signal. you want to be in my gang no but i do want to talk about a topic. that might trigger you and it has to do with brakes it oh. oh oh oh oh oh oh oh ok see i told you off no. no a lot of the headlines talk about the economic disaster that is the united kingdom and place it as the explanation on breaks it but al gore edwards from soft is back and he said it's not to do with brags that in fact it's to do with what one of our guest said that steve keen and he was right we're going to get to that so i'm going to first lay out the story of his thesis this is albert edwards from society in general famous bear was very bearish during the two thousand and seven two thousand and eight two thousand and nine and finally capitulated and went long i think in twenty eleven or two thousand and twelve but he's back and he's saying time has run out at the start of his latest no albert edwards highlights

a recent warning by the chinese central bank that the financial risks associated with grey rhino events which are highly obvious yet ignored threats may surface next year and reminds readers that going into the two thousand and eight global financial crisis many of the massive macro imbalances in credit bubbles that ultimately sunk the global economy were all too apparent but now he says we have all the same risks and actually more disaster on the horizon but what's going to be the trigger of this time might not be with the chinese say which is the grey rhino is it's obvious is there but nobody is afraid of it which he compares he uses a metaphor of in south africa where i think he's from but in south africa. reserves there you know the wildlife reserves what they find is that the buffalo actually causes the most danger and that's because most tourists. and people going for their

you know wild game reserves what they're afraid of are the lions and the leopards and the elephants in the rhino so they're watching out for those the buffaloes right there and i think best to a big danger relative to these other dangers and of course the buffalo often just jumps out at like without any warning and hurt or injuries most got another three right when i run out of the black swan yes. more like a buffalo in the south african game reserve yes yes all right well so he says that he has his words we spend most of our time on these pages focusing on the two biggest threats to the global economy so in the game reserve metaphor that would be the lion and the leopard right or the elephant the u.s. and china but japan the euro zone and u.k. certainly have glaring imbalances in financial bubbles that might burst at any time

the u.k. probably has one of the worst and most obvious problems caused by years of easy money but has diverted attention from the slump in the savings rate so he looks at the savings rates that's a euro zone which is kind of down the u.s. is actually kind of up since the financial crisis you case has plummeted to near zero the savings rate we're going to get into that about how steve kean was right and basically he blames. austerity for it but austerity and steve kean did warn on this show what was it two or three years ago maybe four years ago that financial a steady would cause economic disaster in the united kingdom because it would cause the savings rate to plummet because if the government's not spending that it could only come from somewhere that has to come from either savings or the government so it with the savings rate that low you would think the economy would be growing

faster because it suggests people are spending down their savings they're spending on credit cards you know they're getting into debt but in fact because the government has contract and so much they're spending the entire economy is down one point two five percent more g.d.p. than it would have been otherwise and. still you're saying is this the lynchpin for another leg of a global crisis this is what he's suggesting is that it could be could in his metaphor be the buffalo it could own we're going to talk about italy we've talked about japan and we've talked about the student loan debt or the yeah in the u.s. ryan of the china. ok so he's saying the white rhino the grey rhino. only visible yeah that was the chinese metaphor that is metaphor is the buffalo is the buffalo u.k. that you're not looking at all the other big predators on the you know game reserve

the lion the leopard the rhino and the elephant you're all looking out for that that's china that's you're not letting you know. they're not looking and there is saving rays down because of austerity austerity was a government contract and government spending cut g.d.p. by you're saying point a half or one percent and so the savings rate is decimated and so going forward ok u.k. is a two trillion dollar economy one of the u.k. one completely bust so who cares i mean why would that cause. global crisis so most people have been saying that the economic uncertainty in the u.k. is caused a break set but he doesn't believe that what edwards says is that two years of massive u.k. public sector fiscal tightening and both twenty sixteen and twenty seventeen removed one and a quarter percent from both years g.d.p. growth without that savage fiscal tightening u.k. g.d.p.

would have quite happily skipped along at a three percent rate well in excess of the euro zone where the fiscal impulse was neutral contrary to most mainstream economists would have you believe weak g.d.p. in the u.k. has little to do with bags ok ok but but but ok let you can say right there doing the braggs it ok are they trying to get it so the tories are trying to separate from the e.u. so they're building the ring fencing all the tory austerity poll grom of the poor in the u.k. so they have shielded the world against there are issues and yeah it's an island it's no longer you know it's separate in all its connections to the world it's run by tories or the tories or pro tory you know monopolist i mean that's there's no such thing as society that. according to margaret thatcher there's a statistic from a couple weeks ago came out that showed the wealth and income gap around the world

in different countries and then there's there's the u.s. there's japan there's france and then there's the u.k. it's like what is so incredible spread between this concentration and then you've got the royalist of people there in the tory party who support the queen whose whole point of bragg's it was to support the queen ok so they stared he was a moron it policy it caused incredible poverty brags it's all about supporting the queen and getting rid of their world contacts and ok steve keen is right the u.k. is going to he's in another way in tracks because of fiscal tightening like they don't affect real people in the real world. well it's quite all of this is affected them badly. yes but also out in the real world because they're part of the global financial system. and so they will move on from. we're going to move on to the u.s. we're going to move on to the u.s. and the u.s.

is another story i think you and tyler jenks recently had touched upon this and that is the mortgage rate and this is something that many this new generation of americans are not aware that you know mortgage rates basically average something like seven eight nine percent this is a standard sort of interest rate on a mortgage they've been tricked into thinking everything could be ok and the fed could always keep everything all interest rates low but apparently mortgage rates may hit six percent sooner as fed sheds mortgage backed securities but what will that do to housing bubble two point zero the average interest rate for a thirty year fixed rate mortgage which is the norm in the united states in the in the u.k. of course it's like two or two year adjustable rate mortgages that they've always had they don't do these thirty year fixed which will be probably they'll regret

soon with conforming loan balances four hundred fifty three thousand one hundred or less in the u.s. if it's four hundred fifty three thousand one hundred or less that means the government basically backs it fannie mae and freddie mac. for a twenty percent down payment rose to five point one seven percent for the latest reporting week according to the mortgage bankers association this is the highest average rate since september two thousand and nine so we're heading back this this is for somebody who put twenty percent down i ninety thousand dollars that they have to put down on a conforming mortgage and they're getting five point one percent seven percent so those people that are putting down ten percent or five percent or two. two percent or one percent or a zero percent they're paying a lot more but do all my comment on this i do what you're common and that you know more and more what's happening as we discuss the creeping realisation that rates are going that the bond bubble has popped and that rates are now going

higher that means mortgage rates go higher six percent on the mortgage historically is cheap ok right now or in terms of where we are in mortgage rates the thirty year fixed mortgage rate right you remember when they were way up high earners eight percent percent back in two thousand and three i believe been going back to paul volcker days right i mean they're in the teens yes ok so you know six seven eight percent of the mortgage that's that's completely normal five percent on a thirty day treasury note is perfectly normal for half percent of the money market is should be the normal but you can't taper a ponzi because when you buy a house there when it's at nine percent mortgage rates are at nine percent and they're going down yeah you could always find somebody who is able to service the debts upon sees your price bonzi that but it was going to go up to there it's harder and harder to find somebody to pay the price you pay it's called default yes

you default because all those mortgages remember repackaged by wall street and sold on to institutions pension funds sovereign wealth funds and then all those will get a twenty percent thirty percent forty percent haircut yes well i mean this is the news we have that we have rhinos now grey rhinos and buffaloes on the horizon as you're out there stampeding through black friday yesterday and now the shopping weekend after thanksgiving this is when it's make or break for the u.s. economy we'll find out probably pretty soon actually monday is that internet day what do they call that when they do internet shopping is actually the biggest shopping day now and yass that's right. and internet monday internet sites amazon is jeff bezos day yes all right around the world makes you have to pay those another billion dollars because he's our glorious leader that's very dr evil of you i think he made thirty six billion this year not a day that day you make me three hundred five billion dollars

a day oh you're given a couple years we're going to take a break. ok yeah fries in a dot my gang signal. don't go away. i think that we want to go fast but inside. i'm dockside i think. going down to your neck side you can improve yourself. but it's all so bloody true but i really believe that the bottom that we show up side is story and depend. on our condition one block.

dollars. dollars. dollars. i mean a dollar a dollar is what i would be. when we got garrett over here we care the music with us. we are here we were dry gear. by you know going to get rid of those who will not go away we will not die quiet. real the hard work we do is the true.

thanks thank you. thank you thank you thank you. thank you. both. welcome back to the kaiser report i'm alex keyser time now to turn to dan collins of hisor burke capital and the china money report dan welcome back thanks max i should note that we're in our special backwoods undisclosed location he may or some

cars or fountains or birds or actually it's not a green screen that's real life dan let's get into it you have been back in the u.s. now for a few months after twenty years in china what difference does stand out for better and worse when the u.s. is kind of called the new the new developing economy we have growth rates which we haven't seen here probably in twenty some years close to four percent the first time where if someone wants a job in united states they can get a job we haven't seen that in decades now are the jobs of high quality probably not we have a lot of repair to do in this economy to get the high kind of high paying jobs back but the good news is the economy is growing i think it's going in the right direction and there's a lot of companies not only american companies but companies all across the world that are now coming back to look at putting up facilities here to employ people in new market tell as i'm a means an economy a global economy of winners and losers you know before we. run our trump it was

basically globalization and monitor monetization and monetarism the idea that we just keep printing money in a left all boats then trump said you know what we're losing we're going to go back to mark until as i'm so if if america is winning is it fair to say that china is losing i think us has won the first round we drop the tax rates down thirty eight to twenty one percent now they're in line with what europe is for corporate tax rates that is now gotten a lot of companies to start consider center and come back including chinese companies i know many many chinese entrepreneurs that are scared of duties they're scared and now. u.s. with the wage rates where they are they're not that far off china so they're now considering to set up facilities here chinese stock markets down thirty percent business confidence is at a thirty year low so i would say the first round definitely goes to the united states in the trade wars some are looking at one road one ballot initiative and thinking that this will be a great interest russia play for china great g.d.p.

mike pence is going over a pac which is an asia pacific conference and he says that empire and aggression have no place in indochina in the indo-pacific he's referring and talking about china ersatz yeah when he said that the vietnamese in the room clip they thought he was talking about the vietnam war and the united states but yeah so we're out now we're trying to go against the one bill one road because it's not only economic for china but it's geo political so as china rose everyone in the united states foreign policy circles as we don't worry about it we have the navy we can always block chinese oil imports at the straits of malacca and singapore we're now you've got two week high speed rail from poland to china so that one by one road is not only about bringing those countries closer in to china's co-prosperity sphere but also about having a way to to get into the european markets and let's not forget the chinese one bill one road ends in poland in serbia go to serbia now they have

a new bridge from china they have a high speed rail from budapest to belgrade they have a thirteen plus one concept china's the one thirteen is the eastern european countries they're over there nice europe going guys use not helping much we're not developing and china is out there helping them develop and bringing up new projects and building infrastructure so the one bill one road will go all the way god does end in eastern europe and that's what the u.s. now is waking up to they're starting to say you know russia is not much of an economic threat but chinese economy economically speaking is very very powerful and is just going to continue to get stronger serbia as the new. london yeah there was a property in serbia must be going to start to go up serbian property prices are extremely cheap and you know for the price of one square meter in shanghai you can buy a full apartment so we've a worker in serbia now is half the price of a chinese worker so that's the developments have been nice for europe europe should

be ashamed of them so they have not economically developed they've only created more and more regulations. and they're losing they're going to lose out to china at the the chinese pushing encroaching farther and farther on their territory meanwhile they're worried about russia which really hasn't done anything to him and it's keeping on my theme of now mark until as i'm so typically in previous period mark until as a two centuries ago you had a gold standard and this new mark until this period you've got a debt standard so you've got two major economies multi-trillion dollar economies china and the us there now and engaging in a post monetarist neo mercantilist period and both are indebted to nick extraordinary historic amount so what it boils down to. your thoughts are as i see the great debt for equity swaps you know it's a common trick on wall street a debt equity swap but now we're seeing in a geo political basis you've got it seems like china they're trying to convert

their debt into a useful stuff like infrastructure the us of course goes with their it's tried and true military play you know that's always how they ana wind their debt is that they they start wars. how are these to match ups the global debt to equity of the twenty first century who's better position to words that go on yes as you describe according to austrian economics theory any time we go into unsound money we get chaos it's no coincidence we would you know we did the federal reserve in a year later in world war one every time we get these major wars we go off a hard money standard and we go into debt and now we're in debt money just as human as you mention it. right china's exchanging debt for friends and partners go to kenya and build hospitals schools and bridges and the u.s. will offer to build a drone base so at this point china is winning in a lot of these areas and the united states is going to question do we have at twenty one trillion in debt and counting do we have the economic muscle any more

real economy not not selling credit default swaps not charging five thousand dollars to get some stitches do we have a real economy strong enough to go in keep people in in our camp and i would say probably not compared to i think china is the the economy just going to keep steam rolling. globally because the they can go and build all these countries for nothing the lot of these countries are smaller than chinese cities. than one chinese city speak in a chinese cities there's twenty percent of china's homes are empty second and third home purchases outstrip first time buyers sounds anyway on paper like a ponzi scheme yes thoughts. it has converted into that so when we started talking about this probably seventy years ago homes were bought fully cash up front so there was no debt bubble danger however in the last three or four years they have now converted the loans they're getting their parents to they have to get multi family members just to kick in for the deposit and then they'll go get

a loan property in areas like shanghai you know you're talking millions of millions of dollars for a normal apartment. but however property no everyone wants to live in those major major cities though that won't be the problem the problem come from here to tear three cities they are multiple empty homes china is in and also a debt bubble just like united states and you see the mel malinvestment everywhere that too many homes too many factories in the economy has not been allowed by the government to continue to progress normally they were on a pass to completely dominate but they are now have reversed course in the currency still not convertible some of the world's second largest economy in the currencies not. convertibles so they are they have taken some wrong steps in the last few years we'll see though they're very practical is there anything they're practical and they may i think they're see because of this trade war they've already made many many concessions and they're trying to. probably try to get back in with the us in the good graces with some concessions but we'll see if they can

actually let up enough control to do that i really think that come back with concessions rather than let's say in the south china sea start sinking ships well the concessions have started so for instance two percent duties for chinese products and here twenty five percent for us to send them there that's the so-called free market people like paul krugman who argue for meanwhile american workers get devastated american manufacturing cities get devastated. they have made a lot of concessions to be twenty five percent duties on cars now it's fifteen percent problem is it's still fifteen percent two percent so will they ever go down the two percent probably not so we're probably in the very beginning stages of a new cold war similar to the soviet union in the united states and we'll see if it gets into a hot war probably wouldn't surprise me if that happens many many of my friends who are longtime experts in china many of us of come back and we're actually worried about this now potential china us conflict it's really what the term gray rhino let

me fill you in on this the head of the chinese central bank warned of the risk of gray rhino and these are obvious threats that investors ignore see black swan are the they don't seem happening and they happen to know right out there but there's still a risk now what about china's corporate debt pile or other threats they characterize like hit that the obvious threats and in china i guess that's what you're describing right i mean how many of these gray rhinos are there yeah i mean there's a think it's multiple of the chinese banking system is one you know they can hide debt put it anywhere they want all of these state economies they're supposed to get you know when i move to china twenty years. ago the whole game was going to privatized everything were to get rid of the state owned enterprises because they're totally inefficient you know there's the incentive problem they don't they're not in the market economy so they the liberalizing liberalize in about five to eight years ago now they start pushing all the state on economies they're the only companies are the ones you can get loans the private enterprise can get loans

if they get loans at nine percent so they've gone into the private shadowed market that's a great way to pave a lending market's blown up absolutely blown up that's a great ryan ottley you know you've got to be in the capital so common issue can't be accountable so the way up and com going to go way down exactly right you've got to burn the boats if you really want to be a capitalist you've got to burn your communist boats and go you know full speed down the tuxedo as they were on that path and then bow to that i think was a two thousand and eight financial crisis that set them off they started dumping money into everywhere and all that money went into buy in the companies will get the loans and then they buy properties with it they would actually do anything they just buy properties about the artificial intelligence so there are a lot of money in ai i think they're the world leader in this and it seems like the next huge wave in technology so they might have a huge edge there what are you hearing there well for every i.t. worker we have in united states china has ten they are so far ahead and when i came back to us i'm looking they were still writing paper checks i mean in china i did everything financially with my phone their banking system despite having four or

five state banks has. has so much more innovation than u.s. banks because u.s. banks game is about getting money from the federal reserve it's not about actually searching for depositors and making loans anymore so they haven't innovated on their business platform so we're going to states in terms of banking so far behind united states and ai that links in with a china has so much data out there whether it's from the vehicle you know the. fleets which is like there were all through the economy they have you know the national id systems so they have all this data and that's why they're expected to be able to crunch the data with machine learning and come out on top of the i think that's what most people expect at this point yeah. speaking of ai and you know people look for how they played a role in twenty sixteen election and the bronx and that's apparently a lot of data was scraped from social media sites and then repurposed as persuasion advertising and it's through these elections but if you say china is so far ahead

in this area they from what i understand want to incorporate ai in their five year plan they want to and they have this new social score where people if you spit on the train you know you hear credit rating drops and you can't get a plane ticket. so this is this is dystopian nightmare or you've lived there i mean it's just like just and convenient way to get your cast checked and your you know so i saw on your suit absolutely dystopian i tell people you go to shanghai you're it's the closest to livin in blade runner that you'll ever ever be and not only the architecture but we actually the social systems are well on their way to becoming dystopian or well and well not all well and just hope you know we have to say goodbye jack thanks must be on the concert for not going to do it for this edition of the kaiser report with me max kaiser stacy ever like to thank our guest dan collins of capital slash the china money report joinery just on twitter. until next time by.

fracking gave americans a lot of new job opportunities needed to. make some money twenty five thousand dollars. fifty thousand dollars a year. people who rush to a small town in north dakota employment rate of zero percent like gold rush is very very similar to. this beautiful story with. a lot of people have left here i don't know too many people here and just slow down too much they lost their jobs got laid off the american dream is changing that's not what it used to be. and that's a tough reality to deal with. on the sea on the lying circumstances that allowed for these emergence of this very very lengthy violence

i think that we may get the sons and even grandsons of died at some point in the future it's primarily a political issue in iraq that has taken on minutes where you. are on the traditions. negative place called camp sundown again for people that can't decide and they're like so tired. this is like a safe house i guess they don't have to talk about what they go through with us because we understand her daughter katie was diagnosed with a very rare sun sensitive condition if i get sunburned i heal she doesn't feel patients when they have problems with the walk to talk to your son the brains that are actually shrinking inside there the skull gets thicker in the brain still small . the pain is indescribable it's feels like

a really really bad chemical burn but it goes through your skin in your muscles all the way down to the bone and there's no relief. so we're just not sure this is but just over. top stories here on our two documents placed online via haka group insinuate that britain's foreign office was behind a clandestine anti russia campaigns across the world. also here on r.t. we report from one of the many so-called yellow vests rallies taking place across fraud in protest against the government imposed fuel price. it's not possible to keep going like that's you know it doesn't.