This entry regards news posted on Youtube by Epic Economist yesterday, November 24. This seems to be the channel of a very credible person with extensive knowledge who regularly monitors the financial system and global economy. Based on the factual detail he always presents, this economist is predicting a collapse of the global economy and its major institution.
Epic Economist forecasts a major recession in 2020. He has been reporting frequently on the US economy. After examining the weaknesses in the lending system and slowdown of industrial activity, he believes that many banks in the US will fold and that millions more people will lose their homes soon. Irresponsible lending practices are still happening, he says, and the crisis of 2008 has never recovered. Though many mortgages were foreclosed back then, millions of people are occupying (squatting) in mortgaged homes for which they have not been making payments in the past five years. Since these lenders are not receiving payments and interest rates are already very low, they are bound to close up shop any time. Meanwhile, manufacturing continues to shrink and a cascade of mass layoffs started in October 2019. Consumer debt is around $8 TRILLION in the US. Government liabilities (commitments for which there are no funds set aside) stand at a whopping $120 TRILLION--including military (close to a trillion in 2019) and other department budgets such as health care coverage and pensions. Most people have been over-spending and are in debt up to their ears. Epic Economist reports on surveys that tell us that US residents could not find $400 in cash in an emergency, as they are living paycheque to paycheque and mired in debt.
Epic Economist points out that the economic crisis is not confined to this or that country; it is a global development. The European economy is stuck in a similar swamp.
The video posted yesterday announced that the third Chinese bank in three months just collapsed. It predicts that some 50 other banks in China are on the brink of shutting down. The reasons are similar to those explaining the situations in Europe and the USA: over-production, inflation, over-borrowing/over-lending, and a slowdown in manufacturing. The party could not last forever.
There are differences between China and other rich countries. For one thing, Epic says, many big banks are state-owned. This has maintained some stability, but the problem of over-lending is still a huge problem. Even if the state -owned banks remain afloat, there private sector competitors will lose out to them and be forced to fold. Many business are about to face bankruptcy, claims Epic.
Another thing to note is that the stock market is new and few people in China play it. However, there are many investors in businesses and among them are major foreign investors. Their standing in their home countries will affect the businesses and projects in which they have invested. The crash of Chinese enterprises will affect them, in turn.
Furthermore, most people living in China do not engage in over-spending, according to Epic. Rather, they save half their earnings. However, businesses, large and small, tend to over-borrow and then over-spend.
Finally, there is the widespread corruption in state and private enterprises. The upper crust involved in them, it seems, cannot contain their greed. The rob their businesses for personal benefit.
Get ready for a fall next year. Stop spending so much. Scale down. Re-use items. Cancel plans for travel, luxury purchases and new homes. Sell your home now, especially if you live in the US. Make some other living arrangements and get out if you are a long-time delinquent mortgage holder. Sell all unnecessary items. Save money while you can. Reduce your dependency on the stock market. Buy reliable material items that are financially more resilient and have longer term value, such as gold. Try cooperative ventures such as vehicle and equipment-sharing, as well as sound housing arrangements.