some opportunity to build to work and

invest in their own country but also

because I think it's a great buy the dip

opportunity because China will be back

good luck