The labor market in general seems to be weakening. The what was it openings?
Job openings just got cut by like one point five million, which was
a big number in the context of job openings, and that that was a
restatement of the past few months plus the latest month's number. So it wasn't
you know, the market wasn't as strong as it seemed, and the current
numbers are pretty weak too. You were listening to carry Letts's Financial Survival Network,
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to watching the Financial Survival Network. I'm your host, Carrie Lutz. Eight.
We're at the third to last day or second to last day of the
months. We got John Rabino on with us. John, labor market data
is mixed. Are we adding jobs? Are we taking jobs away? Or
they we one things for sure this time. We know the jobs aren't going
to China, right Hey, Carry No, it doesn't look like that,
but There is a lot of stuff going on out there that are kind of
cross currenty in the economy, and the label market is a big example of
that, because just in the last few months, unions have been striking or
threatening to strike and getting some serious settlements to to the big airlines, United
and American in the US both gave their pilot unions double digit raises for the
next four years, so over ten percent a year for forty straight years.
Yeah, yeah, yeah, and has double digit wage inflation right there,
And the FED knows. The FED doesn't see rising stock wanted real estate prices
as inflation. It ignores those, but when wages go up, it takes
that very seriously. So make makeup of that what you will about the the
elites or whatever. But the unions are now suddenly finding themselves with some power
and they've got a lot of ground to make up. So they're they're threatening
to strike or they are striking. And who else was it it was?
Was it FedEx or Ups one of those guys just gave their union employees big
raises and and so that's spreading across the country. So we've got wage inflation
coming from the unionized sectors of the economy. At the same time, the
labor market in general seems to be weakening. The what was it openings,
Job openings just got cut by like one point five million, which was a
big number in the context of job openings, and that was that was restay
of the past few months plus the latest month's number, So it wasn't you
know, the market wasn't as strong as it seemed, And the current numbers
are pretty weak too. And so home sales at the same time, which
is that that's almost up there with employment as far as a sector that affects
the overall strength of the economy. Home sales are frozen. They got revised
down dramatically over the past few months, and currently they're they're way down year
over year, which makes sense, right because mortgage rates have spiked, which
effectively doubles the monthly cost of a house if the house price doesn't come down,
and so far prices haven't come down, so only cash buyers are still
robust in this market, like the people flying in from out of the country
to Florida unseen. Yeah, see see that that is still a strong part
of the market. But in other places where people actually have to take out
more just forget it. You know, you really can't do it unless you're
going to buy half the house that you can afford, which means you're going
to settle for something that Nobody buys half the house they can afford, because
if they can afford more house, they tend to get excited and buy the
most house they can afford, because that's how the shopping process works. So
if houses aren't selling that these people can't take out the mortgage to buy them,
that's going to slow the economy down dramatically too. So you know,
most signs point towards the slowing economy, but in certain sectors, wages are
going up dramatically. Now the fit is liable to interpret this as wage inflation
becoming a problem, and they're liable to go higher for longer with interest rates,
which is what your own pile just said in his last speech. He
surprised the market by implying that rates we're going to go higher and stay there
longer than the markets were expecting. So you knows, But it doesn't look
like we're going to get fed easing anytime soon, and I think it's gonna
happen, is there and there has to be that big crisis out there,
some part of the secret of the market has to break, and then the
FED will go back to bailing everybody inside out. Then it'll happen quickly.
Remember how quickly they bailed out the banking sector when a Silicon Valley bank and
they're still bailing it out. They're going, yeah, but they didn't waste
any time. Within a week, they were doing things that added liquided each
of the market. So let's something, let's something bigger. They messed up
there because what happened there was that Jenny ill And drew the line in the
line in the sand, We're not going to bail out banks. This time
is different. And then Silicon Valley Bank failed, and you know, they
took like a week or two to bail it out to find a quote unquote
suitor for it, and then three other banks failed, and then all of
a sudden they said, no, no, just kidding. All deposits are
backstopped though, we're not going to let you. We're not going to let
you lose your deposits. We're not going to have bail ins regardless what Don
Frank said. And that was that. So in Florida, sales are down
like a third, but prices are up because inventories are still incredibly short.
I mean, that's the thing. It's a tale of several markets. But
in popular places, even though the sales are down, the inventory still down.
So what that will amount to, I don't know. But people are
still fleeing to these key states like Texas, like Tennessee, Georgia, the
Carolinas, you know, basically the southeast where low taxes more than makeup for
increased mortgage rates. We'll see. The migration thing is kind of a walk
though, because if you're in California and you want to move to Texas,
you kind of have to sell your California house. And if you don't have
to sell your calahorc for in your house, you're in the top one percent,
then we're not talking about you. You know, ninety nine percent of
the country pretty much has to sell one house to move into another. So
you get a sail over here and a purchase over there, and it doesn't
affect the macro numbers all that much. But the question is for housing,
what is going to make inventory spike and cause prices to crash? And I
think it's going to be two things. One is is baby boomer demographics.
You know, we're getting older, and so our boomers have not sold their
McMansions. But the idea was always that there was going to be a demographic
real estate crash because the richest, biggest generation in American history had loaded up
on real estate and bought too much house during previous credit bubbles, and they
they can't go up and down the stairs in the three story house anymore,
and it's gonna keep Who's going to keep four thousand square feet clean? You
know, It's just something that a seventy five year old doesn't want to deal
it. But a growing number of boomers are heading into that age range and
so they kind of have to start lightening up. They got a downsize,
So that's going to happen. And the question is will something happen to spook
boomers into doing it all at once? So will it be more graduating the
other thing? It will go ahead. You have all I was just gonna
say, don't forget. Many of you out there have three percent mortgages and
you want to downsize, and assuming you don't buy the house for cash,
you're going to get a mortgage. You're going to get a seven percent mortgage,
which means your mortgage will be double dollar for dollars. So you buy
half the house and your payment stays the same. So why move. That's
why everybody's frozen in their houses houses right now, because moving is an incredible
expensive process. You know, you're leaving a cheap money place going to an
expensive money place, and yet at some point it's going to have to happen,
just because all those stairs, luckily in its places. I don't have
anything. Yeah, one of the reasons I bought it because it's on one
level. But I totally know what you're saying, and who wants to maintenance
the upkeep? You know, you own a house, you get to be
real good friends with your handyman, your plumber, your electrician, and there's
always stuff breaking on it, you know, always, and there's always stuff
to do. You know. My wife and I had a six thousand square
foot house in Idaho and that was insane. We'd become empty mesteroms and there
were there were just the two of us in the you know, in this
big house where empty rooms get dusty. Even if you don't do anything in
there, you'll go away for a weekend, it's covered in dust. So
the maintenance is insane, and so we did the downsizing thing and toilets go
bad. Then they start running and boss, it's drip even though no one's
using it. Well, if you had, if you have five bathrooms something,
yeah, like you said, something is always dripping. We had we
had this. Okay, wait, I'm not gonna get too far afield here,
but we had a plumber who I was only partially kidding. I offered
him our spare bedroom. I told him he could move in if he wanted
to be, because he's at our household often and not and he saves and
saves my butt every time I being waked. But but anyhow, Yeah,
see, that's that's the situation that boomers are in now, especially with multi
story houses of course, because it really is like if you've got a hip
that's cooling and you need to get a replaced, but you're trying to put
off the replacement, which is probably seventy percent of sixty five year olds right
now. If you don't you don't want to sleep on the third floor,
have all your you know, your TV room in the walkout basement, and
then have the kitchen on the first place. It's just it's a crazy life,
very painful to any out. That's that's one thing. The other thing
is Airbnb now suddenly actual Yeah yeah, well yeah, because let's say you've
got seventeen properties, which is not an unusual number for these airbnb entrepreneurs.
You've got a mail, yeah, you have major carrying costs, and the
minute your revenue dips, you have to start lightning up on inventory. And
you know, hospitality is usually a victim of a slowing economy. I fewer
people are in hotels, fewer people can afford are and be especially air Andbnb
turned out not to be a good deal anyhow. It's got all those hidden
fees and stuff, and so it's not even really that popular anymore compared to
hotels, which are at least clean and simple and understandable. So there's going
to be a del uge of inventory out of airbnbs as soon as the economy
has any kind of a little hiccup, and that deluge is gonna just pour
onto the market because there's so many airbnb units. You know what I think
that I don't have the stat correct or perfect, but it's it's something like
the inventory of houses that people don't actually that the owners don't actually live in.
It is ten or twenty times the inventory currently for sale right now,
so they you know, Airbnb trouble could just swamp the existing market for homes
for pre months, you know, and that could happen. So in twenty
twenty one, the US had an average of two and a quarter million active
listings. So I think that's two and a quarter million units. Bryant's had
one point to China at one point one five. And Okay, that we've
actually got we actually have statistics on all this stuff. Job well, this
is nights. That's not going to do us any good. Okay, it
does get you somewhere when you compare that with inventory of homes for sale and
throw in houses that have been bought as investments, just places to poe under
cash, you know, because the average rich person owns three or four properties.
Now. Yeah, Nashville is a city where they had like thousands of
units built just to be Airbnb's. They're built specific for that purpose, you
know, three four story you know, buildings with units in them. And
you don't go all out on the kitchens. You just make it. You
make the place look nice and clean. You don't go all out on anything
on it, and you know, you make it conducive to people who are
short stay vacation type tenants, and that isn't necessarily what a renter wants when
it was built, you specific, So it's going to be interesting. But
talk about real estate problems and bubbles and collapses. You know, China,
supposedly there's sixty four million units that are empty in the entire country, and
you know, it is the largest asset class in the world, Chinese real
estate. Fortunately only Chinese own it, and most of its substandard construction,
not built to spec And you know, in China, it's like in the
United States, you don't start paying your mortgage till you close on your house.
In China, you pay the mortgage when you sign on the dotted line,
and it could be years before you even get that house or that apartment.
And that's what's led to a mass of mass defaults, you know,
strategic defaults. And then in China, your foreclosure might happen, but your
debt never goes away, and it's in your social cre its score. And
I guess, I guess you could probably move to Siberia and be happier than
staying in Chida once you got the reputation as a deadbeat, you know.
So it's an untenable situation that's made worse by the system, by the corruption,
and by malinvestment because they didn't need sixty four million units to stay empty.
John, You know. Yeah, China blew itself the biggest real estate
bubble and human history, and it's bursting and they're trying to figure out what
to do about it. They're they're easing in various ways, they're cutting interest
rates and running up bigger deficits. But at the same time, the U
one is falling. So during that box that we've been talking about for the
fettle these years, when the currency is falling, but you still have to
stimulate the economy because you've got some sectors blowing up. But the more you
stimulate the zombie sectors, the more the currency drops, which is inflationary.
So you got this this death spirer potential in China right now. We don't
know how it's going to play out exactly, but they're they're in the early
stages of something like that, so it's and it's not clear they understand how
to fix any of this either. Because remember ask guys are. You know
it's a communist dictatorship. Then they don't really get markets. Yeah, they
get you can you can dictate to the banks to lend to housing. You
know, they know markets work from that point of view, but they don't
really know how market's clear via the price mechanism and through bankruptcy and things like
that. And then I don't think they like the idea to live they hear
it. Listen to this. You're gonna love this because human nature being human
nature, government tries to stop you from doing things. As long as they
don't throw you in jail, you don't. You just figure out ways around
it and deal with the fallout later. So in China, if you bought
a place for like half a million, you on, and the market price
is two hundred and fifty thousand, you on, they won't let you sell
it for that. Okay, you're not allowed to sell it as for a
loss because that's going to disrupt the market. So you know what these smart
people do, John, You're gonna love this. And I saw this on
China Fact chasers. These guys speak Mandarin, they're fluent, they know what's
going on there. They have sources all over. They will say all right,
i'll sell it to you for half a million, or i'll buy it
for half a million, but you've got to give me two hundred fifty thousand
back two hundred fifty thousand you on back in gold. So it appears that
the prices are staying higher, but under the table they're paying off the buyer
in gold to reduce the price. But the stated price of the unit at
the stated sale price stays up there and everybody's happy. And this is the
problem with price controls and and really even more corrupt than our central government.
Yeah that end is that great. Yeah, that's but you know, and
in the end, you still did sell your house for half what you paid
for it. Yeah, if I'm understanding that process. So, so losses
are still getting taken, people are being impolyetish, and that has to play
out somewhere, somewhere. Those losses have to be booked, and at some
point somebody goes bankrupt. And that's what China is facing right now, that
there's really no way out of a credit bubble except to take the losses.
You know, you can't you can't move them around forever, and you can't
paper them over forever, and China is going to find that out, So
it's not clear how to solve China's got a lot of problems right now.
They've got big demographications too. The China Policy or one child policy for all
those years left them with a shortage of women, so they don't have households
warming. They've got a lot of very lonely guys with no prospects forever having
a family or anything. And that's economically a big problem too, because you
don't have very you don't have a lot of babies being born in that kind
of situation, so their population is actually shrinking. And it's not clear how
a capitalist economy survives, especially a financialized capitalist economy where there's a lot of
debt, survives a shrinking population because you've already got all these retirees that have
to be taken care of. But if there aren't enough workers to do that,
there's not enough tax revenue coming in, the government then has to make
good on those promises by printing money, which destroys the currency and so on.
So China has multiple problems that all lead to a gigantic, crazy crisis.
We'll just have to see about the timing, but I think the yuan
isn't trouble the mother of all, because they're cutting their rates and the yuan
is basically disintegrating. So I want to revisit a topic that I know is
on both of our list for today, and that is the bricks countries.
Now everybody's saying the bricks, well, they want to get rid of the
dollar. All right, Well that's foregone conclusion. It's going to happen at
some point. I don't particularly think it's this point. But China's own currency
is on the brink of crisis. The country is having a meltdown the equivalent
of what the United States had in nineteen twenty nine, only much worse because
they've got about fifteen times or about eight times more people than the US had.
The US had like under one hundred million people back then, and the
you know. So, so China has to find a way out of their
own currency crisis. That is inevitable and that is going And the more the
yuan goes into crisis, the better it is for the dollar on a relative
basis in the other world's currencies that may hold value, like the euro and
even the Canadian dollar, the Australian dollar. So they need a way out,
and I think the bricks concept is as much a way out for these
countries to flee their own failing currencies as it is for them to stick it
to the US. Just my theory. I could be wrong, but I
personally have celebrated the death of the dollar many times and have been totally off
the mark. Yeah, okay, several things about that. The big fiat
currencies like the dollar and the yen and the euro are all losing value.
You know, we had we had a ten percent inflation shilly in twenty twenty
two and it hasn't gone back down to two percent yet. So they're losing
value and they will continue to lose value. That's a that's a that's a
given separation. Yeah, it's a given, and it's separate off from the
bricks. But yeah, it's not clear how the bricks could well, I
mean, they couldn't go completely to another shared currency. They couldn't do a
Euro kind of common currency market at all because their currencies are too unstable.
You know. That would be like a bunch of Italy is trying to form
a currency unit and lookout of a jourman to anchor some of the whole,
the summit is greater than the whole, a little synergistic thing. Yeah,
they think they can pull off, right, Well, what Jim Rickards had
an interesting take on this, and he said that they wouldn't get rid of
their own national currencies, but what they would do is create a shared trading
currency for them to trade back and forth with each other. So so Russia
doesn't have to take rootpies, which it can, you is, for much
of anything in return for its oil. It would take that gold backed common
currency. And you know, these guys have been accumulating gold for quite a
while, so it's possible that at the right price, you know, gold
would have to be revalued upward, but maybe not so much that it becomes
debilitating. And they back their shared currency with gold, and they just trade
with each other in something that represents a certain weight of gold, and so
their their currencies can do what they do their national currencies, but they've still
got this trading currency which is rock solid. And that's I mean, that
would be technically pretty tricky too, but it's something that if it could be
pulled off, would make a ton of sense, because that's that's a great
currency to have or bilateral trade because you always know what it's worth. You
know, the dollar price of gold exists out there twenty four seven, so
you always basically have a dollar cross rate for your currency. So in theory,
that could be done, and that would explain their aggressive accumulation of gold,
or would it would give down a reason to rationalize their accumulation of gold.
So we'll city. I don't know. I think they're a long away
from anything like that. You know, the problem is like nobody's going to
trust. Hey, look, our banks are in trouble, but so far
the FED has back stopped them. And you know, we're not going to
see any bank runs. We'll see a currency collapse before we see a bank
run. John, you agree with that, well, I see bankrupt leading
to a currency collapsed. Yeah, cried. Could well play out for sure.
In China, the banks have already collapsed, but it's not it's not
like publicized, like there are a bunch of banks that have collapsed and the
people try to get their money out and they say, ah, later,
you know, don't worry about it. Your money is safe, Your money
is safe. Don't worry about a thing, right, But the reality is
that they've got daily currency withdrawal restrictions in their banks in place, and I'm
going to toot my own horn here for a change. I said years ago.
The reason HAF the reason they were doing the Belt and Road initiative and
all of these projects outside of China that were money losers. They were doing
it to get money out of the country. It was flight capital disguised as
investment capital, supposedly achieving the PPC's goals of you know, investing outside the
country and building influence. But in reality, we're laundering money out of the
country and putting it into money losing projects. Because of the projects making money,
then you got to bring it back to China. But if it's losing
money and nobody really knows the scope of the losses, then you've got to
keep feeding it because the Chinese don't want the project to collapse because then there's
a loss of face. So they've used this to literally launder trillions of dollars
out of the PRC. This is what's happened, man, You know,
I know it. You can see it now. It's as clear as day
now that they're in trouble. Yeah. Yeah, that wasn't an actual capitalist
country, not that not that we are. You know, when I saw
some of the place and there's saying America's better, you know, we're I
think not at all. Yeah, you know the elites in the US in
the million dollars stash all over the place. Did you catch the article like
thirteen thousand, five hundred the wealthiest Chinese have fled the country? Now I
didn't see that with that, Hey, that that's why Jancouver has the most
expensive real estate yea Vancouver. Yeah, yeah, And like they just bust
in this woman who is the head of the largest Chinese immigration company that helped
people get out of the country, and she didn't do anything wrong. They
just busted her for whatever reason they busted her. Right, Yeah, I
didn't see any of that, but I totally believe that that's the case.
You know. See, that's another reason why you can't have a competing reserve
currency with the dollar. When your country has capital controls in place, it
be free for Yeah. Yeah, you have to be able to move that
money around with nobody putting you a jail. Where So Russia and China are
not ready for that yet. No, that's not to say they won't be.
Uh. I think there's going to be a major house cleaning in China
and Russia too for that matter. But the house cleaning is going to take
place in China first. There is a I want to call it a theory,
but a belief, maybe a superstition widely held in China that every dynasty,
it's not necessarily a superstition, but a belief that every dynasty ends with
massive flooding. And then the regime is faced with its own inability to deal
with that flooding, and then they get swept out. And that is potentially
where the PRC, the PPC, whatever is, People's Party whatever, Communist
Party CPT been calling it the wrong thing, Chinese Communist Party. That's potentially
CCP. That's potentially where we're at right now. And that combined with with
what's happening in Russia. You know, I don't know whether Ukraine's winning or
losing. If you watch their propaganda, they're about to drive a wooden stake
through Putin's heart or what the space where a normal person would have a heart.
Right, But sometimes in this world you win by not losing, right,
and the fact that they haven't lost yet they might very well lose.
I think it's probable they will, but the fact that they have it now
for almost two years makes them the winner here, right. I think we're
in for a massive cataclysm around the world. John, Can you think,
can you name one country for me where they like their government? Well,
no, when you when you start borrowing insane amounts of money, the government
loses the trust of the people. And that's where we are now. That
the whole trustism thing where yeah, it's global, nobody trusts their government because
they're government is broke obviously, I mean Switzerland's not broke, and and actually
Russia is not broke. They didn't accumulate too much debt and they have a
lot of gold and oils. So but but you know, the Russia Ukraine
thing, Russia wins if Ukraine is neutralized and NATO does not go any further.
And I think we're close to that. At what price? At what
price? You know, quarter of a million casualties, that's not a win.
And the you know, wards are inflationary in and of themselves, So
inflation is going to pick up because of these wars. In every area where
there's a ward, there's inflation. Oh yeah, absolutely. But if global
inflation pushes up the price of oil and gold and the other stuff. Russia
has river They're a resourced economy, so they actually benefit partially from the IF.
But I mean they're they're thinking national See this is a this is an
existential thing for Russia. They can out NATO on their border. It's existential
now because I think the West has perceived I think it's much like World War
One. The West has perceived Russia as a declining empire, and World War
One was about carving up pieces of declining empires. The Austro Hungarian Empire,
which was like this accidental agglomeration of countries that Austria Hungary never really set out
to do. They just kind of it all fell in their lap. And
then the Ottoman Turk Empire, and it was all about chopping that up for
resources. And now the intent of this war has always been, I realize
this recently, to chop up the Russian Empire for resources because it holds some
of the most you know, treasured and highest grade resources that haven't been developed
in any any country in the world, and they want to chop it up.
And China wants their piece too, They want Siberia so they can get
the resources in Siberia and get rid of a bunch of people. They've been
colonizing or attempting to colonize the Russian the pyto Russian border for like forty years,
and the Russians have resisted it. But I wonder, I wonder what's
happening there now. Nobody has reported upon it. Well, the difference between
today and World War One is that we're talking about car Yeah, we're carving
up nuclear or powers that that. I mean, if you've got hypersonic nuclear
tipped missiles, nobody's gonna carve you up to One of those missiles can take
out an entire aircraft carrier group. It wore a major city. I mean,
Seattle could be vaporized in literally twenty minutes. Yeah, make the mission
right this minute. So then that's yeah, so if the you know,
I wouldn't put anything past the psychopaths running the US government. Yeah, I'd
actually think they're gonna occupy and carbuk Russians. But they're not, because that's
that's an existential threat to Russia obviously by definition, and they've got nukes.
So yeah, hey, so don't don't do that. In neo cons Please
don't try anything stupid you that we're dealing with though. You know, you
know what, like we say, John, what do we learn from history?
The one thing we learned from history is we'd all learn from history.
I mean, you know, if if Turkey had a nuke or Austria had
a nuke in World War One, the result would have been a lot different,
right, Oh my god. In World War One, they and they
totally would have used those weapons too, because they were you know, they
were morons. Yeah, and and they were all existantially threatened. Everybody was
ext existentially threatened back downd. So yeah, that could that could have easily
turned into a new your war, and so could this. So I think
I think that will happens. The lesson is don't don't put morons in charge
of your country, you know, that's the Yeah, And you know,
war should definitely, definitely definitely be a last resort, not you know,
they say war is what happens when it's just a way of resolving disputes when
politics can't, or something to that effect. You know, uh, I
think it's something like diplomacy is war by another name or something? Yeah,
yeah, right, yeah, when war is a form of diplomacy, right,
whatever, it's a it's a really interesting situation. Hey, we're so
lucky here in the United States are now, Uh we could sit back in
our chairs on our zoom calls and pontificate it's not real to us, But
that's what's happening. There's no other reason to go after Russia other than to
plunder it, and we kind of did that after communism fell and Yeltson came
in and we kind of pushed through all these oligarchs. But then you know,
Yeltson got wise and he let Putin come in, and Putin replaced our
oligarchs with his oligarchs. And hey, by no means do we support this
man. I think he's a stone cold killer who's capable of anything. But
I think big mistake initiating this war, even though he probably was pushed into
it. Hey, well that is it for today. We really ran along
there, But that's okay. Make sure you go to John's substack Rabino substack
dot com our site Financial Survival Network dot com. John. We will will
touch base in a couple of weeks. Thanks Jaredsia, Thanks for listening to
carry Lens's Financial Survival Network your solution to today's trying times For the latest,
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