Harry Dent is at it again ; this time screaming the warning that this real estate bubble is the greatest bubble in modern history, And Australia is number two only to China in the extent of this bubble. So there is no way real estate is going to go up much farther . Definitely we are in a housing bubble. Income is low. Housing prices are too high. Fewer jobs and interest rates are going up. People already have a considerable debt. There have been too many Scheisster elites and elite institutions, both private and Government, propping up the housing market. But, one swift kick of the front door, in terms of interest rates going up and the whole rotten edifice with collapse into a heap of rubble.
The smart money always gets out first while the dumb money is still coming in. There are bubbles in Canada, Australia, New Zealand, and most likely smaller bubbles in the USA and the UK. So when is the pop ? The real estate crash is the point where everyone recognizes that there is a bubble popping. When it is accepted by the masses that prices are falling. When even the most bullish real estate spruiker admits that the market is falling. That is what I am calling for the year 2020 . Australia may well set the global record for a realestate implosion. Harry Dent is screaming a warning to the Australians about their real estate market . I view Australia this time as leading the second global bust. real estate is going to be more pervasive . It’s gonna affect more countries .
China is going to be the epicenter of that . which has much more impact on Australia than it does United States for real estate . Especially foreign buying and your trade with China . So I I think , you guys have been living in a good real estate market as far as anybody knows or can remember. you didn’t have the real estate crash or even a downturn of significance in the in the global financial crisis we did . A lot of other countries did. I understand you think oh you know it can’t happen to us . I consider and I was in California 22 years before I moved to Florida and now Puerto Rico not that long ago .
California and Australia are the two most similar real estate markets in the world . To me they both have very good climates; attractive places to live ;they have strong immigration especially in foreign buying real estate . I mean Australia is a hip place I mean I would live there if I could . California is the coolest place to live in the States ; unless you’re in financial services in New York. So they’re very similar and the thing I tell people is what people don’t get about bubbles . And this is the second global real estate bubble and the second bubble for Australia. you just didn’t get a hit hard last time. This is the biggest one I see since 1929 ; I can’t compare this to 2008 , 2009 .
This is likely bigger ;it’s comparable more to 29 to 32 except we have this nice emerging world which you guys are closer to than us . with Asia being the next big thing that gives some buoyancy . I don’t think this will be as bad an overall downturn is 1929 to 32 ; but it will be a similar financial asset bubble reset , and it’s gonna hit stocks .
The biggest commodity it’s already crucified . this time the the real estate bubble is global what can’t people get about the bubble since 2008 . now when demographics would start to weaken in most developed countries less so in Australia but still to some degree . because there’s the baby boomer chirring and they’re spending . what can’t people get ? That no matter how much money they print , and how much money they throw in the financial markets . and how much the stock market bubbles ;the real estate bubble. no matter what we do ;the economy keeps weakening .
We just had corporate tax cuts which you guys didn’t get from Donald Trump. That gave a boost for one year . guess what ? we’re already back to two percent real GDP . The same old thing we’ve had since 2008 on average ;and the forecast for it to go lower . everywhere in the world of same forecast or lower . Australia is slowing more this time . I mean that’s a sign .
Economies can’t live off stimulus and free money; in debt forever . debt weighs too much at some point . Most economists just think well yeah the little debt’s too high . But they don’t understand deleveraging a debt when you get too much debt you have excess capacity . it bids up financial assets .everything you get bubbles that make the cost of living in business more and more expensive . and you have to resect them; it’s called deleveraging . It’s like a drug-addict going through detox ;it’s painful but it works . 29 to 32 was simply the biggest detox of financial debt and financial asset bubbles in US and world history ,and we came roaring out of it .
The reason Japan never came roaring out of it and most countries aren’t , except for Iceland ; cuz they didn’t take the medicine . They didn’t deleverage the debt. They should have gotten unproductive debt out of the way . Australia’s money velocity to my surprise , because you have less overall debt than us weighing on the economy . you have much stronger demographics from strong continuous Asian immigration ,your money velocity is well below the US ;and way above Europe and super above Japan and China which are the worse . because you guys are so busy speculating in real estate in Australia that nobody’s producing anything . that’s what happens. money velocity grows as long as you’re productively investing ; and then that investment creates jobs in profits that can be reinvested. that’s what causes money velocity to go up in a positive path .
It starts to slow and it’s still growing but it starts to slow when people start to get into a speculative phase like the late 90s. the stock bubble and then the real estate bubble to follow that when you get into speculation money. what good does it do to keep flipping houses in Australia ; or to people to fix up their houses make a look better . Does that do anything for your world competitive stance ! oh guess what it makes it worse . a lot of weight wage have to go just to cover the high cost of housing in Australia especially Sydney and Melbourne.
I don’t know why people think that high real estate up to a point it shows you’re a good place . I mean New York will always be more than Florida ;and California will always be more than New York, just because of quality of life and job opportunity . But up to a point when they get overly expensive you can’t afford to do business there ;and people start to leave and then it’s a bad thing .
So people only fear real estate going down , because so many people in Australia and the US, but much more in Australian and Canada now you guys are much more invested in net worth as a country . I think of sixty-seven percent in Australia; it’s like 60 percent in Canada it’s only 30 percent in the US . China 75 percent of consumer net worth is in real estate . And the only more overvalued country than Australia is China . and China is your best customer . They’re our biggest competitor. I tell you ; if China goes down ,yeah it’s gonna hurt everybody in the world ; but it’s gonna help us, and boy it’s gonna be the best thing ever happen to India; because they’re competitors.
They’re your best customer ; you don’t want China going down . so I say Australia yeah you slipped to the last one . good demographics ; your government debt is especially much lower , so easier than ours , so easier to deal with that . But this time your banks are exposed ;from what I read ;seventy-five percent of their loans to real estate. And China is your biggest customer and they’re not going to sink your GDP , your exports ; they’re gonna sink the entire Asian region . We’re not gonna feel China’s fall anywhere near what you guys are gonna feel over there . When interest rates are artificially low everybody over invests . consumers spend more on houses in cars and fixed assets . businesses build more capacity . And excess capacity pushes down profits .
The Fed in the U.S. not in Australia not in China not in Europe not in Japan ; was draining reserves of selling off their bonds, instead of QE. Instead of buying they’re selling . they were reducing their monetary base . well what happens is the liquidity goes up more than that . so I think the money base came down about 15 to 20 percent liquidity came down 30 to 40 percent . so banks all of a sudden , normally what they do overnight , they borrow from each other . especially the smaller banks from the bigger ones who have tons of reserves.
But all of a sudden , they need reserves too . so the reserves went down twice as fast as the monetary base, and that foot pressure on . so now the Federal Reserve was having to put money back in . even though they’re buying short-term stuff . Injecting money into the financial system and that’s what creates financial asset bubbles ! all the gold bugs , all the conservatives were expecting this money printing is going to cause consumer inflation . no it went into asset inflation . because they put the money in the banking system . They just sent it to Homer Simpson which I too rather do I don’t like any of this but I’d rather send it to Homer Simpson than Morgan Stanley. it would have caused more consumer inflation . But it’s not going in the money supply. but if the financial assets , stocks and real estate and all this stuff were counted as financial assets ;we would have monetary inflation.
They just don’t count it as that so it’s not showing up . we have massive inflation in financial assets. stock crashes used to be caused by recessions , now a stock crash ; with so much financial assets overvalued , and so much money created by that . A stock crash alone would cause a recession overnight of like 30% or more . So it’s the financial bubbles that people should be looking at not the inflation rate. and even GDP growth people should just be saying : well wait a minute! if we’re growing say at 2% in the U.S. , and we’re growing faster than Europe and Japan . If we had not put four trillion dollars in to the financial markets and tax cuts of a trillion and a half over ten years. you know all this free money. What would our growth rate be ? it would obviously be negative . We would be in a depression . 2008 was the beginning of a depression they just blew their way out of it with financial assets and money printing , and that’s why it’s not causing inflation ; it didn’t go to consumers in the economy , it went to financial assets . And so everybody should be worrying : when does this financial asset bubble burst . and that includes real estate damn it ! real estate is the biggest financial asset bubble for most households especially Australians and in New Zealand . you guys have way more Network in real estate so you should be worried about your own real estate going up .
Wake up ! if you don’t you’re going to be get an unpleasant surprise in the next few years I say . I called the Japanese bubble burst because it was a bubble much bigger than the US or Australian bubble today in real estate. And their demographics peaked ahead of the rest of the world.
So I saw that coming but what shocked me was when the Millennials , and they don’t have as big millennial generation as the US , and the west . And you guys have a bigger one than anybody. That’s your your saving grace . When the Millennials did come along, it didn’t raise real estate prices at all . all they fell 60 70 % residential 80% commercial . and never bounced . I’m like: how could this happen! you know I finally figured out . Old people diapers ,the baby boom was such a big force and especially in all developed countries adult diapers were out selling baby diapers in Japan.
Well I knew that generally but it just kickin off me, Oh old people growing faster than young people coming along . Dyer’s in real estate faster than buyers the dyers are say 80 ish and the buyers are 42 in most countries . so that’s what’s happening ; net demand is going down in the United States . It’s already peaked. we will never see higher for decades . Australia has already peaked in 2014 . Even though your demographics are much stronger for future booms because of Asians and Millennials and stuff. your net demand because of the dying of baby boomers has already peaked .
It will go down ; continue down into 2021 or 22 ; go back up to this level 2025 or 6 and then slow for decades into 2043. now big difference in Australia ; Japan’s been negative net demand since 98 and they got 8 million empty homes heading towards 15 million. U.S. goes slower and slower , but it only goes negative from 2030 to 39 way up. Australia never even gets close to negative . but your net demand pushing on supply ; is going to be weaker and weaker and it never gets better than it is just a few years ago. so you’re at the top of that indicator . and that indicator is what I use in the US . that indicator says in the U.S. .
Even though the present real-estate bubble is only a little higher in dollar terms, relative to GDP it’s a little lower ; but a little bit higher . Net demand is lower than it was in 2006 when it peaked last time in Australia . so we’re 42 percent overvalued this time versus 21 last time . we went down 34 percent last time . so I’m saying about 50 in the US . Australia I come to the same number with this indicator 42 percent overvalued in Australia . which tells me the downturn is gonna be more like 50 percent . so again the difference is. I would buy real estate when it’s down in Australia ; because you have better Demographics in the future ; but still I think real estate prices in Sydney will not ; in Melbourne will not likely get higher , adjusted for inflation than they are at the peak in 2017.
I don’t think you’ll see that. the US will never in Japan not a hope in all of eternity of ever getting back to their 1991 peak in real estate prices. so this net demands a big deal . Anybody that runs the numbers on this would say it’s overvalued. and when you look at price to income around the world also crystal clear. Hong Kong by far the most overvalued city ; coastal China the most overvalued real estate in the world ; Australia’s Next ; then Vancouver ; then California then London . These are the places , english-speaking countries with high foreign buying .
That’s where real estates are the most overvalued . even more than Singapore . Singapore is very expensive but the incomes are higher too . But Australia is the second-most overvalue in the world ! if you’re not worried about that something is wrong with you. You’re just not looking at the numbers . That’s what bubbles are . I don’t worry about a bubble if I’m in Omaha down the street from Warren Buffett because nobody wants to live there . And I don’t worry about as big a bubble in Adelaide , as I do in Sydney and Melbourne .
Why ! because the most attractive places go down . and I still worry about Perth and Cleveland it’s tough ; because they’re more exposed to the commodity crash; which is going to get worse with the fall of China . So I just tell people I know this doesn’t make sense. I know you’ve only seen real estate go up your whole life. well so did we in America ;until 2008 2009 , we got hit in just a 30 40 % crash . We have foreclosures all over the place ; the banking system almost totally melted down. do not take this lightly . Maybe we’re over forecasting this. that’s possible . but I tell you ; there is not much upside in real estate anywhere in the world left after a bubble this size. And the smart money does not think like most people .
Most people think the longer something goes up the more I can bank on it . smart money who understands cycle says , the longer something goes up the closer we are to the next downturn . and the more it’s going up , the more it’s going to go down. I always say : the greater the bubble , the greater the burst . And this is the greatest bubble in real estate in modern history . and Australia is number 2 only to China in the extent of this bubble . So there’s no way Real Estate’s gonna go up much farther , even if you don’t have a crash and it’s extremely likely you’re gonna have a substantial reset . A one-time reset . Then you can buy . Reduce your exposure to real estate.
Real estate is the number one problem in Australia . the fall of China is the number two ; and that also affects your real estate because such heavy foreign buying. Neither of these is the number-one problem in the U.S. ; But they’re your two number one problems right there . so wake up . Nobody can keep a bubble going forever. And , you know , in my talk I have compared every bubble in history , real estate and stock to the male orgasm model . It’s a perfect fit . And you know what happens to the orgasm , they die a quick death .
And there is no soft landing for an orgasm . and there’s no soft landing for a bubble . Once it starts to unravel the leverage and deleveraging just , I mean that’s why they had to print so much but they had to print now collectively and I calculate over here all central banks not just the big six ; sixteen trillion dollar increase in money injected into the global economy since 2009 . sixteen trillion that’s what it took to offset the deleveraging of that bubble ! and therefore we have more debt than ever as you know and understand and see; and more leverage and bit in a bigger financial bubble ; this stock markets much more bubbly than it was back in 2000 a much more. and people are saying it’s not a bubble. I’m like what about the bubbles that is not obvious ! It quacks like a bubble ,walks like a bubble , whatever it’s a bubble damn it and !
The history’s gonna look at what were people smoking here. Especially the most educated economists PhDs and even people like Warren Buffett don’t see this bubble . They’re blind . People are high . you know drug addicts don’t think they have a problem ; cuz they’re high . and when they come down and they take more . Well that’s what we’re doing . the economy we’re just it’s taking in more and more debt to get less and less GDP ; diminishing returns . We’re getting towards that zero point ; and that’s when the thing just blow .
There is a point where it blows up ; and when it does. the central banks have already blown their ammunition and people have already bought and re bought refinanced . How many more times can people refinance their homes ! you can’t at some point . and then the bubble blows and then everything goes to hell . And people go how could we be so stupid. well you could have not been stupid by just waking up and looking at a chart and saying oh this looks like an orgasm . This looks like every bubble in history. Looks like a bubble quacks like a bubble. it’s a bubble !
These are not hard to recognize at all . nothing could be more obvious , but people are too high to notice . everybody is benefiting from this artificial high . and that impairs judgment . high people don’t make good judgments ;whether they’re alcoholics crack addicts , doesn’t matter . what’s you are high on .
Coffee and cigarettes seem to be the better. People don’t have good judgment ; nobody has good judgment . Not the best politicians ;not the best economists ;not the best global corporate leaders or bankers nobody sees this thing ;because they don’t want to . We are in an engineered global economic collapse. The 1 % are lining their back pockets before they pull the pin. After the collapse comes the NWO. The game was rigged while the world slept.
It is very clear that sometimes next year we are going to fall into a recession . the indicators I am looking at , are all pointing to early to mid 2020 , but we still gonna watch what Donald does . Donald is going to come up with some reaction to a slowing economy , that’s the wild card , but I would say even with that by late 2020 , early 2021 we are in recession for sure , and The Greatest Crash of our Lifetime is going to begin .I still lean towards the early scenario , that we are going to see during early to mid 2020 , he added.
The one thing I do know is that the market will make a major change in direction. It’s going to try to hide it as much as possible because it wants to screw everybody. The big traders — the sharks — make money, but all the minnows get eaten. That’s what the market wants. It wants people to be trapped in the bubble. Bubbles are very tricky to play. Now is a good time to get out. The upside is limited , Dent explained .
Instead of dealing with the global financial crisis of 2008, the government just printed a bunch of money and tried to blow their way out of it. Central banks should be able to create money in line with the growth of the economy, period. Central banks only make bubbles worse, which means crises and depressions and the deleveraging that follows.
With the last crisis , we didn’t have a Great Depression, which is what our models are calling for. So we’re just going to get hit harder this time. Stocks won’t go down 50% , they’ll be down 70% to 80%. Unemployment won’t be at 9% or 10% , it will be 15%.
Dent also tweeted : There’s only so much you can do to keep an economy going when it’s destined to bottom out. I review the most likely scenarios based on the historical facts in economy markets .
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