His flaw clearly he supposes that bank or borrower from private sector always do the right thing if not the get jail. It's an incentive model very unrealistic. There are un think able form of accounting hacking to evade the oracle identification of what did really do the bankers or similar borrower with the money that law not even though and it no illegal nor legal. Banks are counterparties in big economies, don rescues them until they have to face the consequences. Money is not all power, it's a financial impulse power. Corporations hold many other cards than just money. The only real incentive that cooperation lo hold money is to a T3rrorims margin call if government want to stop them.
China still holds the developing nation status today 2024 therefore enjoying all the WTO benefits . Smart,, China as the second largest economy in the world do not need to pay fair dues in trade, just take all the advantages and benefits because China is a developing nation. ( 3rd world country status ) China is so smart at cheating , all the other world leaders are so " stupid " that they cannot see the fact.
In light of the ongoing global economic crisis, it is crucial for everyone to prioritize investing in diverse sources of income that are not reliant on the government. This includes exploring opportunities in stocks, gold, silver, and digital currencies. Despite the challenging economic situation, it remains a favorable time to consider these investments.
Gold is often seen as a safe-haven asset that can protect against inflation and economic uncertainty. But like any investment, it carries risks. To determine if gold is the right investment option for you, an investment advisor can help you weigh the potential benefits and risks of investing in gold. They can also help you create a well-diversified portfolio that includes gold as part of a broader investment strategy. An investment advisor can help you decide how much of your portfolio should be allocated to gold and select other investments that can complement your gold holdings.
Investing in gold is a reliable choice, and I plan to keep buying more to make up for my losses. While silver is also a good investment, my collectibles are not as similar. It's important to have clear investment goals and educate yourself on the type of investment that interests you. I work with a financial consultant regulated by the SEC, and started small, but eventually accumulated over $800,000.
Can you provide instructions on how to contact your advisor? I'm experiencing erosion of my funds due to inflation and looking for a more profitable investment strategy to make better use of them.
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Marisa Michelle Litwinsky’’ for about two years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
I appreciate this. After curiously searching her name online and reviewing her credentials, I'm quite impressed. I've contacted her as I could use all the help I can get. A call has been scheduled.
Discussion starting at 52mins on Free Trade winners/losers: Koo offers a very clear spec of when a nation as a whole loses, the first time I've heard anyone in public make the statement clearly, objectively, and w/ detached delivery. Very impressive, and welcome.
As recession mount on Wall Street and inflation remains well above the Fed's 2% target, some economics sounded off on just how bad this downturn might be - and how far stocks may have to fall. I need ideas and advice on what investments to make to set myself up for retirement, my goal is to have a portfolio of at least $850k at the age of 60.
The market is volatile at this time, hence i will suggest you get yourself a financial-advisor that can provide you with entry and exit points on the shares/ETF you focus on.
The volatility of the market is the more reason I prefer my day to day investment decisions being guided by an advisor seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using my advisor for over 2years+
Carol Vivian Constable is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
There is an equal market chance associated with each crash or collapse. I have seen people accumulate up to $1 million during a crisis, and even make it work in a strong economy if they are prepared and well-informed. Without a doubt, the bubble/collapse is making someone wealthy.
If you don't want to crash and burn, you should seek the advice of a fiduciary counselor when you first start out. Because their entire skill set is based on going long and short at the same time, they employ a profit-driven strategy based on individual risk tolerance.
De-risk your portfolios, shore up your core holdings, and take some profits while balancing your portfolio allocations. I’d also suggest you go with a managed portfolio, but even those don’t perform so well, so it’s best you reach out to a fiduciary financial advisor to guide you, that’s what works for my wife and I. It's been 6 years now and we've grown our portfolio to $1m.
There are many independent advisors to choose from. But I work with "Monica Shawn Marti" and we've been working together for almost four years and she's fantastic. You could pursue her if she meets your requirements. I agree with her.
Thanks for sharing. I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
This global recession/collapse might end up being a part of us for a very long time. With inflation currently at about 3%, my primary concern is how to maximize my savings/retirement fund of about $680k which has been sitting duck since forever with zero to no gains.
I'd advice you read up some good books on finances and investing, or just you get yourself a financiaI-advsor that can provide you with entry and exit points on the shares/ETF you focus on.
@@dogmom-pt5we A good number of people discredit the effectiveness of financial advisors in exploring new markets, but over the past 10years I’ve had a financial advisor consistently restructure and diversify my portfolio/expenses and I’ve made over $3million in gains… might not be a lot but i'm financially secure.
@@purplebliss6875 I've been looking to switch, but have been kind of relaxed about it. Could you recommend your wealth manager? I'll be happy to use some help.
@@DeannaPeters-lz8we My ,CFA is. Sharon Crump Cline renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
This was an OUTSTANDING interview! What a way to go out Jack. So good to hear from someone who actually *knows* how these things works from the inside, rather than just guesses from the boundaries.
Congratulations, Jack. You couldn't have timed this any better. I've seen a lot of your videos, but I think this interview with Mr. Koo is the crowning achievement of your show.
China's balance sheet problem is not costed by business cycle but by the rampant widening gap between the rich and poor. China's M2 total has been more than the total of US and Europe combined and China's total bank deposit is now 304 trillions RMB.which is much more the US . Europe and Japan combined. This huge amount of Chinese money prefer to stay on saving accounts to get tiny interest income rather than investing, the owners take Morgage of this cheap RMB to exchange for US dollars to earn higher interest rate, If the Chinese government give money to all citizens indiscriminately, that will have very little effect on stimulating consumption or encouraging invests, it is almost like a drop of water in the big fire. The money given out will soon be taken over the rich people and converted to US dollars, that is to benefit the US economy, not the Chinese economy. The only way China should take is let central government issue long-term national debt to replace their local government debts, thus to untie their consumption power gradually.
Why would the Chinese need to do that Instead of investing/speculating in real estate They are being pushed to invest in the technology sector/clean green/renewable Where China already leads the world in 37 of 44 critical technologies of the future And where China is running record or near record trade surpluses with the world these days In any event the Chinese have historically been savers in good times and bad Plus any large scale stimulus or injecting money into these local/provincial governments by converting that internal debt into sovereign external debt Would just cause more bubbles the Chinese Government spent 14 years trying to deflate the last one being real estate Plus they are more like to sweep that internal debt under the table But that would give local Governments more money to spend and cause more of the bubbles they do t want 👇 Huge Price Cuts Rumored From Chinese Developers Due To Collapsing Demand Vincent Fernando, CFA May 29, 2010 Demand is falling since China's central government announced stricter regulations for property transactions during the middle of April. These involve higher down payments and mortgage rates for the purchase of second home, and act which is seen as potential speculation. Such tightening is reducing buying demand. Thus a moderately bearish view is that property prices need to come down, since demand is likely down yet supply is the same. This challenge isn't limited to Shanghai: China Vanke Co, the country's largest publicly listed developer, may cut apartment prices by 10 to 30 percent within three months, the Beijing News said yesterday, citing an unidentified sales agent. Local Vanke officials declined to comment yesterday. Yet Shanghai is where things could get the ugliest, the earliest. This is because the local Shanghai government is planning to clamp down on speculation even harder than China's central government already has: Chen Qiwei, a spokesman for the Shanghai municipal government, did not preclude the possibility of levying property tax when asked about this issue at a press conference on Friday. "Shanghai will take more strict measures in line with the central government policy," Chen said, adding that more efforts will be made in building economically affordable houses and cracking down on speculative house purchasing. Other cities such as Beijing, Chongqing, and Shenzen could have similar additional taxes, but Shanghai is the first to make an official comment such as above according to China Daily. Thing is, any action from Shanghai will likely need approval from the central government. BusinessInsider 👇 Business Economics China Increases Banks’ Reserve Ratios to Cool Prices By Bloomberg News December 10, 2010 at 4:08 AM PST 👇 China raises banks' reserve ratios again Reuters December 10, 20104:27 AM PSTUpdated 13 years ago Dec 10, 2010 - The 50 basis point increase, which takes effect on Dec 20, will leave required reserve ratios at 18.5 percent 👇 China Property Market ‘Bubble’ Set to Burst, Xie Says By Bloomberg News February 1, 2010 at 11:51 PM PST China’s property market “bubble” is set to burst as the government curbs credit growth and clamps down on speculation, according to independent economist Andy Xie. 👇 China cracks down on speculators to cool prices BY THE ASSOCIATED PRESS NOV. 23, 2010 The government has ordered banks twice in the past three weeks to raise the amount of money they hold in reserves to rein in lending growth. 👇 China cracks down on property speculation Source:Global Times Published: 2010 The Chinese government has raised the down payment for second-home buyers to a minimum 50 percent of the value from 40 percent, in a bid to curb property speculation. The decision was announced in a statement released Thursday after conclusion of an executive meeting of the State Council, the Cabinet, presided over by Premier Wen Jiabao, on Wednesday. First-home buyers must pay no less than 30 percent of the the property price if the area is above 90 square meters, the statement said. The government was stepping up the introduction of tax policies to influence purchases and adjust property investment returns, said the statement. Nationwide, land use for the construction of low-income housing, shanty town renovation and small and medium-sized homes (below 90 square meters) should account for at least 70 percent of the land approved for property development, the statement said. It also urged local authorities to accelerate housing construction approvals to ensure effective land supply, and crack down on land hoarding and speculatory behavior. 👇 China attempts to deflate its unstable property bubble China is to spend $200bn on low-cost homes as part of a series of measures to slow the rapidly rising prices of urban houses Tania Branigan in Beijing Wed 9 Mar 2011 19.24 GMT Chinese officials are blaming speculators for soaring property prices and are vowing to build 36m affordable homes over the next five years. There are already widespread concerns about China's booming property market and the threat it poses to the country's expanding economy. China would spend nearly $200bn (£123bn) on an affordable homes and social housing scheme, said deputy housing minister Qi Ji in Beijing . The pledge came a few days after premier Wen Jiabao promised to "resolutely" curb speculation to tackle excessively rapid price increases The authorities have taken various steps since spring last year to dampen the property market. These include raising interest rates, increasing the minimum downpayment required on second homes and restricting the rights of foreigners to buy property. Two Chinese cities are now imposing sales tax on property deals. While the measures have slowed growth, many fear it remains too high. In March 2010, urban housing prices shot up by 11.7% year-on-year, according to figures from the national bureau of statistics. December saw the lowest increase in more than a year, but it still stood at 6.4%. The Guardian
Jack thanks for all the hard work you've put in to this podcast over the past few years. I've learned a huge amount from your episodes and your questioning. Good luck in your next pursuit sir!
This is what the AU government has done in previous recessions. The government is one of the economic cylinders and its cranked up when the other economic cylinders are not working. Australia might avoid a full recession by cranking up the building industry which is in dire need of building more housing to rebalance demand with new supply
it is called trickle down economic which largely benefits to the wealthy and elite but overtime it kills the entire middle class of its citizens. good for investors bad for working families who are making living on paycheck.
@@carnivaltym Comparing what happened in Japan and what is happening to China now to the USA is like comparing giraffes and apples, there's simply no correlation.
@@billfrehe6620Well, they let Lehman Bro's go Bill, I'll give you that - but the big banking & finance boys were all bailed out. And then artificially low interest rates and unprecedented money printing kept any number of zombie Fortune 500 companies appear to be alive for over a decade. But, I do agree - China is a VERY different place to do business compared with America!
LOL, "mature". Hey guys we went from recession to deep depression and super high unemployment BUT...we are "mature". Good call Einstein, we will come to you when we want another great depression to show folks how "mature" society works. What a clown.
I Hit 110k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started last month 2024. Financial education is indeed required for more than 70% of the society in the country as very few are literate on the subject. thanks to Karen Preston for helping me achieve this .
Wow. I'm a bit perplexed seeing her been mentioned here also Didn’t know she has been good to so many people too this is wonderful, I'm in my fifth trade with her and it has been super.
Our economy is facing challenges due to uncertainties, housing problems, foreclosures, global fluctuations, and the lingering effects of the pandemic, leading to instability. The rising inflation, slow growth, and trade disruptions require immediate action from all sectors to restore stability and promote economic recovery.
With the chinese yuan losing value to inflation and other currencies gaining traction, uncertainty looms. Yet, many still trust in the dollar's perceived safety. Worried about my $420,000 retirement savings losing value, I seek alternative security for my money.
The issue is people have the "I want to do it myself mentality" but not equipped enough for a crash, hence get burnt. Ideally, advisors are reps for investing jobs, and at first-hand encounter, my portfolio has yielded over 300% since 2020 just after the pandemic to date.
This is definitely considerable! Do you think you could suggest any professionals or advisors I can get on the phone with? I'm in dire need of proper portfolio allocation.
I appreciate it. After searching her name online and reviewing her credentials, I'm quite impressed. I've contacted her as I could use all the help I can get. A call has been scheduled.
What appears to trigger a balance sheet recession is an insecure or unhealthy consumer who can't or won't borrow money. If that is the case then the US consumer is the most insecure it's ever been by any measure.
I had heard back in the 90's that property values in Japan were so high that if you were to take the land of the Emperor's Palace in Tokyo and develop it into top end office space, the value would be equal to ALL of the real estate in the state of California. "he Japanese frenzy also spread to the ground beneath their feet. Land values in Tokyo rose 58% in 1987 alone so that a single square metre of the prestigious Ginza shopping precinct changed hands for 32 million yen, or about $230,000. The 3.4 square kilometres (1.31 square miles) occupied by the Imperial Palace was worth more than the entire real estate value of California." from a Reuters article
One change I’d make to Koo’s description: In a balance sheet recession, businesses and people have to pay down debt even if interest rates are near zero - they really have no choice. The reason is that the equity value is negative … if you owe $400k on a house that is now valued at $200k, no one will lend you any more money on it. This is multiplied out through businesses and investments throughout the economy. The process can accelerated using bankruptcy to transfer assets and write off this debt, but if that is process is prevented then it can take a long time to reduce this debt below the equity value, especially since money is scarce - earnings stagnate or drop and there isn’t excess money to bid those asset values back up again.
So the solution is for China to borrow and spend? Sounds healthy. Which economic model is this? Sounds like a debtor nation. What if they chose to be a world lender rather than a world debtor? Oh wait dont they call that Chinese debt trap diplomacy. So they just want China in debt not a lender.
I think you are missing the point: 1. Secretly propping up the economy as China did, between 2016 and 2020 just made the bubble bigger, as both consumers and companies continued to take on massive amount of debt; 2. After the bubble burst, you can end up with not just a crash, but a prolonged spiral deleveraging like a snake eating its tail, the reason is corporate profit maximization stopped happening. (My own note: This also explained why some small companies do very well in recession. They conserved dry powder, including trying to stay underleveraged to spend go after opportunities others let go during a recession.)
@@danman1287 That's oversimplification. As an export country and having GDP heavily dependent on real estate (far more than the US), it is significantly harder to dig itself out of the hole it dug. The US has a credit buffer and has borrowed itself out, but China does not.
So how exactly can we guard against the coming financial reset for 2024? Like what are really the best strategies to make our portfolio recession proof against the incoming financial reset? I'm very worried about my $110k stock portfolio.
Knowledgeable Investors know where and how to put money during a crisis in order to reduce risk and maximize returns. See a market strategist with experience if you are unable to manage these market conditions.
I agree, having the right plan is priceless. My portfolio is well-suited for any market and recently doubled since early last year. My CFP and I are aiming for a seven-figure goal, which might take another year to achieve.
‘’Aileen Gertrude Tippy’’ is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.
Insights yes, but not the conclusions. How does China get out of the housing bubble? More government spending? And he constantly talks about the Japanese experience. Go figure
@@norvikvoskanian4294 Well, he claims he had experience working for the US government. That is the mantra of the Western alliance's political system .... borrow more and spend it all
The conclusion like he said many times is to balance the balance sheet slowly......as such the government has to keep the economy humming while everyone takes their time in balancing and repairing their balance sheet
@@pearlyung ... meaning the government needs to keep borrowing and spending on social services while silently praying the population will return to being productive? What could possibly go wrong?
Wait what? Jack? Are you leaving? Well shit. I'm going to miss your punchable face! It's going to feel weird without you and all I can say, is... see you on the other side of the journey that you have chosen for yourself, sir. Thank you, for all that you have done to bring us such amazing guests and speakers to us all. Thank you for allowing us all to remember what it's like to learn. Seeing you soak in new information in the way that you do, is an absolute joy to witness. You've networked well, it's paid off, and you will always have a friend in us all. May your future always be inspired by the greatness in front of you. Remain curious, focused and studious as you always have, and you will do great things. Challenges come and challenges go. The real challenge is in your mind, heart and soul. Capture and harness that so that it can't affect you in any way, no matter the challenge, and you will go far, my very young sir. All the best to you, from here and forever and thank you, for everything!
Recall that Richard Koo is Taiwanese and works in Japan for Nomura, so it's a good bet that he's got a handle on the economies of both China and Japan and how they relate to the US and world.
If China's economic crisis triggers a market crash or a financial crisis, it could send shockwaves through the stock markets worldwide. I’m worried about my investment of over $600K stocks. Is this a time to consider diversifying my portfolios?
If it takes a hit, it might lead to reduced consumer spending and overall economic instability. I advice you consult with a professional about your investment portfolio.
Partnering with a financial advisor has transformed my approach to investing. Their expertise and personalized guidance have not only helped me navigate complex financial markets but also optimized my portfolio to achieve my long-term goals efficiently.
@@ScarlyJo Partnering with a financial advisor has transformed my approach to investing. Their expertise and personalized guidance have not only helped me navigate complex financial markets but also optimized my portfolio to achieve my long-term goals efficiently.
I believe Japan's real estate market bubble in the 80s really burst to great opposition of many. In China's case, the govt itself actually pricked it several times and has refused to bail it out wholesale. There are quite a number of differences i would say.
Thank you for your work and dedication Mr. Farley. There is little doubt you are very well prepared for your next chapter. Best wishes and much success to you ... 👏👏👏
Wow Jack you’re going places! On to another podcast? I can’t keep up 😅 Congratulations 🎉I like how you interview your guests so I’ll definitely be following your new podcast! (And your power is charts 😉)
Let's be very clear about one thing. The "market" has been massively wrong on what the Fed should do with the funds rate for at least 2.5 years now. In early 2022 before the Fed even started hiking, the market was already forecasting rate cuts to happen by end of 2022. The market at the start of 2024 had 7 rate cuts for 2024. Laughable to suggest the Fed is the one that has been getting this wrong. It has proven out that they were right to start hiking in early 2022, aggressively ramp up that funds rate, and then keep it at the terminal rate until now. Also, the Fed on numerous occasions has stated that a recession will likely occur as a result of this hiking cycle. The market consensus has been no or soft landing, which is another thing they will be massively wrong on...........I've been engaged in active trading and managed to grow a nest egg of around 140k to a decent 539k....I'm especially grateful to Adriana Jensen whose deep expertise and traditional trading acumen have been invaluable in this challenging, ever-evolving financial landscape.
His theory is sound and there is data backing it up, but before writing to the PBOC, he already explained/answered himself why they are not taking on more fiscal (because it is not sustainable and the returns are horrible), and why private sector is not taking on more to expand (because there is already overcapacity and can't export the way out), so what does that leave us? The problem is much worse, because the cures are not working anymore? or this is something entirely different that requires new a framework? edit: the currency is another insight into what the PBOC is trying to hold up, consumption, not production and export, otherwise you would see a big free fall of the RMB and wipe out consumers' buying power to subsidize export.
I do find lots of interesting book collection in the background 😃, could you share the list of those books, some are not readable as camera Focus is on you and background is blur ....
A simple way of saying this is that when the recession is caused by lack of demand, supply side measures (like reducing interest) will not solve the problem.
A typical Western minded economist ... the Chinese government needs to spend its way to prosperity. If anything, I deeply respect the Chinese government for refusing to follow the Western debt spiral to bankruptcy
@@LantangKaturay how come it is pure nonsense. US is scam economy for starters. They are nothing if they dont have dollar control and petro dollar. doing nothing and just printing, US is surviving all these days...if their economy is bad, simple instigate wars and sell more weapons ! Koo is knowledgeable and his logic for works for small countries with no resources and no internal economy (much)...china is completely opposite...even if they go slow, they have huge internal economy and lot of countries will buy their products.
USA needs to be peaceful n not a warmongering spend thrift. Quality effective spending on infrastructure, etc. Wastage n political lobbying costs are way too high. Stop sanctions n tariffs that leads to higher inflation. Same economist BS recession theory n irresponsible spending remedy had cost Japan govt debts to be 250% of GDP.
Jack's last one & you can tell he mailed it in. Never asked the obvious question: Why is the dollar so strong? Also, never addressed the massive internal ambiguity that FREE MARKET depends on MANAGING A CURRENCY. Got that? You can't have a w/w free market because whenever you do the dollar gets too darned strong. Free markets depend on managing the dollar weaker. Is that clear? 🤣😂😆😅
Good question for Koo! Why is it in a free market, when unmanaged, the dollar always gets too strong? Why? Koo is afraid to tell you 'the rest of the story'
just adjusting exchange rates isn't enough, when China is using an investment model, that gives them a big trade imbalance. Tariffs need to be sharper and more focused. the big problem is that free trade in this situation, create a few big-big winners and lots of little losers. To the extent Tariff decouple the us from China its good for the poor in America. We need them as workers, we can't ignore them by exporting all manufacturing work abroad.
Ngl you were the only reason I was subbed, you had the best interviews... You could always tell that you did your research beforehand and steered the conversation in an efficient manner.
At 27:58 is the slight-of-hand argument that "... if there is someone saving money, [then] someone has to be borrowing money..." and this is fallacious argumentation.
both Japan and China have another problem. Bad Demographics with a lack of people in the house forming (and buying) age groups. Home purchases are one of the largest economic drivers out there.
Absolutely. So the government just prints more money and bails the banks out. That is good according to Mr Koo. I so love the Western economist expert opinion
Richard koo has no idea what he is talking about. Japan has no way to recover as they were forced by usa to revalue their yen so high(in the plaza accord) that they crashed their manufacturing and industrial might totally destroyed. They end up printing money to save their financial industries. China meanwhile retains their weak rmb and their industrial output is higher than ever. They have a large trade surplus against the whole world and keep growing. This is totally different and the reason why the western economic “experts” are so keen to ask china to print money and do the bazooka stimulus ala japan is the reason why japan has been in lost decade after decade after decade. Richard koo is clueless and he is just banking on his chief economist title in nomura to try to make his argument valid
Have you looked at Chinese numbers? To quote Michael Pettis: China's GDP is 52-54 percent consumption, 42-43 percent investment and remaining 3-6 percent is export surplus. So growing the export surplus can't keep your economy growing at 4-5 percent in any reasonable scenario. They ran out of productive investment opportunities in 2000-2010. They have all the infrastructure in the world and it is top notch. Now the real estate bubble burst, they kept the investment share high to maintain growth, redirecting it to manufacturing. Now they have deflation.
@@lucast2212．Who says growing your export surplus can’t grow the GDP export surplus means jobs for people and profits for companies as long as export surplus is increasing the economy will chug along and as long as economy is chugging along and real estate is being handled then 4-5% growth is possible with 1-2 % investment from government.
@@skydragon23101979 I never said I could not. Export surplus just needs to grow immensely to compensate for weak consumer demand. And with trade barriers being erected in both the West and developing countries, I don't see it happening. And even if it could, it would still mean that China does not transition from an investment led model to a consumption led model.
@@lucast2212 You are just that one of that other naysayers who pray for the worst for China. By printing money and stimulating the economy like Japan, China will end up exactly like Japan. What they are doing may or may not work, but at least there is a chance that they will not end up like Japan.
@@lucast2212 They are unlikely to transition entirely to a consumer led model the transition would be in the range of 3-5 percent a year gradually. But they would be maintaining their gdp growth at about 5% steadily for this decade at least.
The reason why Japan was in terminal decline despite its central govt tried to use fiscal policy to stimulate the economy was mainly to central govt inability to make sovereign decision for its own economic policy. Eg) if anyone understood what really happened at the Plaza accord in 1985, everything else becomes self explanatory. Every time when Japanese central banks wants to raise or drop rates, it needs permission from the U.S. govt. China on other hand is not a puppet state and it’s able to make sovereign decisions on its own. It refuse to follow US foot steps by printing more cheap credit, that’s the sensible thing to do! Just imagine Chinese property bubble burst and cause GFC 2.0 and spread globally wouldn’t that be a lot worse than just a balance sheet recession!? Traditional in Chinese culture, their understanding of investing is predominantly in property but Chinese govt is seeing danger in over leverage hence why trying to transition away from property.
I am not an expert. You are dead wrong for this. Did you ever predict in 2008 China growth? China GDP was $4.95 trillion in 2008. You should know how to google for GDP of China in 2023? It was $17.7 trillions. How come Richard? You are supposed to smart man. How about 2018 when Trump started trade war? In 2018, US import total $539.5 billions from China, you should know most of the trade were labor products, clothes and tory, raw material. in 2018, less than $20 billions surpluses from trade and most from US. In 2024, China trade surplus close to $100 billions monthly and half of them not in US dollar. Now the trade from EV, solar panel, heavy machinery. China is Lessly depend on US trade in 2024. Trade with Bricks way more than with US, less 1/3 trade to US now. Your false analysis will hurt US. You are dead wrong Richard.
The obvious workaround for this situation of balance sheet recession is for the government to dictate to the central bank (and branches) to put out a new class of longer duration loans (but not an asset, rather a loan for enterprise) and to limit stock buybacks (which are killing the economy).
Very interesting interview. For a look at what the US did during the Depression to combat the seizure in lending and borrowing, read up on a fellow named Jesse Jones, now all but forgotten but quite a mind and a great American.
The problem in the present economy of allowing bubbles to burst and go through a prolonged recession is that your smartest people will migrate out of the country and never come back when the economy recovers, this is especially the case in poorer countries. New Zealand is going through this right now, the economy is really bad and young kiwis/ smart professionals are moving their entire life to Australia, they aren't coming back even if NZ's economy recovers in the future. Southern Europe is another example of this, with people permanently moving to Western European countries. This is uniquely a problem in the 21st century now that we're more globalized and brain drain is so easy. China has one saving grace, they make it really hard to move capital out of the country and they don't speak English to a high level which makes moving hard for most people.
What I find interesting is that no mention is made of the only developed country in the world NOT to go into recession during the GFC - maybe, just maybe you all could learn something from 🤷
The U.S. maintained its embargo on China during the Great Chinese Famine (1959-1961), discouraging other nations from sending food, confident that millions of deaths from starvation would ensure China’s permanent collapse. Consumers worldwide are now frustrated with the influx of affordable goods from China. The British opium nearly did them in, and surely these tariffs on Chinese products will finish them off for good this time. Meanwhile, China’s GDP growth is at 4.7%-a clear sign that the nation is finally collapsing.
Jack, it has been great to watching you on this podcast all these times. Good luck on the new journey and I would be following you on the new land as well!
Thank you, great interview. My question would be, is there any list of how much is the debt part of a growing economy. So you could see, if no one borrows money how much would be the decline of a countrys grow. Sorry for my english, i am austrian...
Very very interesting discussion. I always wonder about how significant investment of us companies outside the USA impacts us economy. If you think about it US corporations see revenue streams from local currencies all over world. That’s in sharp contrast to China who mostly has revenue generated from China and exports.
Marvellously clear and cogent analysis by Richard Koo. It reinforces the view that China won't 'collapse' but deflate gradually, as was the case with Japan. He really helps me to understands why any country will have a problem with saving and lending. Good to hear why there may not be a problem with the size of debt, as long as corporations and businesses spend borrowed money "wisely". But State Owned Enterprises are finding good investments hard to find, lending is falling.
@@danman1287 thanks for your insulting response. A slow Japanese recovery may be indeed slow, but an economic collapse causes a great deal of suffering and has long term consequences. You may like to consult some recent economic studies that argue that there is no clear connection between deflation and depressions (except the Great Depression). www.nber.org/system/files/working_papers/w10268/w10268.pdf
Paying down debt is the essence of Karma. That's why healthier ancient civilizations held periodic jubilees (typically between 7 and 49 years, depending on whether it was short term or long term debt), when all debts were erased. This discouraged compounded indebtedness that always ends up in total economic collapse. Short term debts started becoming toxic after 3-4 years, and longer term debt after 21-28 years. If you don't incentivize the debtors not to refinance to keep bubbles growing, you will kill national, global, and interstellar economies
Add to the balance sheet recession the ability for corporations to borrow and do buybacks (killing Any chance of New Enterprise and velocity of money, effectively killing growth in the middle class which is the majority...
If dollar is weaken, what is the US going to export to China? Chips? Military equipment? US needs to maintain dollar until such time they revive their industrial competitiveness
If dollars is weaken, who is going to finance the deficit, then interest rate will increase. Otherwise, nobody will buy the T bill. During RR, what was the deficit? Who was the competitor? But now, is a matter of existential issue
IMHO what Richard Koo suggested for China (increase government spending to avoid a nation wide balance sheet recession), will only work if China can print a currency that is the world reserve currency. China is not the U.S. (USD world reserve currency) or Japan (an U.S. ally).
Hey Jack, great choice for your outgoing interview, but just typical of the many many high quality discussions you have given us over the past few years. I have downloaded and listened to nearly all of them as a podcast, but am logging into the UA-cam channel just to leave you an appreciative comment. I will definitely be a sub for your new channel and look forward to more great content. All the best!
Jack's new podcast, Monetary Matters: www.youtube.com/@Monetary-Matters
Forward Guidance's new host, Felix Jauvin: x.com/fejau_inc
His flaw clearly he supposes that bank or borrower from private sector always do the right thing if not the get jail. It's an incentive model very unrealistic. There are un think able form of accounting hacking to evade the oracle identification of what did really do the bankers or similar borrower with the money that law not even though and it no illegal nor legal. Banks are counterparties in big economies, don rescues them until they have to face the consequences. Money is not all power, it's a financial impulse power. Corporations hold many other cards than just money. The only real incentive that cooperation lo hold money is to a T3rrorims margin call if government want to stop them.
China still holds the developing nation status today 2024 therefore enjoying all the WTO benefits . Smart,, China as the second largest economy in the world do not need to pay fair dues in trade, just take all the advantages and benefits because China is a developing nation. ( 3rd world country status ) China is so smart at cheating , all the other world leaders are so " stupid " that they cannot see the fact.
In light of the ongoing global economic crisis, it is crucial for everyone to prioritize investing in diverse sources of income that are not reliant on the government. This includes exploring opportunities in stocks, gold, silver, and digital currencies. Despite the challenging economic situation, it remains a favorable time to consider these investments.
Gold is often seen as a safe-haven asset that can protect against inflation and economic uncertainty. But like any investment, it carries risks. To determine if gold is the right investment option for you, an investment advisor can help you weigh the potential benefits and risks of investing in gold. They can also help you create a well-diversified portfolio that includes gold as part of a broader investment strategy. An investment advisor can help you decide how much of your portfolio should be allocated to gold and select other investments that can complement your gold holdings.
Investing in gold is a reliable choice, and I plan to keep buying more to make up for my losses. While silver is also a good investment, my collectibles are not as similar. It's important to have clear investment goals and educate yourself on the type of investment that interests you. I work with a financial consultant regulated by the SEC, and started small, but eventually accumulated over $800,000.
Can you provide instructions on how to contact your advisor? I'm experiencing erosion of my funds due to inflation and looking for a more profitable investment strategy to make better use of them.
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Marisa Michelle Litwinsky’’ for about two years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
I appreciate this. After curiously searching her name online and reviewing her credentials, I'm quite impressed. I've contacted her as I could use all the help I can get. A call has been scheduled.
Discussion starting at 52mins on Free Trade winners/losers: Koo offers a very clear spec of when a nation as a whole loses, the first time I've heard anyone in public make the statement clearly, objectively, and w/ detached delivery. Very impressive, and welcome.
As recession mount on Wall Street and inflation remains well above the Fed's 2% target, some economics sounded off on just how bad this downturn might be - and how far stocks may have to fall. I need ideas and advice on what investments to make to set myself up for retirement, my goal is to have a portfolio of at least $850k at the age of 60.
The market is volatile at this time, hence i will suggest you get yourself a financial-advisor that can provide you with entry and exit points on the shares/ETF you focus on.
The volatility of the market is the more reason I prefer my day to day investment decisions being guided by an advisor seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using my advisor for over 2years+
This is definitely considerable! think you could suggest any professional/advisors I can connect with? I'm in dire need of proper portfolio allocation
Carol Vivian Constable is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thank you for this amazing tip. I just looked up Carol, wrote her explaining my financial market goals and scheduled a call
There is an equal market chance associated with each crash or collapse. I have seen people accumulate up to $1 million during a crisis, and even make it work in a strong economy if they are prepared and well-informed. Without a doubt, the bubble/collapse is making someone wealthy.
If you don't want to crash and burn, you should seek the advice of a fiduciary counselor when you first start out. Because their entire skill set is based on going long and short at the same time, they employ a profit-driven strategy based on individual risk tolerance.
De-risk your portfolios, shore up your core holdings, and take some profits while balancing your portfolio allocations. I’d also suggest you go with a managed portfolio, but even those don’t perform so well, so it’s best you reach out to a fiduciary financial advisor to guide you, that’s what works for my wife and I. It's been 6 years now and we've grown our portfolio to $1m.
Your advisor seems competent. Could you share how I can reach out to them?
There are many independent advisors to choose from. But I work with "Monica Shawn Marti" and we've been working together for almost four years and she's fantastic. You could pursue her if she meets your requirements. I agree with her.
Thanks for sharing. I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
This global recession/collapse might end up being a part of us for a very long time. With inflation currently at about 3%, my primary concern is how to maximize my savings/retirement fund of about $680k which has been sitting duck since forever with zero to no gains.
I'd advice you read up some good books on finances and investing, or just you get yourself a financiaI-advsor that can provide you with entry and exit points on the shares/ETF you focus on.
@@dogmom-pt5we A good number of people discredit the effectiveness of financial advisors in exploring new markets, but over the past 10years I’ve had a financial advisor consistently restructure and diversify my portfolio/expenses and I’ve made over $3million in gains… might not be a lot but i'm financially secure.
@@purplebliss6875 I've been looking to switch, but have been kind of relaxed about it. Could you recommend your wealth manager? I'll be happy to use some help.
@@DeannaPeters-lz8we My ,CFA is. Sharon Crump Cline renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
@@purplebliss6875 Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.
This was an OUTSTANDING interview! What a way to go out Jack. So good to hear from someone who actually *knows* how these things works from the inside, rather than just guesses from the boundaries.
Congratulations, Jack. You couldn't have timed this any better. I've seen a lot of your videos, but I think this interview with Mr. Koo is the crowning achievement of your show.
Jack had done some great work over the last 3 years, asking sharp and relevant questions to some great thinkers. Good luck Jack, the one and only
China's balance sheet problem is not costed by business cycle but by the rampant widening gap between the rich and poor. China's M2 total has been more than the total of US and Europe combined and China's total bank deposit is now 304 trillions RMB.which is much more the US . Europe and Japan combined. This huge amount of Chinese money prefer to stay on saving accounts to get tiny interest income rather than investing, the owners take Morgage of this cheap RMB to exchange for US dollars to earn higher interest rate, If the Chinese government give money to all citizens indiscriminately, that will have very little effect on stimulating consumption or encouraging invests, it is almost like a drop of water in the big fire. The money given out will soon be taken over the rich people and converted to US dollars, that is to benefit the US economy, not the Chinese economy. The only way China should take is let central government issue long-term national debt to replace their local government debts, thus to untie their consumption power gradually.
Thanks for your opinion, I agree with that.
Why would the Chinese need to do that
Instead of investing/speculating in real estate
They are being pushed to invest in the technology sector/clean green/renewable
Where China already leads the world in 37 of 44 critical technologies of the future
And where China is running record or near record trade surpluses with the world these days
In any event the Chinese have historically been savers in good times and bad
Plus any large scale stimulus or injecting money into these local/provincial governments by converting that internal debt into sovereign external debt
Would just cause more bubbles the Chinese Government spent 14 years trying to deflate the last one being real estate
Plus they are more like to sweep that internal debt under the table
But that would give local Governments more money to spend and cause more of the bubbles they do t want
👇
Huge Price Cuts Rumored From Chinese Developers Due To Collapsing Demand
Vincent Fernando, CFA May 29, 2010
Demand is falling since China's central government announced stricter regulations for property transactions during the middle of April. These involve higher down payments and mortgage rates for the purchase of second home, and act which is seen as potential speculation. Such tightening is reducing buying demand.
Thus a moderately bearish view is that property prices need to come down, since demand is likely down yet supply is the same. This challenge isn't limited to Shanghai:
China Vanke Co, the country's largest publicly listed developer, may cut apartment prices by 10 to 30 percent within three months, the Beijing News said yesterday, citing an unidentified sales agent. Local Vanke officials declined to comment yesterday.
Yet Shanghai is where things could get the ugliest, the earliest. This is because the local Shanghai government is planning to clamp down on speculation even harder than China's central government already has:
Chen Qiwei, a spokesman for the Shanghai municipal government, did not preclude the possibility of levying property tax when asked about this issue at a press conference on Friday.
"Shanghai will take more strict measures in line with the central government policy," Chen said, adding that more efforts will be made in building economically affordable houses and cracking down on speculative house purchasing.
Other cities such as Beijing, Chongqing, and Shenzen could have similar additional taxes, but Shanghai is the first to make an official comment such as above according to China Daily. Thing is, any action from Shanghai will likely need approval from the central government.
BusinessInsider
👇
Business
Economics
China Increases Banks’ Reserve Ratios to Cool Prices
By Bloomberg News
December 10, 2010 at 4:08 AM PST
👇
China raises banks' reserve ratios again
Reuters
December 10, 20104:27 AM PSTUpdated 13 years ago
Dec 10, 2010 - The 50 basis point increase, which takes effect on Dec 20, will leave required reserve ratios at 18.5 percent
👇
China Property Market ‘Bubble’ Set to Burst, Xie Says
By Bloomberg News
February 1, 2010 at 11:51 PM PST
China’s property market “bubble” is set to burst as the government curbs credit growth and clamps down on speculation, according to independent economist Andy Xie.
👇
China cracks down on speculators to cool prices
BY THE ASSOCIATED PRESS
NOV. 23, 2010
The government has ordered banks twice in the past three weeks to raise the amount of money they hold in reserves to rein in lending growth.
👇
China cracks down on property speculation Source:Global Times Published: 2010
The Chinese government has raised the down payment for second-home buyers to a minimum 50 percent of the value from 40 percent, in a bid to curb property speculation.
The decision was announced in a statement released Thursday after conclusion of an executive meeting of the State Council, the Cabinet, presided over by Premier Wen Jiabao, on Wednesday.
First-home buyers must pay no less than 30 percent of the the property price if the area is above 90 square meters, the statement said.
The government was stepping up the introduction of tax policies to influence purchases and adjust property investment returns, said the statement.
Nationwide, land use for the construction of low-income housing, shanty town renovation and small and medium-sized homes (below 90 square meters) should account for at least 70 percent of the land approved for property development, the statement said.
It also urged local authorities to accelerate housing construction approvals to ensure effective land supply, and crack down on land hoarding and speculatory behavior.
👇
China attempts to deflate its unstable property bubble
China is to spend $200bn on low-cost homes as part of a series of measures to slow the rapidly rising prices of urban houses
Tania Branigan in Beijing
Wed 9 Mar 2011 19.24 GMT
Chinese officials are blaming speculators for soaring property prices and are vowing to build 36m affordable homes over the next five years. There are already widespread concerns about China's booming property market and the threat it poses to the country's expanding economy.
China would spend nearly $200bn (£123bn) on an affordable homes and social housing scheme, said deputy housing minister Qi Ji in Beijing .
The pledge came a few days after premier Wen Jiabao promised to "resolutely" curb speculation to tackle excessively rapid price increases
The authorities have taken various steps since spring last year to dampen the property market. These include raising interest rates, increasing the minimum downpayment required on second homes and restricting the rights of foreigners to buy property. Two Chinese cities are now imposing sales tax on property deals.
While the measures have slowed growth, many fear it remains too high. In March 2010, urban housing prices shot up by 11.7% year-on-year, according to figures from the national bureau of statistics. December saw the lowest increase in more than a year, but it still stood at 6.4%.
The Guardian
Jack thanks for all the hard work you've put in to this podcast over the past few years. I've learned a huge amount from your episodes and your questioning. Good luck in your next pursuit sir!
This is what the AU government has done in previous recessions. The government is one of the economic cylinders and its cranked up when the other economic cylinders are not working. Australia might avoid a full recession by cranking up the building industry which is in dire need of building more housing to rebalance demand with new supply
Richard’s book, “The holy grain of macroeconomics” is by far one of the best macro-finance books for students of markets!
it is called trickle down economic which largely benefits to the wealthy and elite but overtime it kills the entire middle class of its citizens. good for investors bad for working families who are making living on paycheck.
China only has two options. They can inflate or allow defaults. They are letting defaults happen which is a sign of a mature society.
But but Chinese property has defaulted. What about US defaults?
By that analysis, and I'm not saying you're wrong, the US, and others, are a kindergarten. 😂
@@carnivaltym Comparing what happened in Japan and what is happening to China now to the USA is like comparing giraffes and apples, there's simply no correlation.
@@billfrehe6620Well, they let Lehman Bro's go Bill, I'll give you that - but the big banking & finance boys were all bailed out. And then artificially low interest rates and unprecedented money printing kept any number of zombie Fortune 500 companies appear to be alive for over a decade.
But, I do agree - China is a VERY different place to do business compared with America!
LOL, "mature". Hey guys we went from recession to deep depression and super high unemployment BUT...we are "mature". Good call Einstein, we will come to you when we want another great depression to show folks how "mature" society works. What a clown.
I Hit 110k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started last month 2024. Financial education is indeed required for more than 70% of the society in the country as very few are literate on the subject. thanks to Karen Preston for helping me achieve this .
Wow. I'm a bit perplexed seeing her been mentioned here also Didn’t know she has been good to so many people too this is wonderful, I'm in my fifth trade with her and it has been super.
The very first time we tried, we invested $2000 and after a week, we received $9500. That really helped us a lot to pay up our bills.
You trade with Karen Preston too? Wow that woman has been a blessing to me and my family.
I'm new at this, please how can I reach her?
I was skeptical at first till I decided to try. Its huge returns is awesome. I can't say much.
Subscribed - to the new channel, good luck Jack.
Our economy is facing challenges due to uncertainties, housing problems, foreclosures, global fluctuations, and the lingering effects of the pandemic, leading to instability. The rising inflation, slow growth, and trade disruptions require immediate action from all sectors to restore stability and promote economic recovery.
With the chinese yuan losing value to inflation and other currencies gaining traction, uncertainty looms. Yet, many still trust in the dollar's perceived safety. Worried about my $420,000 retirement savings losing value, I seek alternative security for my money.
The issue is people have the "I want to do it myself mentality" but not equipped enough for a crash, hence get burnt. Ideally, advisors are reps for investing jobs, and at first-hand encounter, my portfolio has yielded over 300% since 2020 just after the pandemic to date.
This is definitely considerable! Do you think you could suggest any professionals or advisors I can get on the phone with? I'm in dire need of proper portfolio allocation.
Just research the name LUCIA ALICIA CRUZ. You’d find necessary details to work with a correspondence to set up an appointment.
I appreciate it. After searching her name online and reviewing her credentials, I'm quite impressed. I've contacted her as I could use all the help I can get. A call has been scheduled.
I learned so much from this one video. Thank you Mr. Richard Koo & Host!
What appears to trigger a balance sheet recession is an insecure or unhealthy consumer who can't or won't borrow money. If that is the case then the US consumer is the most insecure it's ever been by any measure.
Thanks for the years of great interviews, Jack!
I had heard back in the 90's that property values in Japan were so high that if you were to take the land of the Emperor's Palace in Tokyo and develop it into top end office space, the value would be equal to ALL of the real estate in the state of California. "he Japanese frenzy also spread to the ground beneath their feet. Land values in Tokyo rose 58% in 1987 alone so that a single square metre of the prestigious Ginza shopping precinct changed hands for 32 million yen, or about $230,000.
The 3.4 square kilometres (1.31 square miles) occupied by the Imperial Palace was worth more than the entire real estate value of California." from a Reuters article
Dr. Koo's theory of Balance sheet Recession will go down history as one of the most important theories in economics. 🎉🎉🎉
I loved this interview, thank you so much. I just learned valuable information
Congrats jack! I don’t think forward guidance will be same without you.
One change I’d make to Koo’s description:
In a balance sheet recession, businesses and people have to pay down debt even if interest rates are near zero - they really have no choice.
The reason is that the equity value is negative … if you owe $400k on a house that is now valued at $200k, no one will lend you any more money on it. This is multiplied out through businesses and investments throughout the economy.
The process can accelerated using bankruptcy to transfer assets and write off this debt, but if that is process is prevented then it can take a long time to reduce this debt below the equity value, especially since money is scarce - earnings stagnate or drop and there isn’t excess money to bid those asset values back up again.
So the solution is for China to borrow and spend?
Sounds healthy. Which economic model is this? Sounds like a debtor nation.
What if they chose to be a world lender rather than a world debtor? Oh wait dont they call that Chinese debt trap diplomacy.
So they just want China in debt not a lender.
The economists r good at explaining things retrospectively lol... U cannot sustain bubbles. China is Japan 2.0 n we r going to be Japan 3.0
I think you are missing the point: 1. Secretly propping up the economy as China did, between 2016 and 2020 just made the bubble bigger, as both consumers and companies continued to take on massive amount of debt; 2. After the bubble burst, you can end up with not just a crash, but a prolonged spiral deleveraging like a snake eating its tail, the reason is corporate profit maximization stopped happening. (My own note: This also explained why some small companies do very well in recession. They conserved dry powder, including trying to stay underleveraged to spend go after opportunities others let go during a recession.)
@@TCTerribleDog US is Japan 3.0
@@TCTerribleDog Sounds like the US
@@danman1287 That's oversimplification. As an export country and having GDP heavily dependent on real estate (far more than the US), it is significantly harder to dig itself out of the hole it dug. The US has a credit buffer and has borrowed itself out, but China does not.
My condolences to Blockworks, Jack will be missed. Congrats on to Jack on the new channel!
What are you talking about?
Yes not the same. I subscribed because of jack. His channel was a little different especially at that time.
So how exactly can we guard against the coming financial reset for 2024? Like what are really the best strategies to make our portfolio recession proof against the incoming financial reset? I'm very worried about my $110k stock portfolio.
Knowledgeable Investors know where and how to put money during a crisis in order to reduce risk and maximize returns. See a market strategist with experience if you are unable to manage these market conditions.
I agree, having the right plan is priceless. My portfolio is well-suited for any market and recently doubled since early last year. My CFP and I are aiming for a seven-figure goal, which might take another year to achieve.
Being heavily liquid, I'd rather not reinvent the wheel. Since this strategy works for you, how can I contact your advisor?
‘’Aileen Gertrude Tippy’’ is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.
This is a deep analysis that is simply not addressed in the financial news sphere.
For an economist, his political insights are very good.
Insights yes, but not the conclusions. How does China get out of the housing bubble? More government spending? And he constantly talks about the Japanese experience. Go figure
@@gdiwolverinemale4th makes you wonder if his logic is rooted at a paradox
@@norvikvoskanian4294 Well, he claims he had experience working for the US government. That is the mantra of the Western alliance's political system .... borrow more and spend it all
The conclusion like he said many times is to balance the balance sheet slowly......as such the government has to keep the economy humming while everyone takes their time in balancing and repairing their balance sheet
@@pearlyung ... meaning the government needs to keep borrowing and spending on social services while silently praying the population will return to being productive? What could possibly go wrong?
Wait what? Jack? Are you leaving? Well shit. I'm going to miss your punchable face!
It's going to feel weird without you and all I can say, is... see you on the other side of the journey that you have chosen for yourself, sir. Thank you, for all that you have done to bring us such amazing guests and speakers to us all. Thank you for allowing us all to remember what it's like to learn. Seeing you soak in new information in the way that you do, is an absolute joy to witness.
You've networked well, it's paid off, and you will always have a friend in us all. May your future always be inspired by the greatness in front of you. Remain curious, focused and studious as you always have, and you will do great things.
Challenges come and challenges go. The real challenge is in your mind, heart and soul. Capture and harness that so that it can't affect you in any way, no matter the challenge, and you will go far, my very young sir.
All the best to you, from here and forever and thank you, for everything!
here here! Thank you Jack.
Recall that Richard Koo is Taiwanese and works in Japan for Nomura, so it's a good bet that he's got a handle on the economies of both China and Japan and how they relate to the US and world.
If China's economic crisis triggers a market crash or a financial crisis, it could send shockwaves through the stock markets worldwide. I’m worried about my investment of over $600K stocks. Is this a time to consider diversifying my portfolios?
If it takes a hit, it might lead to reduced consumer spending and overall economic instability. I advice you consult with a professional about your investment portfolio.
Partnering with a financial advisor has transformed my approach to investing. Their expertise and personalized guidance have not only helped me navigate complex financial markets but also optimized my portfolio to achieve my long-term goals efficiently.
@@ScarlyJo Partnering with a financial advisor has transformed my approach to investing. Their expertise and personalized guidance have not only helped me navigate complex financial markets but also optimized my portfolio to achieve my long-term goals efficiently.
pls how can I reach this expert, I need someone to help me manage my portfolio
@@Angelina-Szn pls how can I reach this expert, I need someone to help me manage my portfolio
I believe Japan's real estate market bubble in the 80s really burst to great opposition of many. In China's case, the govt itself actually pricked it several times and has refused to bail it out wholesale. There are quite a number of differences i would say.
Awesome guest - thank you
Thank you for your work and dedication Mr. Farley. There is little doubt you are very well prepared for your next chapter. Best wishes and much success to you ... 👏👏👏
Another great one from Jack. Thank You and good luck!!
Good luck Jack , will continue to follow you on your new channel . Richard is an excellent guest .
Another fantastic, informative episode. See you @ Monetary Matters Jack!
This was a great one. I'd love to hear a debate between Mr Koo and Peter Schiff
Wow Jack you’re going places! On to another podcast? I can’t keep up 😅
Congratulations 🎉I like how you interview your guests so I’ll definitely be following your new podcast! (And your
power is charts 😉)
This was so informative and necessary for people in our country to understand now we have been hollowed out by our leadership 😢
This was so informative!!! Congrats to you. My favorite episode ever.
Hollywooooood! from RVDB to FG now to MM...what a fast trajectory!
Let's be very clear about one thing. The "market" has been massively wrong on what the Fed should do with the funds rate for at least 2.5 years now. In early 2022 before the Fed even started hiking, the market was already forecasting rate cuts to happen by end of 2022. The market at the start of 2024 had 7 rate cuts for 2024. Laughable to suggest the Fed is the one that has been getting this wrong. It has proven out that they were right to start hiking in early 2022, aggressively ramp up that funds rate, and then keep it at the terminal rate until now. Also, the Fed on numerous occasions has stated that a recession will likely occur as a result of this hiking cycle. The market consensus has been no or soft landing, which is another thing they will be massively wrong on...........I've been engaged in active trading and managed to grow a nest egg of around 140k to a decent 539k....I'm especially grateful to Adriana Jensen whose deep expertise and traditional trading acumen have been invaluable in this challenging, ever-evolving financial landscape.
Access to good information is what we investors needs to progress financially and generally in life. this is a good one and I appreciate
This is why it is advisable to connect with a true market strategist in order to avoid missing such opportunity and maintain steady gains.
The internet is filled. with so many useful information. about Adriana Jensen.
Thanks for keeping it light and real at the same time. Much needed for us traders in times like these!
She appears to be well-educated and well-read. I ran a Google search on her name and came across her website; thank you for sharing.
His theory is sound and there is data backing it up, but before writing to the PBOC, he already explained/answered himself why they are not taking on more fiscal (because it is not sustainable and the returns are horrible), and why private sector is not taking on more to expand (because there is already overcapacity and can't export the way out), so what does that leave us? The problem is much worse, because the cures are not working anymore? or this is something entirely different that requires new a framework? edit: the currency is another insight into what the PBOC is trying to hold up, consumption, not production and export, otherwise you would see a big free fall of the RMB and wipe out consumers' buying power to subsidize export.
I do find lots of interesting book collection in the background 😃, could you share the list of those books, some are not readable as camera Focus is on you and background is blur ....
thank you Jack
congratulations Felix
Great to listen to Mr Koo🎉🎉🎉
A simple way of saying this is that when the recession is caused by lack of demand, supply side measures (like reducing interest) will not solve the problem.
Felix is taking over everything. Thanks for everything bud best wishes.
A typical Western minded economist ... the Chinese government needs to spend its way to prosperity. If anything, I deeply respect the Chinese government for refusing to follow the Western debt spiral to bankruptcy
You talk pure nonsense!
@@LantangKaturay Anything specific you can point out? At this point that is precisely how one can characterize your statement
@@gdiwolverinemale4th More silly comments from you. Stop wasting our time with your nonsensical posts on YT. Get a life!
@@LantangKaturay how come it is pure nonsense. US is scam economy for starters. They are nothing if they dont have dollar control and petro dollar. doing nothing and just printing, US is surviving all these days...if their economy is bad, simple instigate wars and sell more weapons ! Koo is knowledgeable and his logic for works for small countries with no resources and no internal economy (much)...china is completely opposite...even if they go slow, they have huge internal economy and lot of countries will buy their products.
@@gdiwolverinemale4th You continue to post nonsensical comments on YT. Get a life!
USA needs to be peaceful n not a warmongering spend thrift. Quality effective spending on infrastructure, etc. Wastage n political lobbying costs are way too high. Stop sanctions n tariffs that leads to higher inflation. Same economist BS recession theory n irresponsible spending remedy had cost Japan govt debts to be 250% of GDP.
Jack's last one & you can tell he mailed it in. Never asked the obvious question: Why is the dollar so strong? Also, never addressed the massive internal ambiguity that FREE MARKET depends on MANAGING A CURRENCY. Got that? You can't have a w/w free market because whenever you do the dollar gets too darned strong. Free markets depend on managing the dollar weaker. Is that clear? 🤣😂😆😅
Good question for Koo! Why is it in a free market, when unmanaged, the dollar always gets too strong? Why? Koo is afraid to tell you 'the rest of the story'
great interview. subscribed
Hope you for the best Jack!
just adjusting exchange rates isn't enough, when China is using an investment model, that gives them a big trade imbalance. Tariffs need to be sharper and more focused.
the big problem is that free trade in this situation, create a few big-big winners and lots of little losers. To the extent Tariff decouple the us from China its good for the poor in America.
We need them as workers, we can't ignore them by exporting all manufacturing work abroad.
Ngl you were the only reason I was subbed, you had the best interviews... You could always tell that you did your research beforehand and steered the conversation in an efficient manner.
At 27:58 is the slight-of-hand argument that "... if there is someone saving money, [then] someone has to be borrowing money..." and this is fallacious argumentation.
both Japan and China have another problem. Bad Demographics with a lack of people in the house forming (and buying) age groups. Home purchases are one of the largest economic drivers out there.
Aren’t many large US banks essentially experiencing a balance sheet recession? Aren’t their assets (treasuries) underwater vs their cost basis?
Absolutely. So the government just prints more money and bails the banks out. That is good according to Mr Koo. I so love the Western economist expert opinion
Richard koo has no idea what he is talking about. Japan has no way to recover as they were forced by usa to revalue their yen so high(in the plaza accord) that they crashed their manufacturing and industrial might totally destroyed. They end up printing money to save their financial industries.
China meanwhile retains their weak rmb and their industrial output is higher than ever. They have a large trade surplus against the whole world and keep growing.
This is totally different and the reason why the western economic “experts” are so keen to ask china to print money and do the bazooka stimulus ala japan is the reason why japan has been in lost decade after decade after decade. Richard koo is clueless and he is just banking on his chief economist title in nomura to try to make his argument valid
Have you looked at Chinese numbers? To quote Michael Pettis: China's GDP is 52-54 percent consumption, 42-43 percent investment and remaining 3-6 percent is export surplus. So growing the export surplus can't keep your economy growing at 4-5 percent in any reasonable scenario. They ran out of productive investment opportunities in 2000-2010. They have all the infrastructure in the world and it is top notch. Now the real estate bubble burst, they kept the investment share high to maintain growth, redirecting it to manufacturing. Now they have deflation.
@@lucast2212．Who says growing your export surplus can’t grow the GDP export surplus means jobs for people and profits for companies as long as export surplus is increasing the economy will chug along and as long as economy is chugging along and real estate is being handled then 4-5% growth is possible with 1-2 % investment from government.
@@skydragon23101979 I never said I could not. Export surplus just needs to grow immensely to compensate for weak consumer demand. And with trade barriers being erected in both the West and developing countries, I don't see it happening. And even if it could, it would still mean that China does not transition from an investment led model to a consumption led model.
@@lucast2212 You are just that one of that other naysayers who pray for the worst for China. By printing money and stimulating the economy like Japan, China will end up exactly like Japan. What they are doing may or may not work, but at least there is a chance that they will not end up like Japan.
@@lucast2212 They are unlikely to transition entirely to a consumer led model the transition would be in the range of 3-5 percent a year gradually. But they would be maintaining their gdp growth at about 5% steadily for this decade at least.
That was a brilliant inteview. Wow! Listen min two times!
Jack, they're not saving. They're paying off debt.
The reason why Japan was in terminal decline despite its central govt tried to use fiscal policy to stimulate the economy was mainly to central govt inability to make sovereign decision for its own economic policy. Eg) if anyone understood what really happened at the Plaza accord in 1985, everything else becomes self explanatory. Every time when Japanese central banks wants to raise or drop rates, it needs permission from the U.S. govt. China on other hand is not a puppet state and it’s able to make sovereign decisions on its own. It refuse to follow US foot steps by printing more cheap credit, that’s the sensible thing to do! Just imagine Chinese property bubble burst and cause GFC 2.0 and spread globally wouldn’t that be a lot worse than just a balance sheet recession!? Traditional in Chinese culture, their understanding of investing is predominantly in property but Chinese govt is seeing danger in over leverage hence why trying to transition away from property.
I am not an expert. You are dead wrong for this. Did you ever predict in 2008 China growth? China GDP was $4.95 trillion in 2008. You should know how to google for GDP of China in 2023? It was $17.7 trillions. How come Richard? You are supposed to smart man. How about 2018 when Trump started trade war? In 2018, US import total $539.5 billions from China, you should know most of the trade were labor products, clothes and tory, raw material. in 2018, less than $20 billions surpluses from trade and most from US. In 2024, China trade surplus close to $100 billions monthly and half of them not in US dollar. Now the trade from EV, solar panel, heavy machinery. China is Lessly depend on US trade in 2024. Trade with Bricks way more than with US, less 1/3 trade to US now. Your false analysis will hurt US. You are dead wrong Richard.
The obvious workaround for this situation of balance sheet recession is for the government to dictate to the central bank (and branches) to put out a new class of longer duration loans (but not an asset, rather a loan for enterprise) and to limit stock buybacks (which are killing the economy).
Very interesting interview. For a look at what the US did during the Depression to combat the seizure in lending and borrowing, read up on a fellow named Jesse Jones, now all but forgotten but quite a mind and a great American.
The problem in the present economy of allowing bubbles to burst and go through a prolonged recession is that your smartest people will migrate out of the country and never come back when the economy recovers, this is especially the case in poorer countries. New Zealand is going through this right now, the economy is really bad and young kiwis/ smart professionals are moving their entire life to Australia, they aren't coming back even if NZ's economy recovers in the future. Southern Europe is another example of this, with people permanently moving to Western European countries. This is uniquely a problem in the 21st century now that we're more globalized and brain drain is so easy. China has one saving grace, they make it really hard to move capital out of the country and they don't speak English to a high level which makes moving hard for most people.
What I find interesting is that no mention is made of the only developed country in the world NOT to go into recession during the GFC - maybe, just maybe you all could learn something from 🤷
The U.S. maintained its embargo on China during the Great Chinese Famine (1959-1961), discouraging other nations from sending food, confident that millions of deaths from starvation would ensure China’s permanent collapse.
Consumers worldwide are now frustrated with the influx of affordable goods from China. The British opium nearly did them in, and surely these tariffs on Chinese products will finish them off for good this time.
Meanwhile, China’s GDP growth is at 4.7%-a clear sign that the nation is finally collapsing.
Excellent episode
Jack, it has been great to watching you on this podcast all these times. Good luck on the new journey and I would be following you on the new land as well!
Thank you, great interview. My question would be, is there any list of how much is the debt part of a growing economy. So you could see, if no one borrows money how much would be the decline of a countrys grow. Sorry for my english, i am austrian...
This guy's is phenomenal
Great interview. I learned a lot. Thank you!
Mr, Koo`s charts ARE fantastic! 👍
Well done, sir!
Very very interesting discussion. I always wonder about how significant investment of us companies outside the USA impacts us economy. If you think about it US corporations see revenue streams from local currencies all over world. That’s in sharp contrast to China who mostly has revenue generated from China and exports.
But it is not factually correct, China Aug loans grew at 8.5%, far higher than nonimal GDP
not a dry eye in the room for the outro
An excllent episode to bow out on Jack. I have learnt a lot listening you your interviews. Thanks and best of luck with your new channel!
The majority of non corporate inflation is in direct relationship to income inequality.
Marvellously clear and cogent analysis by Richard Koo. It reinforces the view that China won't 'collapse' but deflate gradually, as was the case with Japan. He really helps me to understands why any country will have a problem with saving and lending. Good to hear why there may not be a problem with the size of debt, as long as corporations and businesses spend borrowed money "wisely". But State Owned Enterprises are finding good investments hard to find, lending is falling.
Collapse accelerates the recovery process... Deflate extends the timeframe.. clueless.
@@danman1287 thanks for your insulting response. A slow Japanese recovery may be indeed slow, but an economic collapse causes a great deal of suffering and has long term consequences. You may like to consult some recent economic studies that argue that there is no clear connection between deflation and depressions (except the Great Depression). www.nber.org/system/files/working_papers/w10268/w10268.pdf
Paying down debt is the essence of Karma. That's why healthier ancient civilizations held periodic jubilees (typically between 7 and 49 years, depending on whether it was short term or long term debt), when all debts were erased. This discouraged compounded indebtedness that always ends up in total economic collapse. Short term debts started becoming toxic after 3-4 years, and longer term debt after 21-28 years. If you don't incentivize the debtors not to refinance to keep bubbles growing, you will kill national, global, and interstellar economies
Amazing interview!!!
Congratulations. Well done Jack, thank you
Add to the balance sheet recession the ability for corporations to borrow and do buybacks (killing Any chance of New Enterprise and velocity of money, effectively killing growth in the middle class which is the majority...
If dollar is weaken, what is the US going to export to China? Chips? Military equipment? US needs to maintain dollar until such time they revive their industrial competitiveness
If dollars is weaken, who is going to finance the deficit, then interest rate will increase. Otherwise, nobody will buy the T bill. During RR, what was the deficit? Who was the competitor? But now, is a matter of existential issue
How many "last" videos can 1 dude have?
Isn't this just a re-hash of Keynesian economics?
IMHO what Richard Koo suggested for China (increase government spending to avoid a nation wide balance sheet recession), will only work if China can print a currency that is the world reserve currency. China is not the U.S. (USD world reserve currency) or Japan (an U.S. ally).
This was a great interview
This is an outstanding insight! And great visuals, too, which most finance people fail dismally on.
Thank you so much this is absolute gold dust
Subscribed to the new channel; waiting for the first upload
Why does he think the private sector might be ready to ‘take on the challenge’ of borrowing at 4/5 % any time soon, if they weren’t at near 0%?
Hey Jack, great choice for your outgoing interview, but just typical of the many many high quality discussions you have given us over the past few years. I have downloaded and listened to nearly all of them as a podcast, but am logging into the UA-cam channel just to leave you an appreciative comment. I will definitely be a sub for your new channel and look forward to more great content. All the best!
Will miss you jack, looking forward to monetary matters